Exhibit 10.1

 

 

 

AMENDED AND RESTATED

GOVERNANCE AGREEMENT

among

EXPEDIA, INC.,

LIBERTY INTERACTIVE CORPORATION,

and

BARRY DILLER

Dated as of December 20, 2011

 

 

 

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TABLE OF CONTENTS

 

            Page   ARTICLE I    TRANSFEREES    ARTICLE II         BOARD OF
DIRECTORS AND RELATED MATTERS   

Section 2.01.

     Board of Directors      2   

Section 2.02.

     Management of the Business      2   

Section 2.03.

     Contingent Matters      3   

Section 2.04.

     Notice of Events      4   

Section 2.05.

     Certain Hedging Transactions      5   

Section 2.06.

     Notice of Sale of Company Class B Stock      5    ARTICLE III    PREEMPTIVE
RIGHTS   

Section 3.01.

     Liberty Preemptive Rights      5    ARTICLE IV    REPRESENTATIONS AND
WARRANTIES   

Section 4.01.

     Representations and Warranties of the Company      6   

Section 4.02.

     Representations and Warranties of the Stockholders      7    ARTICLE V   
DISTRIBUTION TRANSACTION AND BLOCK SALE   

Section 5.01.

     Distribution Transaction      8   

Section 5.02.

     Block Sale; Purchase/Exchange Right      9    ARTICLE VI    DEFINITIONS   

Section 6.01.

     “Affiliate”      12   

Section 6.02.

     “Beneficial Ownership”      13   

Section 6.03.

     “Block Sale”      13   

 

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Section 6.04.

     “Block Sale Transferee”      13   

Section 6.05.

     “business day”      13   

Section 6.06.

     “Chairman”      13   

Section 6.07.

     “Chairman Termination Date”      13   

Section 6.08.

     “Commission”      13   

Section 6.09.

     “Company”      13   

Section 6.10.

     “Company Class B Stock”      13   

Section 6.11.

     “Company Common Shares”      13   

Section 6.12.

     “Company Common Stock”      14   

Section 6.13.

     “Consenting Party”      14   

Section 6.14.

     “Demand Registration”      14   

Section 6.15.

     “DGCL”      14   

Section 6.16.

     “Disabled”      14   

Section 6.17.

     “Distribution Transaction”      14   

Section 6.18.

     “EBITDA”      14   

Section 6.19.

     “Effective Time”      14   

Section 6.20.

     “Equity Securities”      14   

Section 6.21.

     “Exchange Act”      15   

Section 6.22.

     “Excluded Issuance”      15   

Section 6.23.

     “Expedia”      15   

Section 6.24.

     “Fair Market Value”      15   

Section 6.25.

     “Hedging Transaction”      15   

Section 6.26.

     “Insider”      15   

Section 6.27.

     “Issue Price”      15   

Section 6.28.

     “Lapse Date”      16   

Section 6.29.

     “Liberty”      16   

Section 6.30.

     “Liberty Director”      16   

Section 6.31.

     “Liberty Holdco”      16   

Section 6.32.

     “Liberty Holders”      16   

Section 6.33.

     “Liberty Proxy”      16   

Section 6.34.

     “Liberty Spinco”      16   

Section 6.35.

     “Litigation”      16   

Section 6.36.

     “Mr. Diller”      16   

Section 6.37.

     “Ownership Percentage”      16   

Section 6.38.

     “Permitted Transferee”      16   

Section 6.39.

     “Person”      17   

Section 6.40.

     “Qualified Distribution Transferee”      17   

Section 6.41.

     “Restricted Equity Security”      17   

Section 6.42.

     “Restricted Stock”      17   

Section 6.43.

     “Sale Transaction”      17   

Section 6.44.

     “Securities Act”      17   

Section 6.45.

     “Standstill Agreement”      17   

Section 6.46.

     “Stockholder Group”      17   

Section 6.47.

     “Stockholders”      17   

Section 6.48.

     “Stockholders Agreement”      17   

Section 6.49.

     “Subsidiary”      17   

 

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Section 6.50.

     “Third-Party Transferee”      18   

Section 6.51.

     “Total Debt”      18   

Section 6.52.

     “Total Debt Ratio”      18   

Section 6.53.

     “Total Equity Securities”      18   

Section 6.54.

     “Transfer”      18   

Section 6.55.

     “TripAdvisor”      18   

Section 6.56.

     “Voting Securities”      19    ARTICLE VII    MISCELLANEOUS   

Section 7.01.

     Notices      19   

Section 7.02.

     Amendments; No Waivers      20   

Section 7.03.

     Company Consent Right to Waiver of Liberty Conversion Obligations in
Stockholders Agreement      20   

Section 7.04.

     Successors And Assigns      21   

Section 7.05.

     Governing Law; Consent To Jurisdiction      21   

Section 7.06.

     Counterparts      22   

Section 7.07.

     Specific Performance      22   

Section 7.08.

     Registration Rights      22   

Section 7.09.

     Termination      23   

Section 7.10.

     Severability      23   

Section 7.11.

     Cooperation      23   

Section 7.12.

     Adjustment of Share Numbers and Prices      23   

Section 7.13.

     Effective Time      24   

Section 7.14.

     Entire Agreement      24   

Section 7.15.

     Interpretation      24   

Section 7.16.

     Headings      24   

Exhibit A Form of Standstill Agreement

 

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Amended and Restated Governance Agreement

Amended and Restated Governance Agreement, dated as of December 20, 2011 (the
“Agreement”), among Expedia, Inc., a Delaware corporation (“Expedia,” or the
“Company”), Liberty Interactive Corporation, a Delaware corporation formerly
known as Liberty Media Corporation, for itself and on behalf of the members of
its Stockholder Group (“Liberty”), and Mr. Barry Diller (“Mr. Diller”) for
himself and on behalf of the members of his Stockholder Group.

WHEREAS, the parties hereto have agreed that the Company, Liberty and Mr. Diller
shall enter into this Agreement in order to amend and restate in its entirety
the respective rights and obligations of the parties set forth in the Governance
Agreement, dated as of August 9, 2005, as amended on June 19, 2007.

WHEREAS, the Company, Liberty and Mr. Diller desire to establish in this
Agreement certain provisions concerning Liberty’s and Mr. Diller’s relationships
with the Company.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
Company, Liberty and Mr. Diller hereby agree as follows:

ARTICLE I

TRANSFEREES

No Third Party Transferee shall have any rights or obligations under this
Agreement, except as specifically provided for in this Agreement and except that
(a) if such Third Party Transferee shall acquire Beneficial Ownership of more
than 5% of the outstanding Total Equity Securities upon consummation of any
Transfer or series of related Transfers from a Stockholder, to the extent such
Stockholder has the right to Transfer a Demand Registration and assigns such
right in connection with a Transfer, such Third Party Transferee shall have the
right to initiate one or more Demand Registrations pursuant to Section 7.08 or
any registration rights agreement that replaces or supersedes Section 7.08 (and
shall be entitled to such other rights that a Stockholder would have applicable
to such Demand Registration) and (b) if such Third Party Transferee shall
acquire Beneficial Ownership of 5% or less of the outstanding Total Equity
Securities but shall acquire Beneficial Ownership of Company Common Shares (or
other equity securities of the Company) with a Fair Market Value of at least
$250,000,000 upon consummation of any Transfer or series of related Transfers
from a Stockholder, to the extent such Stockholder has the right to Transfer a
Demand Registration and assigns such right in connection with a Transfer, such
Third Party Transferee shall have the right to initiate one (but not more than
one) Demand Registration pursuant to Section 7.08 or any registration rights
agreement that replaces or supersedes Section 7.08 (and shall be entitled to
such other rights that a Stockholder would have applicable to such Demand
Registration), provided that, in the case of this clause (b), such Third Party
Transferee may exercise such Demand Registration only in connection with a
registered public offering of Company Common Stock having a Fair Market Value at
least equal to $100,000,000, subject (in each of clauses (a) and (b)) to the
obligations of such Stockholder applicable to such demand (and the number of
Demand Registrations to which such Stockholder is entitled under Section 7.08
hereof shall be correspondingly decreased).

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ARTICLE II

BOARD OF DIRECTORS AND RELATED MATTERS

Section 2.01. Board of Directors.

(a) Liberty shall have the right to nominate up to such number of Liberty
Directors as is equal to 20% of the total number of directors on the Board of
Directors (rounded up to the next whole number if the total number of directors
on the Board of Directors is not an even multiple of 5) so long as Liberty
Beneficially Owns at least 16,825,982 Equity Securities (so long as the
Ownership Percentage of Liberty is at least equal to 15% of the Total Equity
Securities). Liberty shall have the right to nominate one Liberty Director so
long as Liberty Beneficially Owns at least 11,217,321 Equity Securities (so long
as Liberty’s Ownership Percentage is at least equal to 5% of the Total Equity
Securities). As of the date hereof, the Liberty Directors are John C. Malone and
William R. Fitzgerald.

(b) The Company shall cause each Liberty Director to be included in the slate of
nominees recommended by the Board of Directors to the Company’s stockholders for
election as directors at each annual meeting of the stockholders of the Company
and shall use all reasonable efforts to cause the election of each Liberty
Director, including soliciting proxies in favor of the election of such persons.

(c) Within a reasonable time prior to the filing with the Commission of its
proxy statement or information statement with respect to each meeting of
stockholders at which directors are to be elected, the Company shall, to the
extent Liberty is entitled to representation on the Company’s Board of Directors
in accordance with this Agreement, provide Liberty with the opportunity to
review and comment on the information contained in such proxy or information
statement applicable to the director nominees designated by Liberty.

(d) In the event that a vacancy is created at any time by the death, disability,
retirement, resignation or removal (with or without cause) of any Liberty
Director, Liberty shall have the right to designate a replacement Liberty
Director to fill such vacancy, and the Company agrees to use its best efforts to
cause such vacancy to be filled with the replacement Liberty Director so
designated. Upon the written request of Liberty, each Stockholder shall vote
(and cause each of the members of its Stockholder Group to vote, if applicable),
or act by written consent with respect to, all Equity Securities Beneficially
Owned by it and otherwise take or cause to be taken all actions necessary to
remove the director designated by Liberty and to elect any replacement director
designated by Liberty as provided in the first sentence of this Section 2.01(d).

Section 2.02. Management of the Business. Except as indicated in Section 2.03
below or as required by Delaware law or the Certificate of Incorporation of the
Company and the By-Laws and the agreements contemplated thereby, Mr. Diller, so
long as he is Chairman and has not become Disabled, will continue to have full
authority to operate the day-to-day business

 

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affairs of the Company to the same extent as prior to the date hereof. The
Company shall use its reasonable best efforts to cause one Liberty Director
designated by Liberty for such purpose to be appointed as a member of a
committee of the Board of Directors and, to the extent such person qualifies
under applicable law (including stock exchange requirements, as applicable, and
tax laws) and Section 16(b) under the Exchange Act or other similar
requirements, all committees and subcommittees of the Board of Directors that
make determinations relating to the compensation of executives of the Company.

Section 2.03. Contingent Matters. So long as Liberty or Mr. Diller Beneficially
Owns, in the case of Liberty, at least 14,956,428 Equity Securities (so long as
such Ownership Percentage equals at least 5% of the Total Equity Securities),
or, in the case of Mr. Diller, at least 2,500,000 Company Common Shares with
respect to which he has a pecuniary interest and the Chairman Termination Date
(as defined in the Stockholders Agreement and not as defined in this Agreement)
has not occurred and Mr. Diller has not become Disabled, neither the Company nor
any Subsidiary shall take any of the following actions (any such action, a
“Contingent Matter”) without the prior approval of Mr. Diller and/or Liberty,
whichever (or both) satisfy the foregoing Beneficial Ownership requirements:

(a) any transaction not in the ordinary course of business, launching new or
additional channels or engaging in any new field of business, in any case, that
will result in, or will have a reasonable likelihood of resulting in, Liberty or
Mr. Diller or any Affiliate thereof being required under law to divest itself of
all or any part of its Beneficial Ownership of Company Common Shares, or
interests therein, or any other material assets of such Person, or that will
render such Person’s continued ownership of such securities, shares, interests
or assets illegal or subject to the imposition of a fine or penalty, or that
will impose material additional restrictions or limitations on such Person’s
full rights of ownership (including, without limitation, voting) thereof or
therein. This Contingent Matter will be applied based only on the Beneficial
Ownership of Company Common Shares, interests therein or other material assets
of Liberty or Mr. Diller or any Affiliate thereof as of the date hereof; or

(b) if the Company or any of its Subsidiaries incurs any obligations (other than
in respect of the customary refinancing of an amount not to exceed the principal
amount of the existing obligation being refinanced) included within the
definition of Total Debt (the “Incurred Debt”) upon which (and after giving
effect to such) incurrence the Total Debt Ratio equals or exceeds 8:1 (for this
purpose (x) calculating Total Debt as if the Incurred Debt had been incurred on
the last day of the most recently ended fiscal quarter of the Company (the
“Balance Sheet Date”) and (y) if the Incurred Debt is being incurred in whole or
in part to fund the acquisition by the Company or any of its Subsidiaries of any
Person or business (whether by way of a merger, stock purchase, asset purchase
or otherwise) (an “Acquisition”) then (A) in addition to the adjustment set
forth in clause (x) above, Total Debt shall be calculated to be Total Debt of
the Company and its Subsidiaries plus Total Debt of the Person or business
acquired in the Acquisition (substituting, for this purpose, such Person or
business for the Company and its Subsidiaries in the definition of Total Debt)
as of the Balance Sheet Date to the extent applicable to the business(es) or
assets being acquired and (B) there shall be added to the EBITDA otherwise used
in calculating the Total Debt Ratio at the Balance Sheet Date an amount equal to
the EBITDA of the acquired Person or business (substituting, for this purpose,
such Person or business for the Company and its Subsidiaries in the definition
of EBITDA) for the four fiscal

