Exhibit 10.7

 

EXECUTION COPY

 

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STOCKHOLDERS AGREEMENT

 

between

 

LIBERTY MEDIA CORPORATION

 

and

 

BARRY DILLER

 

Dated as of August 9, 2005

 

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EXPEDIA, INC.

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TABLE OF CONTENTS

 

     PAGE

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ARTICLE I     DEFINITIONS

   1

Section 1.1. Certain Defined Terms

   1

Section 1.2. Other Defined Terms

   6

Section 1.3. Other Definitional Provisions

   7

ARTICLE II     RESERVED

   7

ARTICLE III     CORPORATE GOVERNANCE

   7

Section 3.1. Voting on Certain Matters

   7

Section 3.2. Restrictions on Other Agreements

   8

Section 3.3. Irrevocable Proxy of Liberty

   8

Section 3.4. Cooperation

   9

ARTICLE IV     TRANSFER OF COMMON SHARES

   10

Section 4.1. Restrictions on Transfer by Liberty and Diller

   10

Section 4.2. Tag-Along for Diller and Liberty for Transfers by the Other

   11

Section 4.3. Right of First Refusal Between Liberty and Diller

   14

Section 4.4. Transfers of Class B Shares

   16

Section 4.5. Transferees

   17

Section 4.6. Notice of Transfer

   18

Section 4.7. Compliance with Transfer Provisions

   18

ARTICLE V     BDTV ENTITY ARRANGEMENTS

   18

Section 5.1. Management

   18

Section 5.2. Changes to BDTV Structures

   19

Section 5.3. Transfers of BDTV Interests

   19

ARTICLE VI     MISCELLANEOUS

   20

Section 6.1. Conflicting Agreements

   20

Section 6.2. Duration of Agreement

   20

Section 6.3. Further Assurances

   20

Section 6.4. Amendment and Waiver

   20

Section 6.5. Severability

   20

Section 6.6. Effective Time

   21

Section 6.7. Entire Agreement

   21

Section 6.8. Successors and Assigns

   21

Section 6.9. Counterparts

   21

Section 6.10. Liabilities Under Federal Securities Laws

   21

Section 6.11. Remedies

   21

Section 6.12. Notices

   21

Section 6.13. Adjustment of Shares Numbers

   22

Section 6.14. Governing Law; Consent to Jurisdiction

   23

Section 6.15. Interpretation

   23

 

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STOCKHOLDERS AGREEMENT, dated as of August 9, 2005, between Liberty Media
Corporation, a Delaware corporation (“Liberty”), for itself and on behalf of the
members of the Liberty Stockholder Group and Mr. Barry Diller (“Diller”), for
himself and on behalf of the members of the Diller Stockholder Group.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
obligations hereinafter set forth, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1. Certain Defined Terms. As used herein, the following terms shall
have the following meanings:

 

“1997 IAC Stockholders Agreement” means the Stockholders Agreement, dated as of
October 19, 1997, among Universal Studios, Inc., Liberty, Diller and The Seagram
Company Ltd., as in effect as of such date and without giving effect to any
termination of such agreement (including in connection with the execution of any
agreement intended to supersede such agreement).

 

“Affiliate” means, with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with, such specified Person, for so long as such Person
remains so associated to the specified Person. For purposes of this definition,
natural persons shall not be deemed to be Affiliates of each other, and none of
Liberty, Diller or the Company shall be deemed to be Affiliates of any of the
others. In addition, for purposes of this definition, IAC/InterActiveCorp and
the Company shall not be deemed Affiliates of one another as a result of such
entities being under the common control of the Stockholders.

 

“Agreement” means this Stockholders Agreement as it may be amended,
supplemented, restated or modified from time to time.

 

“BDTV I” means BDTV, Inc., a Delaware corporation.

 