 

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quarter period ending as of the Balance Sheet Date to the extent applicable to
the business(es) or assets being acquired), then, for so long as the Total Debt
Ratio continues to equal or exceed 8:1:

(i) any acquisition or disposition (including pledges), directly or indirectly,
by the Company or any of its Subsidiaries of any assets (including debt and/or
equity securities) or business (by merger, consolidation or otherwise), the
grant or issuance of any debt or equity securities of the Company or any of its
Subsidiaries (other than, in the case of any of the foregoing, as contemplated
by Section 3.01 of this Agreement), the redemption, repurchase or reacquisition
of any debt or equity securities of the Company or any of its Subsidiaries, by
the Company or any such Subsidiary, or the incurrence of any indebtedness, or
any combination of the foregoing, in any such case, in one transaction or a
series of transactions in a six-month period, with a value of 10% or more of the
market value of the Total Equity Securities at the time of such transaction,
provided that the prepayment, redemption, repurchase or conversion of
prepayable, callable, redeemable or convertible securities in accordance with
the terms thereof shall not be a transaction subject to this paragraph;

(ii) voluntarily commencing any liquidation, dissolution or winding up of the
Company or any material Subsidiary;

(iii) any material amendments to the Certificate of Incorporation or Bylaws of
the Company (including the issuance of preferred stock pursuant to the “blank
check” authorization in the Certificate of Incorporation, having super voting
rights (more than 1 vote per share) or entitled to vote as a class on any matter
(except to the extent such class vote is required by Delaware law or to the
extent the holder of such preferred stock may have the right to elect directors
upon the occurrence of a default in payment of dividends or redemption price));

(iv) engagement by the Company in any line of business other than online and
offline travel services and products and related businesses, or other businesses
engaged in by the Company as of the date of determination of the Total Debt
Ratio;

(v) adopting any stockholder rights plan (or any other plan or arrangement that
could reasonably be expected to disadvantage any stockholder on the basis of the
size or voting power of its shareholding) that would adversely affect Liberty or
Mr. Diller; and

(vi) entering into any agreement with any holder of Equity Securities in such
stockholder’s capacity as such, which grants such stockholder approval rights
similar in type and magnitude to those set forth in this Section 2.03.

Section 2.04. Notice of Events. In the event that (a) the Company intends to
engage in a transaction of a type that is described in Section 2.03, and (b) the
Company does not intend to

 

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seek consent from Liberty and/or Mr. Diller, whichever (or both) are required to
consent to a Contingent Matter (a “Consenting Party”) due to the Company’s good
faith belief that the specific provisions of Section 2.03 do not require such
consent but that reasonable people acting in good faith could differ as to
whether consent is required pursuant to such Section, the Company shall notify
the Consenting Parties as to the material terms of the transaction (including
the Company’s estimate of the timing thereof) by written notice (including a
statement of the Total Debt Ratio) delivered as far in advance of engaging in
such transaction as is reasonably practicable unless such transaction was
previously publicly disclosed.

Section 2.05. Certain Hedging Transactions. Prior to entering into any Hedging
Transaction with respect to more than 4.9% of the outstanding Company Common
Shares (based on the number of Company Common Shares outstanding as reported in
the Company’s most recently filed report on Form 8-K, Form 10-Q or Form 10-K),
Liberty shall give notice to the chief financial officer of the Company
(including a brief description of the general structure of the Hedging
Transaction contemplated and the potential timing of such Hedging Transaction),
which notice must be received no less than one full business day (but not less
than 24 hours), but no more than ten business days, prior to the proposed date
of effectiveness of such Hedging Transaction. Upon receipt of such notice, the
Company will have the right, which must be exercised by notice to Liberty
delivered no more than 24 hours after receipt of such notice from Liberty, to
require Liberty to delay such Hedging Transaction if (i) the Company has
determined in good faith that such Hedging Transaction would adversely affect a
contemplated significant corporate transaction (including financing) of the
Company and (ii) all Insiders of the Company have been prohibited during such
delay period from buying or selling equity securities of the Company (other than
transactions between an Insider and the Company in accordance with the terms of
any Company equity security or any plan or agreement pursuant to which any such
security was granted or issued). The period during which Liberty will be
required to delay such Hedging Transaction will not exceed ten business days
after the proposed date (as specified in such notice) of effectiveness of such
Hedging Transaction, or, if sooner, the date the Company informs Insiders that
they may trade in equity securities of the Company.

Section 2.06. Notice of Sale of Company Class B Stock. Prior to effecting any
Transfer of Company Class B Stock other than to a member of such transferring
Stockholder’s Stockholder Group, the transferring Stockholder shall deliver
written notice to the Company, which shall deliver such notice to the Board of
Directors of the Company, which notice shall specify (i) the Person to whom the
transferring Stockholder proposes to make such Transfer and (ii) the number or
amount of the shares of Company Class B Stock to be Transferred.

ARTICLE III

PREEMPTIVE RIGHTS

Section 3.01. Liberty Preemptive Rights. (a) In the event that after the date
hereof, the Company issues or proposes to issue (other than to the Company and
its Affiliates or Liberty and its Affiliates, and other than pursuant to an
Excluded Issuance) any Company Common Shares (including Company Common Shares
issued upon exercise, conversion or exchange of options, warrants and
convertible securities (other than shares of Company Common Stock issued upon
conversion of shares of Company Class B Stock)) and such issuance, together with
any prior

 

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issuances aggregating less than 1% with respect to which Liberty’s preemptive
right has not become exercisable, shall be in excess of 1% of the total number
of Company Common Shares outstanding after giving effect to such issuance (an
“Additional Issuance”), the Company shall give written notice to Liberty not
later than five business days after the issuance, specifying the number of
Company Common Shares issued or to be issued and the Issue Price (if known) per
share. Liberty shall have the right (but not the obligation) to purchase or
cause one or more of the Liberty Holdcos to purchase for cash a number (but not
less than such number) of Company Common Shares (allocated between Company
Common Stock and Company Class B Stock in the same proportion as the issuance or
issuances giving rise to the preemptive right hereunder, except to the extent
that Liberty opts to receive Company Common Stock in lieu of Company Class B
Stock), so that Liberty and the Liberty Holdcos shall collectively maintain the
identical percentage equity Beneficial Ownership interest in the Company that
Liberty and the Liberty Holdcos collectively owned immediately prior to the
Additional Issuance requiring notice from the Company to Liberty described in
the first sentence of this paragraph (but not in excess of 20.01% of the
outstanding Total Equity Securities) after giving effect to such Additional
Issuance and to shares of Company Common Stock that are to be issued to Liberty
and the Liberty Holdcos pursuant to this Section 3.01, by sending an irrevocable
written notice to the Company not later than fifteen business days after receipt
of such notice of an Additional Issuance (or, if later, two business days
following the determination of the Issue Price) from the Company that it elects
to purchase or to cause one or more of the Liberty Holdcos to purchase all of
such Company Common Shares (the “Additional Shares”). The closing of the
purchase of Additional Shares shall be the later of ten business days after the
delivery of the notice of election by Liberty and five business days after
receipt of any necessary regulatory approvals.

(b) The purchase or redemption of any Company Common Shares by the Company or
any of its Affiliates shall not result in an increase in the percentage of
Company equity that Liberty may be entitled to acquire pursuant to the
preemptive right in Section 3.01(a) above.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.01. Representations and Warranties of the Company. The Company
represents and warrants to Mr. Diller and Liberty that: (a) the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby; (c) this Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, and, assuming this Agreement constitutes a valid and binding
obligation of each Stockholder, is enforceable against the Company in accordance
with its terms; (d) neither the execution, delivery or performance of this
Agreement by the Company constitutes a breach or violation of or conflicts with
the Company’s Certificate of Incorporation or By-laws or any material agreement
to which the

 

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Company is a party; (e) none of such material agreements would impair in any
material respect the ability of the Company to perform its obligations
hereunder; and (f)(i) the shares of Company Common Stock (or such other
securities of the Company into which such shares are then convertible) issuable
to Liberty in the exchange contemplated by Section 5.02(c) and the shares of
Company Class B Stock issuable to Mr. Diller pursuant to the Purchase/Exchange
Right, in each case, upon issuance will be duly authorized, validly issued,
fully paid and nonassessable and not subject to, or issued in violation of, any
purchase option, redemption, call option, right of first refusal, preemptive
right, subscription right or any similar right in any such case granted by, or
exercisable for the benefit of, the Company (other than any such restrictions or
rights under this Agreement, the Stockholders Agreement or applicable state and
federal securities laws) and (ii) in the case of the shares of Company Common
Stock issuable to Liberty in the exchange contemplated by Section 5.02(c), if
the Company Common Stock (or such securities of the Company into which such
shares are then convertible) is then listed on a national securities exchange,
the Company will use its reasonable best efforts to cause such shares of Company
Common Stock or such other securities to be approved for listing on such
national securities exchange upon issuance (subject only to official notice of
issuance).

Section 4.02. Representations and Warranties of the Stockholders. Each
Stockholder, severally as to itself (and, in the case of Mr. Diller, as
applicable), represents and warrants to the Company and the other Stockholder
that (a) it is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and he or it, as the
case may be, has the power and authority (corporate or otherwise) to enter into
this Agreement and to carry out his or its obligations hereunder, (b) the
execution and delivery of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of such Stockholder and
no other proceedings on the part of such Stockholder are necessary to authorize
this Agreement or any of the transactions contemplated hereby, (c) this
Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of such Stockholder, and, assuming
this Agreement constitutes a valid and binding obligation of the Company and the
other Stockholder, is enforceable against such Stockholder in accordance with
its terms, (d) neither the execution, delivery or performance of this Agreement
by such Stockholder constitutes a breach or violation of or conflicts with its
certificate of incorporation or by-laws (or similar governing documents) or any
material agreement to which such Stockholder is a party and (e) none of such
material agreements would impair in any material respect the ability of such
Stockholder to perform its obligations hereunder.

 

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ARTICLE V

DISTRIBUTION TRANSACTION AND BLOCK SALE

Section 5.01. Distribution Transaction.

(a) In the event Liberty desires to effect a Distribution Transaction in which
it will Transfer all of the Company Common Shares Beneficially Owned by it
(other than any Restricted Equity Securities) to a Qualified Distribution
Transferee (which Transfer, for the avoidance of doubt, will be deemed to occur
on the date such Qualified Distribution Transferee ceases to be a Subsidiary of
Liberty), the Company, Mr. Diller, Liberty and the Qualified Distribution
Transferee and, if applicable under the proviso to this Section 5.01(a), the
Liberty Spinco, will enter into an amendment to this Agreement on or prior to
the date of consummation of such Distribution Transaction to: (i) effective
immediately prior to such Distribution Transaction (but subject to the
consummation of the Distribution Transaction) assign all rights and obligations
of Liberty under this Agreement (including its rights pursuant to Articles II
and III and Section 7.08 hereof) to the Qualified Distribution Transferee,
(ii) have such Qualified Distribution Transferee agree to accept, as of
immediately prior to the effective time of such Distribution Transaction (but
subject to the consummation of the Distribution Transaction), such assignment of
rights and agree to assume and perform all liabilities and obligations of
Liberty hereunder to be performed following the effective time of such
Distribution Transaction, (iii) effective immediately prior to such Distribution
Transaction (but subject to the consummation of the Distribution Transaction)
substitute such Qualified Distribution Transferee for Liberty (and the
stockholder group of the Qualified Distribution Transferee for the Liberty
Stockholder Group) for all purposes under this Agreement and (iv) provide for
(w) a representation from Liberty that such amendment is being entered into in
connection with a Distribution Transaction involving the Qualified Distribution
Transferee pursuant to Section 5.01 of this Agreement, (x) Liberty’s
acknowledgement that it shall not be entitled to any benefits under this
Agreement following such Distribution Transaction, (y) each of the Company’s and
Mr. Diller’s acknowledgement that Liberty shall not be subject to any liability
under this Agreement to it or him, as applicable, following such Distribution
Transaction (except for any liability arising from any breach of this Agreement
by Liberty or relating to any actions or events occurring, in each case, on or
prior to the date of the Distribution Transaction) and (z) Liberty’s
acknowledgement that neither the Company nor Mr. Diller shall be subject to any
liability to Liberty under this Agreement following such Distribution
Transaction (except for any liability arising from any breach of this Agreement
by the Company or Mr. Diller, as applicable, or relating to any actions or
events occurring, in each case, on or prior to the date of the Distribution
Transaction); provided, that if the Qualified Distribution Transferee is not the
Liberty Spinco, then the Liberty Spinco shall also become a party to this
Agreement and in such case each reference in the foregoing clauses (i) through
(iv) to Qualified Distribution Transferee shall be to the Liberty Spinco and the
Qualified Distribution Transferee shall become a party to this Agreement as a
member of the Liberty Spinco’s stockholder group.

(b) The Company agrees that:

(i) it shall not adopt any stockholder rights plan or similar plan or agreement
(or amend or modify any such plan or agreement) or adopt or

 

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approve any charter or by-law provision, in each case, the purpose or reasonably
evident effect of which is to (x) restrict or limit Liberty’s ability to engage
in a Distribution Transaction with a Qualified Distribution Transferee or
(y) impose on the Qualified Distribution Transferee, or cause the Qualified
Distribution Transferee to incur or suffer, material economic detriment
(including through disproportionate dilution, relative to other holders of
Company Common Shares, or through a requirement to purchase or otherwise
acquire, or offer to acquire, additional equity securities of the Company in the
form of a mandatory offer requirement or similar provision) as a result of its
receipt or continued ownership of Company Common Shares or other equity
securities of the Company Transferred to it in a Distribution Transaction;
provided that, any adoption, approval, amendment or modification by the Company
of any stockholder rights plan (or similar plan or agreement) or charter or
by-law provision having anti-takeover provisions of general applicability, which
does not cause Liberty to incur or suffer material economic detriment as a
result of its ownership of Company Common Shares or other equity securities of
the Company upon such adoption, approval, amendment or modification (and,
assuming the Distribution Transaction occurred on such date, would not cause a
Qualified Distribution Transferee to incur or suffer such effects upon the
consummation of the Distribution Transaction), shall not be deemed to have any
purpose or effect specified in clause (y) above; and

(ii) as promptly as reasonably practicable following the written request of
Liberty and prior to the consummation of a Distribution Transaction involving a
Qualified Distribution Transferee, the Board of Directors will approve the
Transfer of Company Common Shares to the Qualified Distribution Transferee in
such Distribution Transaction for purposes of Section 203(a)(1) of the DGCL in
the event that the Qualified Distribution Transferee’s ownership of Company
Common Shares immediately following the Distribution Transaction would cause it
to become an “interested stockholder” for purposes of Section 203 of the DGCL.

Section 5.02. Block Sale; Purchase/Exchange Right.

(a) Liberty shall have the rights and obligations set forth in Section 5.02(b)
and Section 5.02(c) in respect of a Block Sale provided that the following
conditions are satisfied at the time of such proposed Block Sale:

(i) Mr. Diller still holds the Liberty Proxy;

(ii) Liberty does not Beneficially Own Equity Securities in excess of 30% of the
Total Equity Securities (excluding, for such purposes, any increase in Liberty’s
Beneficial Ownership resulting from any redemption, repurchase or reacquisition
of any Equity Securities by the Company);

(iii) if such proposed Block Sale would be consummated on or prior to the second
anniversary of December 20, 2011, the Company and

 

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TripAdvisor have consented in writing to such Block Sale (which consent will be
delivered by the Company and TripAdvisor if the Company and TripAdvisor acting
in good faith determine that either (x) any of the “Safe Harbors” set forth in
Treas. Reg. § 1.355-7(d) applies to such Block Sale or (y) there was no
“agreement, understanding, arrangement or substantial negotiations” with the
Block Sale Transferee regarding such Block Sale or any “similar acquisition” (as
such terms are defined in Treas. Reg. § 1.355-7(h)) during the two-year period
ending on December 20, 2011); and

(iv) Liberty has complied with its obligations under Sections 4.2, 4.3 and 4.4
of the Stockholders Agreement in connection with such proposed Block Sale.

(b) The Company agrees that as promptly as reasonably practicable following
receipt of a written request therefor from Liberty, in connection with any Block
Sale that complies with Section 5.02(a):

(i) to the extent necessary, it shall amend any stockholder rights plan or
similar plan or agreement (or take all steps necessary to amend any charter or
bylaw provision) then in effect (x) the purpose or reasonably evident effect of
which is to restrict or limit Liberty’s ability to engage in a Block Sale that
complies with Section 5.02(a) or (y) that would impose on the Block Sale
Transferee, or cause the Block Sale Transferee to incur or suffer, material
economic detriment (including through disproportionate dilution, relative to
other holders of Company Common Shares, of the Block Sale Transferee’s equity or
voting power or through a requirement to purchase or otherwise acquire, or offer
to acquire, additional equity securities of the Company in the form of a
mandatory offer requirement or similar provision) as a result of the Block Sale
Transferee’s and its Affiliates’ receipt or continued ownership of Company
Common Shares or other equity securities of the Company in the Block Sale, such
that the acquisition and continued ownership by the proposed Block Sale
Transferee of Company Common Shares or other equity securities of the Company in
such Block Sale or thereafter in an amount permitted by the Standstill Agreement
will not result in the imposition of any such restriction, limitation or
economic detriment or cost under any such plan or agreement (or charter or bylaw
provision having anti-takeover provisions); provided that such amendment shall
be conditioned upon the Block Sale Transferee entering into a Standstill
Agreement with the Company; and

(ii) prior to the Block Sale Transferee becoming an “interested stockholder” (as
such term is defined in Section 203(c)(5) of the DGCL) with respect to the
Company and subject to the execution by the Block Sale Transferee of a
Standstill Agreement with the Company and the accuracy of the representation
contained in Section 6.2(b) of the Standstill Agreement, the Board of Directors
shall approve (x) the Block Transferee as an “interested stockholder” within the
meaning of Section 203(c)(5) of the DGCL and (y) the receipt of Company Common
Shares by the Block Sale Transferee pursuant to the Block

 

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Sale for purposes of Section 203(a)(1) of the DGCL (but, for the avoidance of
doubt, the Board of Directors shall have no obligation to approve any such
transaction with respect to a Subsequent Transferee (as defined in the
Standstill Agreement)).

(c) In the event that Liberty is required to exchange Company Class B Stock for
newly issued shares of Company Common Stock or other securities pursuant to
Section 4.4(b)(ii) of the Stockholders Agreement, the Company hereby agrees that
it will exchange all remaining shares of Company Class B Stock not acquired by
Mr. Diller pursuant to Sections 4.3 or 4.4 of the Stockholders Agreement for the
number and type of shares of Company Common Stock (or such other securities of
the Company into which such shares of Company Class B Stock are then
convertible) Liberty would have received upon conversion of such shares of
Company Class B Stock and shall keep available in its treasury and not cancel
such shares of Company Class B Stock exchanged by Liberty until the termination
of the Purchase/Exchange Right as described below. After such exchange, or, in
the event the conditions to such exchange are not satisfied and Liberty is
instead required to convert its remaining shares of Company Class B Stock in
accordance with Section 4.4(b)(i) of the Stockholders Agreement (by reason of
the proviso to Section 4.4(b)(ii) of the Stockholders Agreement), then after
such conversion, Mr. Diller shall have the right (the “Purchase/Exchange
Right”), exercisable at any time and from time to time on or prior to the second
anniversary of the date of the Block Sale or the transaction giving rise to the
obligation of Liberty to exchange or convert its Company Class B Stock as
described above (subject to the provisos in Section 5.02(d)(i) and
Section 5.02(d)(ii)) (the “Purchase/Exchange Period”), either to:

(i) purchase from the Company a number of shares of Company Class B Stock up to
the number of shares of Company Class B Stock that Liberty exchanged for, or
converted into, Company Common Stock (or such lesser amount of Company Class B
Stock), at a price per share of Company Class B Stock equal to the Fair Market
Value of a share of Company Common Stock at the time of such purchase; or

(ii) exchange an equivalent number of shares of Company Common Stock for a
number of shares of Company Class B Stock, up to the number of shares of Company
Class B Stock that Liberty exchanged for, or converted into, Company Common
Stock (or such lesser amount of Company Class B Stock).

(d) The Purchase/Exchange Right may be exercised by Mr. Diller directly or
together with other third parties, provided that Mr. Diller retains voting
control over any such Company Class B Stock purchased or exchanged, and provided
further that during the Purchase/Exchange Period:

(i) the Purchase/Exchange Right will be suspended upon the entry by the Company
into an agreement providing for a Sale Transaction and will remain suspended for
so long as such agreement (or any successor agreement) has not been terminated;
and

 

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(ii) the Purchase/Exchange Right will terminate upon the consummation of a
tender or exchange offer for securities representing more than 50% of the total
voting power of all outstanding Voting Securities of the Company or consummation
of a Sale Transaction.

(e) 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 Purchase/Exchange
Right or as may be otherwise requested by Mr. Diller, adopt resolutions and
otherwise take all actions necessary to cause any acquisitions or deemed
acquisitions from the Company of Company Class B Stock transferred to Mr. Diller
pursuant to this Agreement and the Purchase/Exchange Right and any dispositions
or deemed dispositions to the Company of Company Common Stock pursuant to this
Agreement and the Purchase/Exchange Right to be exempt under Rule 16b-3 under
the Exchange Act.

(f) In connection with a Block Sale pursuant to the conditions of
Section 5.02(a) in which the Block Sale Transferee receives the right to
nominate candidates to the Board of Directors pursuant to the Standstill
Agreement: (i) Liberty shall, on or prior to consummation of the Block Sale,
cause the Liberty Directors to resign from the Board of Directors effective as
of the consummation of such Block Sale; and (ii) the Company shall use its best
efforts to cause such vacancy to be filled with the candidate(s) nominated by
the Block Sale Transferee (subject to the approval of such candidates by the
nominating committee or equivalent committee of the Board of Directors (or the
Board of Directors) as described in the Standstill Agreement).

(g) For the avoidance of doubt, none of the provisions of Section 5.02(a),
5.02(b), or 5.02(f) shall be applicable in the event Liberty Transfers all of
the Company Common Shares (or other equity securities of the Company)
Beneficially Owned by it (other than any Restricted Equity Securities) to a
Third-Party Transferee and such Third Party Transferee elects not to enter into
a Standstill Agreement or such Third Party Transferee’s Ownership Percentage
exceeds or, upon consummation of such Transfer would exceed, 30% of the Total
Equity Securities.

ARTICLE VI

DEFINITIONS

For purposes of this Agreement, the following terms shall have the following
meanings:

Section 6.01. “Affiliate” shall have the meaning set forth in Rule 12b-2 under
the Exchange Act (as in effect on the date of this Agreement). For purposes of
this definition, (i) natural persons shall not be deemed to be Affiliates of
each other, (ii) none of Mr. Diller, Liberty or any of their respective
Affiliates shall be deemed to be an Affiliate of the Company or its Affiliates,
(iii) none of the Company, Liberty or any of their respective Affiliates shall
be deemed to be an Affiliate of Mr. Diller or his Affiliates, (iv) none of the
Company, Mr. Diller or any of their respective Affiliates shall be deemed to be
an Affiliate of Liberty or its Affiliates, (v) the Company shall not be deemed
to be an Affiliate of TripAdvisor based upon the common control of the Company
and TripAdvisor by the Stockholders and (vi) the Company shall not be deemed to
be an Affiliate of IAC/InterActiveCorp to the extent such relationship would
otherwise be based on the common control of the Company and IAC/InterActiveCorp
by Mr. Diller.

 

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Section 6.02. “Beneficial Ownership” or “Beneficially Own” shall have the
meaning given such term in Rule 13d-3 under the Exchange Act and a Person’s
Beneficial Ownership of Company Common Shares shall be calculated in accordance
with the provisions of such Rule; provided, however, that for purposes of
Beneficial Ownership, (a) a Person shall be deemed to be the Beneficial Owner of
any Equity Securities which may be acquired by such Person (disregarding any
legal impediments to such Beneficial Ownership), whether within 60 days or
thereafter, upon the conversion, exchange or exercise of any warrants, options
(which options held by Mr. Diller shall be deemed to be exercisable), rights or
other securities issued by the Company or any Subsidiary thereof and (b) no
Person shall be deemed to Beneficially Own any Equity Securities solely as a
result of such Person’s execution of this Agreement (including by virtue of
holding a proxy with respect to any Equity Securities), or the Stockholders
Agreement, or with respect to which such Person does not have a pecuniary
interest.

Section 6.03. “Block Sale” shall mean a Transfer, in a single transaction (other
than a Transfer to a Qualified Distribution Transferee) of all of the Equity
Securities Beneficially Owned by Liberty (other than any Restricted Equity
Securities) at such time to a Person (other than Mr. Diller, a Permitted
Transferee, a Permitted Designee or the Company) not affiliated with Liberty
(i) whose Ownership Percentage upon, and giving effect to, such Transfer does
not exceed 30% of the Total Equity Securities and (ii) who enters into a
standstill agreement with the Company in the form attached as Exhibit A to this
Agreement (a “Standstill Agreement” and such Transferee, the “Block Sale
Transferee”).

Section 6.04. “Block Sale Transferee” shall have the meaning set forth in
Section 6.03.

Section 6.05. “business day” shall mean any day other than a Saturday, a Sunday
or any other day on which banks in New York, New York may, or are required to,
remain closed.

Section 6.06. “Chairman” shall mean the Chairman of the Board of Directors of
the Company or any successor entity.

Section 6.07. “Chairman Termination Date” shall mean the date that Mr. Diller no
longer serves as Chairman.

Section 6.08. “Commission” shall mean the Securities and Exchange Commission.

Section 6.09. “Company” shall have the meaning set forth in the Recitals to this
Agreement.

Section 6.10. “Company Class B Stock” shall mean class B common stock, $0.001
par value per share, of the Company.

Section 6.11. “Company Common Shares” shall mean shares of Company Common Stock
and Company Class B Stock.

 

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Section 6.12. “Company Common Stock” shall mean common stock, $0.001 par value
per share, of the Company.

Section 6.13. “Consenting Party” shall have the meaning set forth in
Section 2.04.

Section 6.14. “Demand Registration” shall have the meaning set forth in
Section 7.08(b).

Section 6.15. “DGCL” shall mean the General Corporation Law of the State of
Delaware.

Section 6.16. “Disabled” shall mean the disability of Mr. Diller after the
expiration of more than 180 consecutive days after its commencement which is
determined to be total and permanent by a physician selected by Liberty and
reasonably acceptable to Mr. Diller, his spouse or a personal representative
designated by Mr. Diller; provided that Mr. Diller shall be deemed to be
disabled only following the expiration of 90 days following receipt of a written
notice from the Company and such physician specifying that a disability has
occurred if within such 90-day period he fails to return to managing the
business affairs of the Company. Total disability shall mean mental or physical
incapacity that prevents Mr. Diller from managing the business affairs of the
Company.

Section 6.17. “Distribution Transaction” shall mean any transaction pursuant to
which the equity interests of a Subsidiary of Liberty which directly or
indirectly holds all Company Common Shares Beneficially Owned (other than any
Restricted Equity Securities) by Liberty at such time (a “Liberty Spinco”) are
distributed, directly or indirectly (whether by redemption, dividend, share
distribution, merger or otherwise) to all or substantially all of the holders of
one or more classes or series of the common stock of Liberty that are registered
under Section 12(b) or 12(g) of the Exchange Act (such holders of one or more
such classes or series, “Liberty Holders”), on a pro rata basis with respect to
each such class or series (other than with respect to the payment of cash in
lieu of fractional shares), or such equity interests of such Liberty Spinco are
available to be acquired by Liberty Holders (including through any rights
offering, exchange offer, exercise of subscription rights or other offer made
available to Liberty Holders), on a pro rata basis with respect to each such
class or series (other than with respect to the payment of cash in lieu of
fractional shares), whether voluntary or involuntary.

Section 6.18. “EBITDA” shall mean, for any period, for the Company and its
Subsidiaries (on a pro forma basis to the extent the applicable period includes
any period prior to the separation of TripAdvisor from the Company), on a
combined consolidated basis: net income plus (to the extent reflected in the
determination of net income) (i) provision for income taxes, (ii) minority
interest, (iii) interest income and expense, (iv) depreciation and amortization,
(v) amortization of cable distribution fees, and (vi) amortization of non-cash
distribution and marketing expense and non-cash compensation expense.

Section 6.19. “Effective Time” shall have the meaning set forth in Section 7.13.

Section 6.20. “Equity Securities” shall mean the equity securities of the
Company calculated on a Company Common Stock equivalent basis, including the
Company Common Shares and those shares issuable upon exercise, conversion or
redemption of other securities of the Company not otherwise included in this
definition.

 

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Section 6.21. “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

Section 6.22. “Excluded Issuance” shall mean any issuance of Company Common
Shares (i) in a Sale Transaction, or (ii) which is “restricted stock” or the
ownership of which is otherwise subject to forfeiture (“Restricted Stock”),
provided that for purposes of this definition and Section 3.01 of this Agreement
any stock covered by the provisions of clause (ii) shall be deemed to have been
issued for purposes of Section 3.01 of this Agreement on the date (the “Lapse
Date”) the restrictions on such stock lapse or on which the stock is no longer
subject to forfeiture.

Section 6.23. “Expedia” shall have the meaning set forth in the recitals to this
Agreement.

Section 6.24. “Fair Market Value” for a security publicly traded on a recognized
exchange shall be the average closing price of such security for the three
trading days ending on the applicable day (or, if such day is not a trading day,
the trading day immediately preceding the applicable day), and for all other
securities or property “Fair Market Value” shall be determined, by a nationally
recognized investment banking firm which has not been engaged by the Company or
Liberty or their respective Affiliates (including with respect to the Company,
(a) for so long as Mr. Diller is Senior Executive of TripAdvisor, TripAdvisor
and (b) for so long as Mr. Diller is Senior Executive of IAC/InterActiveCorp,
IAC/InterActiveCorp) for the prior three years, selected by (i) the Company and
(ii) Liberty; provided that, if the Company and Liberty cannot agree on such an
investment banking firm within 10 business days, such investment banking firm
shall be selected by a panel designated in accordance with the rules of the
American Arbitration Association. The fees, costs and expenses of the American
Arbitration Association and the investment banking firm so selected shall be
borne equally by the Company and Liberty.

Section 6.25. “Hedging Transaction” shall have the meaning ascribed to such term
in the Stockholders Agreement.

Section 6.26. “Insider” shall mean all directors of the Company and all officers
of the Company required to file a statement with respect to the Company pursuant
to Section 16(a) of the Exchange Act.

Section 6.27. “Issue Price” shall mean the price per share equal to (i) in
connection with an underwritten offering of Company Common Shares, the initial
price at which the stock is offered to the public or other investors, (ii) in
connection with other sales of Company Common Shares for cash, the cash price
paid for such stock, (iii) in connection with the deemed issuances of Restricted
Stock, the Fair Market Value of the stock on the Lapse Date (as defined in the
definition of “Excluded Issuance” above), (iv) in connection with the issuance
of Company Common Shares as consideration in an acquisition by the Company, the
average of the Fair Market Value of the stock for the five trading days ending
on the third trading day immediately

 

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preceding (a) the date upon which definitive agreements with respect to such
acquisition were entered into if the number of Company Common Shares issuable in
such transaction is fixed on that date, or (b) such later date on which the
consideration, or remaining portion thereof, issuable in such transaction
becomes fixed, (v) in connection with a compensatory issuance of shares of
Company Common Shares, the Fair Market Value of the Company Common Stock, and
(vi) in all other cases, including, without limitation, in connection with the
issuance of Company Common Shares pursuant to an option, warrant or convertible
security (other than in connection with issuances described in clause
(v) above), the Fair Market Value of the Company Common Shares on the date of
issuance.

Section 6.28. “Lapse Date” shall have the meaning set forth in Section 6.22.

Section 6.29. “Liberty” shall have the meaning set forth in the Recitals to this
Agreement.

Section 6.30. “Liberty Director” shall mean (a) any executive officer or
director of Liberty designated by Liberty to serve on the Company’s Board of
Directors, provided that the Company’s Board of Directors is not unable, in the
exercise of its fiduciary responsibilities, to recommend that the Company’s
stockholders elect such individual to serve on the Company’s Board of Directors,
or (b) any other Person designated by Liberty who is reasonably acceptable to
the Company.

Section 6.31. “Liberty Holdco” shall mean any holding company wholly owned by
Liberty and reasonably acceptable to the Company, formed solely for the purpose
of acquiring and holding an equity interest in the Company.

Section 6.32. “Liberty Holders” shall have the meaning set forth in
Section 6.17.

Section 6.33. “Liberty Proxy” shall have the meaning ascribed to such term in
the Stockholders Agreement.

Section 6.34. “Liberty Spinco” shall have the meaning set forth in Section 6.17.

Section 6.35. “Litigation” shall have the meaning set forth in Section 7.05.

Section 6.36. “Mr. Diller” shall have the meaning set forth in the Recitals to
this Agreement.

Section 6.37. “Ownership Percentage” means, with respect to any Stockholder, at
any time, the ratio, expressed as a percentage, of (i) the Equity Securities
Beneficially Owned by such Stockholder (disregarding any legal impediments to
such Beneficial Ownership) and its Affiliates to (ii) the sum of (x) the Total
Equity Securities and (y) with respect to such Stockholder, any Company Common
Shares included in clause (i) that are issuable upon conversion, exchange or
exercise of Equity Securities that are not included in clause (x).

Section 6.38. “Permitted Transferee” shall mean Liberty or Mr. Diller and the
members of their respective Stockholder Groups.

 

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Section 6.39. “Person” shall mean any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or department or agency of a government.

Section 6.40. “Qualified Distribution Transferee” shall mean any Person that
meets the following conditions: (i) at the time of any acquisition by it of
Beneficial Ownership of Equity Securities, it is a Subsidiary of Liberty,
(ii) thereafter, by reason of a Distribution Transaction, it ceases to be a
Subsidiary of Liberty, (iii) if the Distribution Transaction pursuant to which
such Person ceases to be a Subsidiary of Liberty occurs prior to the second
anniversary of the Effective Time, then, immediately prior to such Distribution
Transaction, such Person (or, if such Person is not the Liberty Spinco, the
Liberty Spinco) is a wholly owned Subsidiary of Liberty, and (iv) prior to such
Distribution Transaction (a) it and, if required by Section 5.01(a), the Liberty
Spinco, enters into the amendment contemplated by Section 5.01(a) hereof and
(b) it and, if required by Section 5.1 of the Stockholders Agreement, the
Liberty Spinco enters into the amendment contemplated by Section 5.1 thereof.

Section 6.41. “Restricted Equity Security” shall mean any option, warrant, right
or other security issued by the Company that by its terms is not transferable by
the holder of such option, warrant, right or other security at such time of
determination.

Section 6.42. “Restricted Stock” shall have the meaning set forth in
Section 6.22.

Section 6.43. “Sale Transaction” shall mean a merger, consolidation or
amalgamation between the Company and another entity (other than an Affiliate of
the Company) in which the Company is to be acquired by such other entity or a
Person who controls such entity, or a sale of all or substantially all of the
assets of the Company to another entity, other than an Affiliate of the Company.

Section 6.44. “Securities Act” shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.

Section 6.45. “Standstill Agreement” shall have the meaning set forth in
Section 6.03.

Section 6.46. “Stockholder Group” shall mean (a) in respect of Liberty, the
Liberty Stockholder Group (as defined in the Stockholders Agreement) and (b) in
respect of Mr. Diller, the Diller Stockholder Group (as defined in the
Stockholders Agreement).

Section 6.47. “Stockholders” shall mean Liberty and Mr. Diller.

Section 6.48. “Stockholders Agreement” shall mean the Amended and Restated
Stockholders Agreement dated as of the date hereof between Liberty and
Mr. Diller.

Section 6.49. “Subsidiary” shall mean, as to any Person, any corporation or
other Person at least a majority of the shares of stock or other ownership
interests of which having general voting power under ordinary circumstances to
elect a majority of the Board of Directors or similar governing body of such
corporation or other entity (irrespective of whether or not at the time stock of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency) is, at the time as of which the determination
is being made, owned by such Person, or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.

 

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Section 6.50. “Third-Party Transferee” shall have the meaning ascribed to such
term in the Stockholders Agreement.

Section 6.51. “Total Debt” shall mean all obligations of the Company and its
Subsidiaries for money borrowed, at such time (including all long-term senior
and subordinated indebtedness, all short-term indebtedness, the stated amount of
all letters of credit issued for the account of the Company or any of its
Subsidiaries and (without duplication) all unreimbursed draws thereunder (but
excluding trade letters of credit)), net of cash (other than working capital) or
cash equivalent securities, as shown on the consolidated quarterly or annual
financial statements, including the notes thereto, of the Company and its
Subsidiaries included in the Company’s filings under the Exchange Act for such
period, determined in accordance with GAAP, provided, however, that Total Debt
shall not include hedging, pledging, securitization or similar transactions
involving securities owned by the Company or its Subsidiaries to monetize the
underlying securities, to the extent such securities are the sole means of
satisfying such obligations and otherwise the fair value thereof.

Section 6.52. “Total Debt Ratio” shall mean, at any time, the ratio of (i) Total
Debt of the Company and its Subsidiaries on a combined consolidated basis as of
such time to (ii) EBITDA for the four fiscal quarter period ending as of the
last day of the most recently ended fiscal quarter as of such time.

Section 6.53. “Total Equity Securities” at any time shall mean, subject to the
next sentence, the total number of the Company’s outstanding equity securities
calculated on a Company Common Stock equivalent basis. Any Equity Securities
Beneficially Owned by a Person that are not outstanding Voting Securities but
that, upon exercise, conversion or exchange, would become Voting Securities,
shall be deemed to be outstanding for the purpose of computing Total Equity
Securities and the percentage of Equity Securities owned by such Person but
shall not be deemed to be outstanding for the purpose of computing Total Equity
Securities and the percentage of the Equity Securities owned by any other
Person.

Section 6.54. “Transfer” shall mean, 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 Company Common
Shares Beneficially Owned by such Stockholder or any interest in any Company
Common Shares Beneficially Owned by such Stockholder, provided, however, that, a
merger or consolidation in which a Stockholder is a constituent corporation
shall not be deemed to be the Transfer of any Company Common Shares Beneficially
Owned by such Stockholder (provided, that a significant purpose of any such
transaction is not to avoid the provisions of this Agreement). For purposes of
this Agreement, the conversion of Company Class B Stock into Company Common
Stock shall not be deemed to be a Transfer.

Section 6.55. “TripAdvisor” means TripAdvisor, Inc., a Delaware corporation.

 

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Section 6.56. “Voting Securities” shall mean at any particular time the shares
of any class of capital stock of the Company which are then entitled to vote
generally in the election of directors.

ARTICLE VII

MISCELLANEOUS

Section 7.01. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy) and shall be given, if
to Liberty, to:

Liberty Interactive Corporation

12300 Liberty Boulevard

Englewood, Colorado 80112

Attention: General Counsel

Facsimile: (720) 875-5401

with a copy to:

Baker Botts L.L.P.

30 Rockefeller Plaza

44th Floor

New York, New York 10112

Attention: Frederick H. McGrath

Facsimile: (212) 408-2501

if to Mr. Diller, to:

Barry Diller

Chairman

Expedia, Inc.

c/o IAC/InterActiveCorp

555 West 18th Street

New York, New York 10011

Attention: General Counsel

Facsimile: (212) 632-9551

with a copy to:

Expedia, Inc.

333 108th Avenue N.E.

Bellevue, Washington 98004

Attention: General Counsel

Facsimile: (425) 679-7240

 

 

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with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: Andrew J. Nussbaum

Facsimile: (212) 403-2000

if to the Company, to:

Expedia, Inc.

333 108th Avenue N.E.

Bellevue, Washington 98004

Attention: General Counsel

Facsimile: (425) 679-7240

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: Andrew J. Nussbaum

Facsimile: (212) 403-2000

or such address or facsimile number as such party may hereafter specify for the
purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered personally, telegraphed,
or telecopied, or, if mailed, five business days after the date of the mailing.

Section 7.02. Amendments; No Waivers. (a) Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the party whose rights or obligations
hereunder are affected by such amendment, or in the case of a waiver, by the
party or parties against whom the waiver is to be effective. Any amendment or
waiver by the Company shall be authorized by a majority of the Board of
Directors (excluding for this purpose any director who is a Liberty Director as
provided for in this Agreement), except as otherwise provided in Section 7.03.

(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 7.03. Company Consent Right to Waiver of Liberty Conversion Obligations
in Stockholders Agreement. Any waiver by Mr. Diller of Liberty’s obligation (or
the obligation of any member of Liberty’s Stockholder Group), pursuant to
Section 4.4(b) of the Stockholders Agreement, to convert or exchange shares of
Company Class B Stock into shares of Company Common Stock before Transferring
shares of Company Class B Stock to a third party (including as required in
connection with any Hedging Transaction) will be subject to the consent of the
Company (the Company’s right to so consent, the “Waiver Consent Right”), which
consent will

 

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be exercisable by the vote of (i) a majority of the members of the Board of
Directors who are “independent directors” as defined by applicable stock
exchange listing rules (which, for this purpose, shall exclude any director who
is a Liberty Director) or (ii) a majority of the members of a committee of the
Board of Directors composed solely of such independent directors (each of
(i) and (ii), a “Special Committee”). If, pursuant to Sections 6.2(a) or 6.2(b)
of the Stockholders Agreement (without giving effect to any amendment, waiver or
modification of the Stockholders Agreement following the execution thereof that
is not approved by a Special Committee), Mr. Diller has ceased to be entitled to
exercise his rights under the Stockholders Agreement, the Waiver Consent Right
will terminate and no such consent will thereafter be required in connection
with Liberty’s Transfer of shares of Company Class B Stock.

In the event the Stockholders Agreement is mutually terminated by Mr. Diller and
Liberty, then:

(a) if, at the time the Stockholders Agreement is mutually terminated,
Mr. Diller would, but for such mutual termination, have ceased to be entitled to
exercise his rights under the Stockholders Agreement pursuant to Sections 6.2(a)
or 6.2(b) thereof (without giving effect to any amendment, waiver or
modification of the Stockholders Agreement following the execution thereof that
is not approved by a Special Committee), the Waiver Consent Right will terminate
at the same time the Stockholders Agreement is mutually terminated; or

(b) if, at the time the Stockholders Agreement is mutually terminated,
Mr. Diller would have been entitled to exercise his rights under the
Stockholders Agreement (without giving effect to any amendment, waiver or
modification of the Stockholders Agreement following the execution thereof that
is not approved by a Special Committee) had such mutual termination not
occurred, then the Waiver Consent Right will continue until the earlier of:
(i) such time as Mr. Diller would have, pursuant to Sections 6.2(a) or 6.2(b) of
the Stockholders Agreement, ceased to be entitled to exercise his rights under
the Stockholders Agreement (without giving effect to any amendment, waiver or
modification of the Stockholders Agreement following the execution thereof that
is not approved by a Special Committee) had the Stockholders Agreement remained
in full force and effect and (ii) the one-year anniversary of the date the
Stockholders Agreement is mutually terminated.

Section 7.04. Successors And Assigns. Except as provided in Article I or as
provided for in Section 5.01(a), neither this Agreement nor any of the rights or
obligations under this Agreement shall be assigned, in whole or in part (except
by operation of law pursuant to a merger of Liberty with another Person a
significant purpose of which is not to avoid the provisions of this Agreement),
by any party without the prior written consent of the other parties hereto.
Subject to the foregoing, the provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

Section 7.05. Governing Law; Consent To Jurisdiction. This Agreement shall be
construed in accordance with and governed by the internal laws of the State of
Delaware, without giving effect to the principles of conflicts of laws. Each of
the parties hereto hereby irrevocably and unconditionally consents to submit to
the non-exclusive jurisdiction of the courts of the State of Delaware, for any
action, proceeding or investigation in any court or before any governmental
authority (“Litigation”) arising out of or relating to this Agreement and the
transactions

 

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contemplated hereby and further agrees that service of any process, summons,
notice or document by U.S. mail to its respective address set forth in this
Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the parties irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any and all rights to trial
by jury in connection with any Litigation arising out of or relating to this
Agreement or the transactions contemplated hereby.

Section 7.06. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

Section 7.07. Specific Performance. The Company, Mr. Diller and Liberty each
acknowledge and agree that the parties’ respective remedies at law for a breach
or threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of that fact, agree that, in the event of a
breach or threatened breach by Mr. Diller, the Company or Liberty of the
provisions of this Agreement, in addition to any remedies at law, Mr. Diller,
Liberty and the Company, respectively, without posting any bond shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.

Section 7.08. Registration Rights. (a) Liberty and Mr. Diller shall be entitled
to customary registration rights relating to Company Common Stock owned by them
as of the date hereof or acquired from the Company (including upon conversion of
Company Class B Stock) in the future (including the ability to transfer
registration rights as set forth in this Agreement in connection with the sale
or other disposition of Company Common Stock).

(b) If requested by a Stockholder, the Company shall be required promptly to
cause the Company Common Stock owned by such Stockholder or its Affiliates to be
registered under the Securities Act in order to permit such Stockholder or such
Affiliate to sell such shares in one or more (but not more than (i) in the case
of Liberty, four and (ii) in the case of Mr. Diller, three) registered public
offerings (each, a “Demand Registration”). Each Stockholder shall also be
entitled to customary piggyback registration rights. If the amount of shares
sought to be registered by a Stockholder and its Affiliates pursuant to any
Demand Registration is reduced by more than 25% pursuant to any underwriters’
cutback, then such Stockholder may elect to request the Company to withdraw such
registration, in which case, such registration shall not count as one of such
Stockholder’s Demand Registrations. If a Stockholder requests that any Demand
Registration be an underwritten offering, then such Stockholder shall select the
underwriter(s) to administer the offering, provided that such underwriter(s)
shall be reasonably satisfactory to the Company. If a Demand Registration is an
underwritten offering and the managing underwriter advises the Stockholder
initiating the Demand Registration in writing that in its opinion the total
number or dollar amount of securities proposed to be sold in such offering is
such as to materially and adversely affect the success of such offering, then
the Company will

 

- 22 -

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include in such registration, first, the securities of the initiating
Stockholder, and, thereafter, any securities to be sold for the account of
others who are participating in such registration (as determined on a fair and
equitable basis by the Company). In connection with any Demand Registration or
inclusion of a Stockholder’s or its Affiliate’s shares in a piggyback
registration, the Company, such Stockholder and/or its Affiliates shall enter
into an agreement containing terms (including representations, covenants and
indemnities by the Company and such Stockholder), and shall be subject to
limitations, conditions, and blackout periods, customary for a secondary
offering by a selling stockholder. The costs of the registration (other than
underwriting discounts, fees and commissions) shall be paid by the Company. The
Company shall not be required to register such shares if a Stockholder would be
permitted to sell the Company Common Stock in the quantities proposed to be sold
at such time in one transaction under Rule 144 of the Securities Act or under
another comparable exemption therefrom.

(c) If the Company and a Stockholder cannot agree as to what constitutes
customary terms within ten days of such Stockholder’s request for registration
(whether in a Demand Registration or a piggyback registration), then such
determination shall be made by a law firm of national reputation mutually
acceptable to the Company and such Stockholder.

Section 7.09. Termination. Except as otherwise provided in this Agreement, this
Agreement shall terminate (a) as to Liberty, at such time that Liberty
Beneficially Owns Equity Securities representing less than 5% of the Total
Equity Securities and (b) as to Mr. Diller, at such time that the Chairman
Termination Date has occurred or at such time as he becomes Disabled. In respect
of “Contingent Matters,” such provisions shall terminate as to Mr. Diller and
Liberty as set forth therein.

Section 7.10. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, provided that the parties hereto
shall negotiate in good faith to attempt to place the parties in the same
position as they would have been in had such provision not been held to be
invalid, void or unenforceable.

Section 7.11. Cooperation. Each of Liberty and Mr. Diller covenants and agrees
with the other to use its reasonable best efforts to cause the Company to
fulfill the Company’s obligations under this Agreement.

Section 7.12. Adjustment of Share Numbers and Prices. If, after the effective
time of this Agreement, there is a subdivision, split, stock dividend,
combination, reclassification or similar event with respect to any of the shares
of capital stock referred to in this Agreement, then, in any such event, the
numbers and types of shares of such capital stock referred to in this Agreement
and, if applicable, the prices of such shares, shall be adjusted to the number
and types of shares of such capital stock that a holder of such number of shares
of such capital stock would own or be entitled to receive as a result of such
event if such holder had held such number of shares immediately prior to the
record date for, or effectiveness of, such event, and the prices for such shares
shall be similarly adjusted.

 

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Section 7.13. Effective Time. This Agreement shall become effective as of the
date hereof, immediately following consummation of TripAdvisor’s spin-off from
the Company and transactions relating thereto (the “Effective Time”).

Section 7.14. Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement and the Stockholders Agreement embody the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way (including, without limitation,
effective upon the date hereof, all stockholders agreements relating to the
Company (other than the Stockholders Agreement) between Liberty and Mr. Diller).

Section 7.15. Interpretation. References in this Agreement to Articles and
Sections shall be deemed to be references to Articles and Sections of this
Agreement unless the context shall otherwise require. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of such agreement or instrument.

Section 7.16. Headings. The titles of Articles and Sections of this Agreement
are for convenience only and shall not be interpreted to limit or otherwise
affect the provisions of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Governance Agreement to be duly executed as of the day and year first above
written.

 

EXPEDIA, INC. By  

/s/ Mark D. Okerstrom

Name:   Mark D. Okerstrom Title:   Executive Vice President and Chief  
Financial Officer LIBERTY INTERACTIVE CORPORATION By  

/s/ John C. Malone

Name:   John C. Malone Title:   Chairman of the Board  

/s/ Barry Diller

  BARRY DILLER

[SIGNATURE PAGE TO AMENDED AND RESTATED EXPEDIA

GOVERNANCE AGREEMENT]

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EXHIBIT A

FORM OF STANDSTILL AGREEMENT

--------------------------------------------------------------------------------

FORM OF STANDSTILL AGREEMENT

This STANDSTILL AGREEMENT, dated as of [—] and effective as of the Effective
Date (as defined below) (this “Agreement”), is entered into by and among the
Persons set forth on Annex A hereto (collectively, the “Block Sale Transferee”)
and Expedia, Inc., a Delaware corporation (the “Company,” which term shall, for
purposes of this Agreement, include its direct and indirect subsidiaries) (each,
a “Party” and collectively, the “Parties”).

W I T N E S S E T H:

WHEREAS, the Company is a party to a governance agreement dated as of
December 20, 2011 (the “Governance Agreement”), among the Company, Liberty
Interactive Corporation (“Liberty”), for itself and on behalf of the members of
its Stockholder Group and Mr. Barry Diller (“Mr. Diller”), for himself and on
behalf of the members of his Stockholder Group;

WHEREAS, the Governance Agreement requires that, prior to the consummation of a
Transfer qualifying as a Block Sale, the Block Sale Transferee shall have
executed a standstill agreement with the Company;

WHEREAS, pursuant to Section 5.02(b)(ii) of the Governance Agreement, the
Company has agreed that, prior to the Block Sale Transferee becoming an
“interested stockholder” (as such term is defined in Section 203(c)(5) of the
DGCL) with respect to the Company, the Board of Directors of the Company will
approve (x) the Block Sale Transferee as an “interested stockholder” within the
meaning of Section 203(c)(5) of the DGCL and (y) the receipt of Company Common
Shares by the Block Sale Transferee pursuant to the Block Sale for purposes of
Section 203(a)(1) of the DGCL, with the condition that the Block Sale Transferee
execute this Agreement;

WHEREAS, this Agreement shall be effective as of the date of consummation of the
Block Sale (the “Effective Date”); and

WHEREAS, capitalized terms used and not otherwise defined herein shall have the
meaning ascribed to such terms in the Governance Agreement.

NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Agreement and other consideration, the adequacy
of which is hereby acknowledged, and intending to be legally bound hereby, the
Parties hereby agree as follows:

 

1. Definitions.

1.1 The term “Actual Ownership” (and the related term “Actually Own”) shall mean
as of any date of determination, an amount equal to the sum of (a) the number of
Company Common Shares (or other Voting Securities) issued and outstanding and
actually owned by Mr. Diller and his Affiliates as of such date (excluding
shares of Company Common Stock that Mr. Diller and his Affiliates could exchange
pursuant to clause (c)), plus (b) the number of shares of Company Class B Stock
owned by any third party that has acquired shares of Company Class B Stock
pursuant to the exercise of the Purchase/Exchange Right in accordance with
Section 5.02(d)

--------------------------------------------------------------------------------

of the Governance Agreement, plus (c) the number of shares of Company Class B
Stock Mr. Diller and his Affiliates would actually own if Mr. Diller exercised
(directly or with an Affiliate) the Purchase/Exchange Right pursuant to
Section 5.02(c)(ii) of the Governance Agreement utilizing the shares of Company
Common Stock issued and outstanding and actually owned by Mr. Diller and his
Affiliates as of such date; provided, that, notwithstanding anything to the
contrary in this Section 1.1, for the avoidance of doubt, Actual Ownership shall
not include Company Common Shares (or other equity securities of the Company)
which are deemed Beneficially Owned by Mr. Diller solely by virtue of voting
power granted to Mr. Diller pursuant to a proxy granted by Liberty.

1.2 The term “business day” means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in the
City of New York.

1.3 The term “DGCL” means the General Corporation Law of the State of Delaware,
as amended.

1.4 The term “group” shall have the meaning given to that term (or as that term
is used) in Section 13(d)(3) of the Exchange Act.

1.5 The term “proxy” shall have the meaning ascribed to such term in Rule 14a-1
promulgated under the Exchange Act.

1.6 The term “Rights Offering” means the issuance by the Company to holders of
Company Common Stock (or other equity securities of the Company) of rights to
buy, within a fixed time period, a proportional number of newly issued shares of
Company Common Stock (or other equity securities of the Company).

1.7 The term “SEC” means the Securities and Exchange Commission.

1.8 The term “solicitation” shall have the meaning ascribed to such term in
Rule 14a-1 promulgated under the Exchange Act.

 

2. Share Ownership.

2.1 Limitation on Share Ownership. From the Effective Date until the third
anniversary of the Effective Date (the “Standstill Period”), the Block Sale
Transferee and its Affiliates shall not acquire Beneficial Ownership of any
Equity Securities that would cause the Block Sale Transferee, its Affiliates or
any group of which any of them are a part to Beneficially Own in the aggregate
more than thirty percent (30%) of the Total Equity Securities (subject to
adjustment pursuant to this Section 2.1, the “Ownership Limitation”); provided,
however, that the Block Sale Transferee shall not be in breach of the Ownership
Limitation to the extent that its Beneficial Ownership of Equity Securities
exceeds the Ownership Limitation as a result of (x) a reduction in the number of
Total Equity Securities (whether due to a redemption, share buyback, reverse
stock split or similar transaction effected by the Company or any of its
Subsidiaries), (y) a distribution that was made by the Company pursuant to a
Rights Offering or a distribution that was made generally to holders of Company
Common Shares (or other equity securities of the Company) as a result of their
ownership of Company Common Shares (or other equity securities of the Company)
including, without limitation, pursuant to a shareholder rights plan or similar

 

2

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plan or agreement, or (z) the acquisition by the Block Sale Transferee or its
Affiliates of any Company Common Shares (or other equity securities of the
Company) as a result of the exercise (or exchange) of any rights (1) distributed
to the Block Sale Transferee or its Affiliates by the Company pursuant to clause
(y) above and (2) acquired, directly or indirectly, by the Block Sale Transferee
or its Affiliates from third parties (“Third Party Rights”), subject, as to the
exercise (or exchange) of the Third Party Rights, to the following limitations:
(A) in the event that the Company or any of its Subsidiaries enters into an
agreement with a standby purchaser or underwriter (a “Standby Purchaser”)
pursuant to which such Standby Purchaser will purchase and exercise rights or
otherwise purchase Company Common Shares (or other equity securities) that would
have been issuable upon the exercise of rights which expire unexercised upon the
expiration of such offering or distribution (such offering or distribution, an
“Underwritten Offering”), then the Block Sale Transferee and its Affiliates will
only be permitted to exercise such Third Party Rights to the extent that,
assuming the Standby Purchaser exercised rights or acquired shares in accordance
with its obligations under such agreement with the Company, such exercise would
not result in the Block Sale Transferee and its Affiliates exceeding the
Ownership Limitation in effect immediately prior to the commencement of such
Rights Offering or other distribution and (B) in the event such offering or
distribution is not an Underwritten Offering, or in the event of a separation or
distribution of rights pursuant to a shareholder rights plan or similar plan or
agreement, the Block Sale Transferee and its Affiliates will not be entitled to
exercise (or exchange) Third Party Rights to the extent that after giving effect
to the exercise (or exchange) of all rights distributed to the Block Sale
Transferee and its Affiliates by the Company, such exercise (or exchange) of
Third Party Rights would result in the Block Sale Transferee and its Affiliates
having Beneficial Ownership of Equity Securities, determined immediately
following the closing of such offering or distribution or (in the case of a
shareholder rights plan or similar plan or agreement) at such time as all of the
Company’s stockholders electing to exercise rights (excluding any “acquiring
person”) have exercised such rights or, if applicable, the Company has exchanged
the rights held by all of the Company’s stockholders (other than by the
“acquiring person”), in an amount that exceeds the Ownership Limitation in
effect immediately prior to the commencement of such offering, distribution or
separation, as applicable. In the event that the Block Sale Transferee’s
Beneficial Ownership of Equity Securities exceeds the Ownership Limitation as a
result of actions referred to in clauses (x) or (z) of this Section 2.1 (or any
combination thereof and the Block Sale Transferee is otherwise in compliance
with the provisions of this Section 2.1), then the Ownership Limitation shall be
deemed increased to that percentage which is equal to the Block Sale
Transferee’s Beneficial Ownership of Total Equity Securities immediately
following (i) for purposes of clause (x), the event that caused such increase
and (ii) for purposes of clause (z), the closing of such Rights Offering or
distribution or (in the case of a shareholder rights plan or similar plan or
agreement) at such time as all of the Company’s stockholders electing to
exercise rights (excluding any “acquiring person”) have exercised such rights
or, if applicable, the Company has exchanged the rights held by all of the
Company’s stockholders (other than by the “acquiring person”), and thereafter
the Block Sale Transferee and its Affiliates shall not acquire any Company
Common Shares (or other equity securities of the Company) that would result in
it exceeding such adjusted Ownership Limitation except as otherwise permitted by
this Section 2.1. The Block Sale Transferee acknowledges and agrees that nothing
in this Section 2.1 is intended to limit or restrict the operation of any
shareholder rights plan or similar plan or agreement adopted by the Company.

 

3

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2.2 Share Ownership Notice. Within 5 business days after the end of each
calendar quarter during the Standstill Period, commencing with the quarter
ending [—], the Block Sale Transferee shall provide written notice to the
Company of the number of Equity Securities Beneficially Owned by the Block Sale
Transferee at the end of such quarter. Upon a written request by the Block Sale
Transferee to the Company, the Company shall provide within 10 business days of
the receipt of such written request a written notice to the Block Sale
Transferee of the number of Equity Securities Beneficially Owned and Actually
Owned by Mr. Diller as of such date, and the Block Sale Transferee agrees to
hold the information contained in such notice in confidence (except in the event
that the Block Sale Transferee is required by law, regulation, legal process,
regulatory authority (including, without limitation, any stock exchange) or
other applicable judicial or governmental order to disclose the information
contained in such notice or to the extent necessary to exercise or enforce any
of its rights under this Agreement).

 

3. Standstill and Related Provisions.

3.1 Standstill Provisions. During the Standstill Period, unless expressly
authorized in writing to do so by a majority of the members of the Board of
Directors, acting through a committee of directors that qualify as “independent
directors” as defined by applicable stock exchange listing rules [(which term,
for this purpose, will exclude any directors nominated by the Block Sale
Transferee)]1, the Block Sale Transferee shall not, and shall cause its
Affiliates not to, directly or indirectly, acting alone or as part of a group:

 

  (a)

make, or in any way participate in any solicitation of any proxy [(but without
regard to the exclusion set forth in Rule 14a-1(l)(2)(iv) under the Exchange Act
from the definition of “solicitation”)]2 to vote any Company Common Shares (or
other equity securities of the Company) with respect to any matter (including,
without limitation, any contested solicitation for the election of directors
with respect to the Company), other than solicitations or acting as a
participant in support of all of the Company’s nominees [including, without
limitation, the nominees of the Block Sale Transferee pursuant to Article 5]3;

 

  (b) form, join in or in any way participate in a group (for the avoidance of
doubt, the Block Sale Transferee shall not be deemed to have formed, joined in
or in any way participated in a group with the Company as a result of the Block
Sale Transferee’s execution of this Agreement) with respect to the Company
Common Shares (or other equity securities of the Company) or deposit any Company
Common Shares (or other equity securities of the Company) in a voting trust or
similar arrangement or subject any Company Common Shares (or other equity
securities of the Company) to any voting agreement or similar arrangement, or
grant any proxy with respect to any Company Common Shares (or other equity
securities of the Company) (other than to a designated representative of the

 

 

1 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

2 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

3 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

 

4

--------------------------------------------------------------------------------

  Company pursuant to a proxy statement of the Company), other than as
contemplated by the Governance Agreement or the Stockholders Agreement or the
transactions contemplated thereby;

 

  (c)

seek to call, or to request the calling of, or call a special meeting of the
stockholders of the Company, or seek to make, or make, a stockholder proposal
(whether pursuant to Rule 14a-8 under the Exchange Act or otherwise) at any
meeting of the stockholders of the Company, or make a request for a list of the
Company’s stockholders, or[, other than pursuant to the Block Sale Transferee’s
nomination rights in accordance with Article 5 of this Agreement,]4 seek
election of a representative to the Board of Directors, seek to place a
representative on the Board of Directors or seek the removal of any director
from the Board of Directors, or otherwise acting alone, or by participating in a
group, seek to control or influence the governance or policies of the Company;

 

  (d) effect or seek to effect (including, without limitation, by entering into
any discussions, negotiations, agreements or understandings whether or not
legally enforceable with any third Person), offer or propose (whether publicly
or otherwise) to effect, or cause or participate in, or in any way assist or
facilitate any other Person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in any acquisition of any
Company Common Shares (or other equity securities of the Company) (or Beneficial
Ownership thereof) in excess of the Ownership Limitation, except in accordance
with Section 2.1; provided, that, for the avoidance of doubt, the Block Sale
Transferee is permitted to Transfer to an unaffiliated third party any Company
Common Shares (or other equity securities of the Company) Beneficially Owned by
the Block Sale Transferee, subject to the provisions of Article 8 hereof, if
applicable;

 

  (e) effect or seek to effect (including, without limitation, by entering into
any discussions, negotiations, agreements or understandings whether or not
legally enforceable with any third Person), offer or propose (whether publicly
or otherwise) to effect, or cause or participate in, or in any way assist or
facilitate any other Person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in (i) any tender offer or
exchange offer, merger, acquisition, share exchange or other business
combination involving the Company or any of its Subsidiaries, (ii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any of its Subsidiaries or any
material portion of its or their businesses, or (iii) any acquisition of any
material assets or businesses of the Company or any of its Subsidiaries;

 

  (f) publicly disclose, or cause or, in a material manner, facilitate the
public disclosure (including without limitation through the filing by it of any
document or report with the SEC or any other governmental agency or any
disclosure to any

 

 

4 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

 

5

--------------------------------------------------------------------------------

  journalist, member of the media or securities analyst) of any intent, purpose,
plan or proposal to obtain any waiver, or consent under, or any amendment of,
any of the provisions of Section 2.1, this Section 3.1, or Article 4 (except as
described in Section 4.1) or bring any action to (i) contest the validity of
Section 2.1, this Section 3.1 or Article 4, or (ii) seek a release from the
restrictions contained in Section 2.1, this Section 3.1 or Article 4;

 

  (g) unless required by law, make or issue or cause to be made or issued any
public disclosure, announcement or statement (including without limitation the
filing of any document or report with the SEC or any other governmental agency
or any disclosure to any journalist, member of the media or securities analyst)
(i) in support of any solicitation described in paragraph (a) above (other than
solicitations by the Company), (ii) in support of any matter described in
paragraph (c) above, (iii) concerning any potential matter described in
paragraph (d) above; (iv) concerning any potential matter described in paragraph
(e) above; or (v) negatively commenting upon the Company’s corporate strategy,
business, corporate activities, board of directors or management (for the
avoidance of doubt, making any factual statement about the Company’s corporate
strategy, business, corporate activities, board of directors or management shall
not be prohibited by this Section 3.1(g)(v)); or

 

  (h) enter into any discussions, negotiations, agreements or understandings
with any Person with respect to any of the foregoing or advise, assist or seek
to persuade others to take any action with respect to any of the foregoing.

Notwithstanding the foregoing, (a) [the restrictions in Sections 3.1(d), 3.1(e),
3.1(f), 3.1(g)(iii), 3.1(g)(iv), 3.1(g)(v) and 3.1(h) (to the extent it relates
to any of the foregoing) shall not apply at any time that (i) the Company fails
to comply in all material respects with its obligations under Article 5 hereof,
which failure continues unremedied for a period of 10 business days following
receipt by the Company of a written notice from the Block Sale Transferee of
such failure or (ii) the Block Sale Transferee has relinquished its nomination
rights pursuant to Article 5 and all Block Sale Transferee nominated directors
have resigned; or (b)]5 in the event that (x) the Board of Directors determines
that the Company should engage in any transaction described in Section 3.1(e)(i)
or 3.1(e)(ii), the Block Sale Transferee shall be permitted to participate in
such Board of Directors’ approved transaction as a shareholder on the same terms
and conditions as any other shareholder of the Company, (y) the Board of
Directors determines that the Company should solicit from one or more Persons or
enter into discussions with one or more Persons regarding, or invites any other
Person or group to make a proposal (without similarly inviting the Block Sale
Transferee to make a similar proposal) with respect to an acquisition of (i) all
or substantially all of the equity securities or assets of the Company or any of
its Subsidiaries (by merger, tender offer or otherwise) or (ii) any material
assets or businesses of the Company or any of its Subsidiaries, the Block Sale
Transferee shall have the right to make a non-public competing proposal to the
Board of Directors in compliance with any written procedures generally
applicable to Persons making proposals provided by the Company

 

 

5 

Note to form: enumerated restrictions to be removed if the Block Sale Transferee
does not accept the board nomination rights.

 

6

--------------------------------------------------------------------------------

or the Board of Directors or (z) any third party that is not an Affiliate of the
Block Sale Transferee makes a bona fide offer or proposal, with respect to a
matter described in Section 3.1(d) or 3.1(e) above (a “Third Party Proposal”),
the Block Sale Transferee (A) shall have the right to make a non-public
competing proposal to the Board of Directors and may publicly announce that it
has made a competing proposal to the Board of Directors so long as such public
announcement does not constitute an offer or a solicitation to any recipient
thereof and (B) may tender, exchange or otherwise sell or transfer its Company
Common Shares (or other equity securities of the Company) to such third party in
accordance with the Third Party Proposal; provided, however, that in the case of
clauses (y) and (z), the Block Sale Transferee shall be prohibited from
participating with, joining in a group with or providing financing to any such
third party).

[For the avoidance of doubt, any discussions involving the directors nominated
by the Block Sale Transferee pursuant to Article 5 hereof (i) at a meeting of
the Board of Directors or (ii) with management of the Company, other members of
the Board of Directors or any of the Company’s advisors or representatives, in
the case of clauses (i) and (ii), while acting in such directors’ capacity as
members of the Board of Directors, shall not be deemed to violate any of the
provisions of this Article 3.]6

 

4. Restriction on Business Combinations

4.1 If, at the Effective Date and after taking into consideration the effect of
the Block Sale, the Block Sale Transferee would be an “interested stockholder”
for purposes of Section 203(c)(5) of the DGCL, then during the Standstill Period
any “business combination” (as such term is defined in Section 203(c)(3) of the
DGCL) between the Company and the Block Sale Transferee or any of its Affiliates
will require approval by the Board of Directors, acting through a committee of
directors that qualify as “independent directors” as defined by applicable stock
exchange listing rules [(which term will, for this purpose, exclude any
directors nominated by the Block Sale Transferee)]7; provided, that the
execution and delivery by the Company or any of its Subsidiaries of any contract
or agreement with respect to a proposed “business combination” of the type
described in Section 203(c)(3)(v) of the DGCL to which the Block Sale Transferee
or its “affiliates” (as such term is defined in Section 203(c)(1) of the DGCL)
is a party shall constitute conclusive evidence of such approval only with
respect to such contract or agreement (and the performance thereof) to the Block
Sale Transferee; and provided, further, that the entrance into such contract
shall constitute a waiver of the restrictions in Section 3.1(f) with respect to
such contract or agreement.

 

5. [Board Representation

5.1 The Block Sale Transferee shall have the right to nominate up to such number
of directors to the Board of Directors as is equal to 20% of the total number of
directors on the Board of Directors (rounded up to the next whole number if the
total number of directors on the Board of Directors is not an even multiple of
5) so long as the Block Sale Transferee

 

 

6 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

7 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

 

7

--------------------------------------------------------------------------------

Beneficially Owns at least 16,825,982 Equity Securities (so long as the
Ownership Percentage of the Block Sale Transferee is at least equal to 15% of
the Total Equity Securities), provided that all Liberty Directors have resigned
from the Board of Directors. The Block Sale Transferee shall have the right to
nominate one director to the Board of Directors so long as the Block Sale
Transferee Beneficially Owns at least 11,217,321 Equity Securities (so long as
the Block Sale Transferee’s Ownership Percentage is at least equal to 5% of the
Total Equity Securities), provided that all Liberty Directors have resigned from
the Board of Directors.

5.2 Each director nominee proposed by the Block Sale Transferee must qualify as
an “independent director” as defined by applicable stock exchange listing rules.
The director nominees proposed by the Block Sale Transferee must be approved by
the nominating committee of the Board of Directors (which committee shall be
comprised solely of “independent directors” as defined by applicable stock
exchange listing rules (which term, for this purpose, will exclude any directors
nominated by the Block Sale Transferee)) (or by an equivalent committee of the
Board of Directors or, if no such committee exists, by a committee of
“independent directors” as defined by applicable stock exchange listing rules
(which term, for this purpose, will exclude any directors nominated by the Block
Sale Transferee)), and, if such approval is not granted to one or more of the
Block Sale Transferee’s proposed nominees, the Block Sale Transferee shall have
the right to propose additional nominees until approval has been granted to that
number of nominees equal to the number of directors the Block Sale Transferee is
entitled to nominate pursuant to Section 5.1.

5.3 Subject to the approval of the Block Sale Transferee’s nominees as described
in Section 5.2 and provided that the Block Sale Transferee has provided (or
caused to be provided) the Company with all information reasonably requested by
the Company relating to its nominees to the extent required under applicable law
to be included in any proxy statement of the Company and in any other
solicitation materials to be delivered to stockholders of the Company in
connection with a stockholders meeting, the Company shall cause each director
nominee of the Block Sale Transferee that has received such approval to be
included in the slate of nominees recommended by the Board of Directors to the
Company’s stockholders for election as directors at each annual meeting of the
stockholders of the Company and shall use all reasonable efforts to cause the
election of each director nominee of the Block Sale Transferee that has received
such approval, including soliciting proxies in favor of the election of such
persons.

5.4 In the event that a vacancy is created at any time by the death, disability,
retirement, resignation or removal (with or without Cause) of any Director
nominated by the Block Sale Transferee pursuant to Section 5.1, or by any
increase in the number of directors constituting the entire Board (such that the
Block Sale Transferee, pursuant to Section 5.1, is entitled to additional
representation on such Board to maintain its right to nominate directors
constituting 20% (rounded up) of the total number of directors on the Board),
the Block Sale Transferee shall, subject to Section 5.2, have the right to
designate a replacement or additional Director to fill such vacancy, and the
Company shall use all reasonable efforts to cause such vacancy to be filled with
the replacement or additional Director so designated.

5.5 The Company shall use its best efforts to cause the candidate(s) nominated
by the Block Sale Transferee (subject Section 5.2 hereof and Section 5.02(f) of
the Governance Agreement) to be appointed to the Board of Directors at the next
regularly scheduled meeting of the Board of Directors immediately following the
Effective Date.]8

 

 

8 

Note to form: to be included if Block Sale Transferee accepts the board
nomination rights.

 

8

--------------------------------------------------------------------------------

6. Representations and Warranties.9

6.1 Authority; Binding Agreement of Company; Anti-takeover. The Company
represents that (a) this Agreement and the performance by the Company of its
obligations hereunder (i) has been duly authorized, executed and delivered by
it, and is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, (ii) does not require the approval of
the stockholders of the Company, and (iii) does not violate any material law,
any order of any court or other agency of government, the charter or other
organizational document of the Company, or any stock exchange rule or
regulation, (b) prior to the Block Sale Transferee becoming an “interested
stockholder” (as such term is defined in Section 203(c)(5) of the DGCL) with
respect to the Company and subject to the execution by the Block Sale Transferee
of this Agreement and the accuracy of the representation contained in
Section 6.2(b), the Board of Directors has approved (x) the Block Sale
Transferee as an “interested stockholder” within the meaning of
Section 203(c)(5) of the DGCL and (y) the receipt of Company Common Shares by
the Block Sale Transferee pursuant to the Block Sale for purposes of
Section 203(a)(1) of the DGCL and (c) the Company has amended any stockholder
rights plan or similar plan or agreement (or taken all steps necessary to amend
any charter or bylaw provision) then in effect that would impose on the Block
Sale Transferee, or cause the Block Sale Transferee to incur or suffer, material
economic detriment (including through disproportionate dilution, relative to
other holders of Company Common Shares, of the Block Sale Transferee’s equity or
voting power or through a requirement to purchase or otherwise acquire, or offer
to acquire, additional equity securities of the Company in the form of a
mandatory offer requirement or similar provision) as a result of the Block Sale
Transferee’s and its Affiliates’ receipt or continued ownership of Company
Common Shares or other equity securities of the Company in the Block Sale, such
that the acquisition and continued ownership by the proposed Block Sale
Transferee of Company Common Shares or other equity securities of the Company in
such Block Sale or thereafter in an amount permitted by this Agreement will not
result in the imposition of any such restriction, limitation or economic
detriment or cost under any such plan or agreement (or charter or bylaw
provision having anti-takeover provisions).

6.2 Authority; Binding Agreement of Block Sale Transferee; Ownership of Shares.
Each of the parties listed on Annex A hereto, severally as to itself, represents
and warrants that (a) this Agreement and the performance by such Person of its
obligations hereunder (i) has been duly authorized, executed and delivered by
such Person, and is a valid and binding obligation of such Person, enforceable
against such Person in accordance with its terms, (ii) does not require approval
by any owners or holders of any equity interest in such Person (except as has
already been obtained), and (iii) does not violate any material law, any order
of any court or other agency of government, the charter or other organizational
documents of such Person, as amended, or constitute a breach or violation of or
conflict with any material agreement to which such Person

 

 

9 

Nothing contained in Article 6 shall constitute consent by the committee of
directors that qualify as “independent directors” as defined by applicable stock
exchange listing rules (which term, for this purpose, will exclude any directors
nominated by the Block Sale Transferee) to any waiver of any obligation to
convert Company Class B Stock into shares of Company Common Stock.

 

9

--------------------------------------------------------------------------------

is bound and none of such material agreements would impair in any material
respect the ability of such Person to perform its obligations hereunder,
(b) prior to the approval described in Section 6.1(b) above, the Block Sale
Transferee was not an “interested stockholder” within the meaning of
Section 203(c)(5) of the DGCL with respect to the Company and (c) as of the date
hereof, after taking into account the Company Common Shares to be acquired by
the Block Sale Transferee in the Block Sale and based upon the number of Company
Common Shares outstanding as set forth in the Company’s latest Report on Form
10-K or Form 10-Q, as applicable, the Block Sale Transferee does not
Beneficially Own Company Common Shares in excess of the Ownership Limitation.

6.3 Interests in Company Common Shares. Each of the parties listed on Annex A
hereto, severally as to itself, represents and warrants that, as of the
Effective Date, it is or will be, as applicable, the Beneficial Owner of the
number and type of Company Common Shares (or other equity securities of the
Company) set forth (including, without limitation, as to the form of ownership)
on Annex B hereto.

6.4 Compliance with Laws. Each of the parties listed on Annex A hereto,
severally as to itself, represents and warrants that (a) it is aware, and that
it has advised and will advise its Affiliates, that federal and state securities
laws prohibit any Person who has material, non-public information about a
company from purchasing or selling securities of such a company or from
communicating such information to any other Person under circumstances in which
it is reasonably foreseeable that the Person is likely to purchase or sell those
securities, and (b) it will, and will cause its Affiliates to, comply with
federal and state securities laws in connection with any purchase of the
Company’s securities contemplated by this Agreement.

 

7. Termination.

7.1 Termination. This Agreement will terminate and cease to be of any further
force or effect, except with respect to Article 9 of this Agreement (with
respect to actions, events or causes of action arising prior to, or in
connection with, such termination), upon the earlier to occur of (i) the
expiration of the Standstill Period or (ii) such time as (A) all or
substantially all of the assets or equity securities of the Company have been
acquired (whether by merger, tender offer or otherwise) by a third party and
(B) the Block Sale Transferee or any of its Affiliates ceases to own any Company
Common Shares (or other equity securities of the Company); provided that the
provisions of Article 2 and Article 3 of this Agreement shall terminate and be
of no further force and effect prior to the end of the Standstill Period upon
the earlier to occur of:

 

  (a) such time as the Actual Ownership of Voting Securities represents in
excess of 50% of the aggregate voting power of the total Voting Securities
(provided that for purposes of calculating the aggregate voting power of the
total Voting Securities for purposes of this Section 7.1(a), total Voting
Securities shall: (1) include those shares of Company Class B Stock as to which
Mr. Diller and his Affiliates at such time could receive pursuant to the
Purchase/Exchange Right provided for in Section 5.02(c) of the Governance
Agreement solely by exchanging an equivalent number of issued and outstanding
shares of Company Common Stock actually owned by Mr. Diller and such Affiliates
at such time, and (2) exclude such shares of Company Common Stock that could be
exchanged as of such date by Mr. Diller and such Affiliates pursuant to clause
(1)); or

 

10

--------------------------------------------------------------------------------

  (b) such time as both (i) the Block Sale Transferee, its Affiliates or any
group of which any of them are a part Beneficially Owns less than 12% of the
aggregate voting power of the Total Equity Securities and (ii) Mr. Diller
Beneficially Owns greater than 40% of the aggregate voting power of the Total
Equity Securities (provided that for purposes of this Section 7.1(b)(ii),
Mr. Diller’s Beneficial Ownership shall not include Company Common Shares which
are deemed Beneficially Owned by Mr. Diller solely by virtue of voting power
granted to Mr. Diller pursuant to any Proxy granted by Liberty).

7.2 Notice of Termination of Article 2 and Article 3. In the event that any
Party becomes aware of the occurrence of the events described in Section 7.1(a)
or Section 7.1(b), such Party shall, within 2 business days, deliver a notice to
each of the other Parties of its belief that Article 2 and Article 3 of this
Agreement have terminated pursuant to Section 7.1(a) or Section 7.1(b), as
applicable, and such notice shall describe in reasonable detail the basis for
such Party’s assertion that the applicable thresholds have been met. In the
event that any of the other Parties dispute that such events of termination have
occurred, such Party shall, within 2 business days, deliver a notice to the
other Parties identifying the basis for such dispute. In connection with any
termination pursuant to Section 7.1(a) or (b), any acquisitions or dispositions
of Company Common Shares occurring after the date specified in the original
notice of termination (the “Termination Date”) will be disregarded, provided
that if Article 2 and Article 3 of this Agreement shall have terminated pursuant
to Section 7.1(b), the Block Sale Transferee shall have no agreement regarding
the re-acquisition of the shares described in Section 7.1(b)(i).

 

8.

Subsequent Transferees.10

8.1 Except in the event the Block Sale Transferee sells or transfers its Company
Common Shares (or other equity securities of the Company) to a third party in
accordance with a Third Party Proposal, the transferee of all or substantially
all of the Company Common Shares transferred to the Block Sale Transferee in the
Block Sale (the “Subsequent Transferee”) shall agree to assume and perform all
obligations and be subject to, and bound by all restrictions of the Block Sale
Transferee pursuant to this Agreement during the remainder of the Standstill
Period (other than (i) Article 6, (ii) the provisions of Article 4 if such
transferee (a) is not an “affiliate” (as such term is defined in
Section 203(c)(1) of the DGCL) of the Block Sale Transferee at the time of such
transfer and (b) was not such an “affiliate” (as such term is defined in
Section 203(c)(1) of the DGCL) on the Effective Date [and (ii) the provisions of
Article 5 and Sections 3.1(d), 3.1(e), 3.1(f), 3.1(g)(iii), 3.1(g)(iv),
3.1(g)(v) and 3.1(h) hereunder]11), as if such transferee were the Block Sale
Transferee (provided, however, that the Effective Date shall continue to be
defined as the date of consummation of the Block Sale). For the avoidance of
doubt, the Parties acknowledge and agree that no Subsequent Transferee shall
have a right to a

 

 

10 

Nothing contained in Article 8 shall constitute consent by the committee of
directors that qualify as “independent directors” as defined by applicable stock
exchange listing rules (which term, for this purpose, will exclude any directors
nominated by the Block Sale Transferee) to any waiver of any obligation to
convert Company Class B Stock into shares of Company Common Stock.

11 

Note to form: to be included if the Block Sale Transferee accepts the board
nomination rights.

 

11

--------------------------------------------------------------------------------

waiver of Section 203(a)(1) of the DGCL in connection with such Subsequent
Transferee’s acquisition of Company Common Shares Transferred to the Block Sale
Transferee in a Block Sale under this Agreement, the Governance Agreement or
otherwise.

8.2 Prior to and as a condition to the acquisition by the Subsequent Transferee
of the Company Common Shares Transferred to the Block Sale Transferee in the
Block Sale, the Block Sale Transferee (or any Subsequent Transferee who
transfers such Company Common Shares) agrees to cause such Subsequent Transferee
to execute an Assumption Agreement substantially in the form attached hereto as
Annex C (the “Assumption Agreement”), which shall also be signed by the Company
and the Block Sale Transferee.

 

9. Miscellaneous.

9.1 Breach. The Block Sale Transferee shall be responsible for any breach of
this Agreement by it or any of its Affiliates of the terms applicable to its
Affiliates, and the Block Sale Transferee agrees to take all reasonable measures
to avoid any breach of this Agreement by any of its Affiliates of the terms
applicable to its Affiliates. The foregoing obligation shall not limit the
remedies available to the Company for any such breach of this Agreement.

9.2 Adjustment of Shares Numbers. If, after the execution of this Agreement (or
the Assumption Agreement), there is a subdivision, split, stock dividend,
combination, reclassification or similar event with respect to any of the shares
of capital stock of the Company referred to in this Agreement, then, in any such
event, the numbers and types of shares of such capital stock referred to in this
Agreement (and if applicable, the share prices thereof) shall be adjusted to the
number and types of shares of such capital stock that a holder of such number of
shares of such capital stock would own or be entitled to receive as a result of
such event if such holder had held such number of shares immediately prior to
the record date for, or effectiveness of, such event.

9.3 Modification and Waiver. This Agreement may be modified or waived only by a
separate writing by the Company, acting through a committee of directors on the
Board of Directors that qualify as “independent directors” as defined by
applicable stock exchange listing rules [(which term, for this purpose, will
exclude any directors nominated by the Block Sale Transferee)]12, on the one
hand, and the Block Sale Transferee, on the other hand, expressly so modifying
or waiving this Agreement. The Company shall represent to the Block Sale
Transferee that such committee has approved the execution and delivery by the
Company of any such modification or waiver by an authorized officer of the
Company, which representation will constitute conclusive evidence that such
modification or waiver has been validly approved by the Company in accordance
with the first sentence of this Section 9.3. It is understood and agreed that no
failure or delay by the Company or the Block Sale Transferee in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

 

 

12 

Note to form: to be included if the Block Sale Transferee accepts the board
nomination rights.

 

12

--------------------------------------------------------------------------------

9.4 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be illegal, invalid or unenforceable, such provisions shall be deemed limited
or eliminated only to the minimum extent necessary so that this Agreement shall
otherwise remain in full force and effect.

9.5 Entire Agreement. This Agreement contains the entire agreement between the
Company and the Block Sale Transferee concerning the subject matter hereof.

9.6 Remedies. It is understood and agreed that money damages may not be a
sufficient remedy for any breach of this Agreement and, in addition to all other
remedies that any Party may have at law or in equity, each Party shall be
entitled to equitable relief, including, without limitation, injunction and
specific performance, as a remedy for any such breach and each Party hereby
waives any requirement for the securing or posting of any bond in connection
with such remedy.

9.7 Governing Law; Consent to Jurisdiction. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Delaware,
without giving effect to the principles of conflicts of laws. Each of the
Parties hereby irrevocably and unconditionally consents to submit to the
non-exclusive jurisdiction of the courts of the State of Delaware, for any
action, proceeding or investigation in any court or before any governmental
authority (“Litigation”) arising out of or relating to this Agreement and the
transactions contemplated hereby and further agrees that service of any process,
summons, notice or document by U.S. mail to its respective address set forth in
this Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the Parties hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the Parties irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any and all rights to trial
by jury in connection with any Litigation arising out of or relating to this
Agreement or the transactions contemplated hereby.

9.8 Assignment; Binding Effect. Except as otherwise contemplated hereby, without
the prior consent of the other Parties (which in the case of the Company shall
be through a committee of directors on the Board of Directors that qualify as
“independent directors” as defined by applicable stock exchange listing rules
[(which term, for this purpose, will exclude any directors nominated by the
Block Sale Transferee)]13), no Party may assign its rights or obligations (other
than by operation of law) under this Agreement to any Person. This Agreement
shall be binding upon the Block Sale Transferee and its successors and permitted
assigns and shall inure to the benefit of, and be enforceable by, the Company
and its successors and permitted assigns.

 

 

13 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

 

13

--------------------------------------------------------------------------------

9.9 Expenses. All costs and expenses incurred in connection with this Agreement
shall be paid by the Party incurring such cost or expense.

9.10 Headings. Headings included in this Agreement are for the convenience of
the Parties only and shall be given no substantive or interpretive effect.

9.11 Counterparts; Signatures. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. This Agreement or any
counterpart may be executed and delivered by facsimile or electronic
transmission copies, each of which shall be deemed to be an original.

9.12 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy) and shall be given, if to the
Block Sale Transferee, to:

[—]

[—]

[—],[—] [—]

Attention: [—]

Facsimile: [—]

with a copy to:

[—]

[—]

[—],[—] [—]

Attention: [—]

Facsimile: [—];

if to the Company, to:

Expedia, Inc.

333 108th Avenue N.E.

Bellevue, Washington 98004

Attention: General Counsel

Facsimile: (425) 679-7240

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: Andrew J. Nussbaum

Facsimile: (212) 403-2000

or such address or facsimile number as such party may hereafter specify for the
purpose by notice to the other Parties. Each such notice, request or other
communication shall be effective when delivered personally, telegraphed, or
telecopied, or, if mailed, 5 business days after the date of the mailing.

(Signature page follows)

 

14

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
and delivered as of the date first above written.

 

EXPEDIA, INC. By:  

 

Name:   Title:   [BLOCK SALE TRANSFEREE] By:  

 

Name:   Title:  

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Annex A

Parties to the Agreement

[Block Sale Transferee]

 

A-1

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Annex B

Beneficial Ownership

 

B-1

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Annex C

FORM OF ASSUMPTION AGREEMENT

ASSUMPTION AGREEMENT

This ASSUMPTION AGREEMENT (this “Agreement”) is made as of [—], by and among
[Block Sale Transferee], [a [—]] (“Assignor”), [Subsequent Transferee], [a [—]]
(“Assignee”), and Expedia, Inc., a Delaware corporation (the “Company,” which
term shall, for purposes of this Agreement, include its direct and indirect
subsidiaries).

W I T N E S S E T H :

WHEREAS, Assignor is party to that certain Standstill Agreement, dated as of
[—], by and between Assignor and the Company (the “Standstill Agreement”);

WHEREAS, capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to such terms in the Standstill Agreement;

WHEREAS, pursuant to Section 8.2 of the Standstill Agreement, prior to and as a
condition to the acquisition by Assignee of all or substantially all of the
Company Common Shares Transferred to Assignor in the Block Sale (the “Subsequent
Transfer”), Assignor, Assignee and the Company agree to enter into this
Agreement;

WHEREAS, Assignee desires to assume and perform all rights and obligations and
be subject to, and bound by all restrictions under the Standstill Agreement; and

WHEREAS, Assignor and Assignee desire to enter into this Agreement in connection
with the Subsequent Transfer.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

1.

Assumption. Effective as of the date hereof and immediately prior to the
consummation of the Subsequent Transfer (but subject to the consummation of the
Subsequent Transfer), Assignee assumes all rights of, and agrees to perform all
obligations and be subject to, and bound by all restrictions imposed upon, the
Assignor under the Standstill Agreement (other than the terms, covenants,
conditions, and obligations arising under (i) Article 6 of the Standstill
Agreement, [[(ii) Article 4 of the Standstill Agreement]14 or [(iii) Article 5
and Sections 3.1(d), 3.1(e), 3.1(f), 3.1(g)(iii), 3.1(g)(iv), 3.1(g)(v) and
3.1(h) of the Standstill Agreement]15]).

 

2. Company Agreement. The Company hereby consents to the assumption set forth
herein and agrees that, unless the context of the Standstill Agreement otherwise
requires, Assignee will be substituted for Assignor for all such purposes of the
Standstill Agreement and will be

 

 

14 

Note to form: to be included if Subsequent Transferee is not an Affiliate of
Assignor and was not an Affiliate of Assignor as of the Effective Date.

15 

Note to form: to be included if the Block Sale Transferee accepts the board
nomination rights.

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  entitled to exercise any rights of the Assignor thereunder (other than any
rights arising under Article 4 or Article 5 of the Standstill Agreement) and the
Company will perform all of its obligations under the Standstill Agreement
(other than the obligations arising under Article 4 or Article 5 of the
Standstill Agreement).

 

3.

Representations and Warranties of the Assignee. Each of the parties on Appendix
A, severally as to itself, represents and warrants that (a) this Agreement and
the performance by such party of its obligations hereunder (i) has been duly
authorized, executed and delivered by such party, and is a valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, (ii) does not require approval by any owners or holders of any equity
interest in such party (except as has already been obtained), and (iii) does not
violate any material law, any order of any court or other agency of government,
the charter or other organizational documents of such party, as amended, or
constitute a breach or violation of or conflict with any material agreement to
which such party is bound and none of such material agreements would impair in
any material respect the ability of such party to perform its obligations
hereunder, (b) as of the date hereof, after taking into account the Company
Common Shares to be acquired by the Assignee in the Subsequent Transfer and
based upon the number of Company Common Shares outstanding as set forth in the
Company’s latest Report on Form 10-K or Form 10-Q, as applicable, the Assignee
does not Beneficially Own Company Common Shares in excess of the Ownership
Limitation, and (c) as of the date hereof, it is the Beneficial Owner of the
number and type of Company Common Shares (or other equity securities of the
Company) set forth (including, without limitation, as to the form of ownership)
on Appendix B hereto. [Each of the parties on Appendix A, severally as to
itself, represents and warrants that (a) as of the date hereof, it is an
“affiliate” (as such term is defined in Section 203(c)(1) of the DGCL) of
Assignor and (b) as of the Effective Date, it was not an “affiliate” (as such
term is defined in Section 203(c)(1) of the DGCL) of Assignor.]16

 

4.

[Section 203 of the DGCL. The parties hereto acknowledge and agree that the
Company has not waived Section 203(a)(1) of the DGCL with respect to the
Subsequent Transfer and the Assignee, and the execution by the Company of this
Agreement shall not be construed to waive any of the provisions of
Section 203(a)(1) of the DGCL.]17

 

5.

[Article 4 of the Standstill Agreement. Assignee acknowledges and agrees that it
will be bound by the provisions of Article 4 of the Standstill Agreement.]18

 

6.

Representations and Warranties of the Company. The Company represents and
warrants that a committee of directors that qualify as “independent directors”
as defined by applicable stock exchange listing rules [(which term, for this
purpose, will exclude any directors nominated by the Block Sale Transferee)]19
has approved the Company’s acknowledgement and agreement of this Agreement.

 

 

16 

Note to form: insert if Assignee is, as of the assumption agreement, an
“affiliate” (as such term is defined in Section 203(c)(1) of the DGCL) of
Assignor, and (b) as of the Effective Date, it was not an “affiliate” (as such
term is defined in Section 203(c)(1) of the DGCL) of Assignor.

17 

Note to form: insert if the Company has not waived DGCL section 203(a)(1) with
respect to the Subsequent Transfer and the Assignee.

18 

Note to form: insert if Assignee is (a) as of the date of the assumption
agreement, an “affiliate” (as such term is defined in Section 203(c)(1) of the
DGCL) of Assignor, and (b) as of the Effective Date, it was not an “affiliate”
(as such term is defined in Section 203(c)(1) of the DGCL) of Assignor.

19 

Note to form: bracketed language to be removed if Block Sale Transferee does not
accept the board nomination rights.

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7. Further Assurances. From time to time following the date hereof, and without
any further consideration or other payment, Assignor shall execute and deliver
such other instruments of conveyance, assignment, transfer and delivery and
execute and deliver such other documents and take or cause to be taken such
other actions as Assignee reasonably may request in order to consummate,
complete and carry out the transactions contemplated by this Agreement.

 

8. Successors. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, legal representatives, successors
and assigns.

 

9. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument. This Agreement or any counterpart may be
executed and delivered by facsimile or electronic transmission copies, each of
which shall be deemed to be an original.

 

10. Entire Agreement. This Agreement contains the entire agreement between the
parties hereto concerning the subject matter hereof

 

11. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be illegal, invalid or unenforceable, such provisions shall be deemed limited
or eliminated only to the minimum extent necessary so that this Agreement shall
otherwise remain in full force and effect.

 

12. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of Delaware, without giving effect to
the principles of conflicts of laws. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the non-exclusive
jurisdiction of the courts of the State of Delaware, for any action, proceeding
or investigation in any court or before any governmental authority
(“Litigation”) arising out of or relating to this Agreement and the transactions
contemplated hereby and further agrees that service of any process, summons,
notice or document by U.S. mail to its respective address set forth in this
Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to
trial by jury in connection with any Litigation arising out of or relating to
this Agreement or the transactions contemplated hereby.

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IN WITNESS WHEREOF, the parties hereto hereby cause this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

ASSIGNOR: [BLOCK SALE TRANSFEREE] By:  

 

Name:   Title:   ASSIGNEE: [SUBSEQUENT TRANSFEREE] By:  

 

Name:   Title:   EXPEDIA, INC. By:  

 

Name:   Title:  

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Appendix A

Parties to the Agreement

[Assignee]

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Appendix B

Beneficial Ownership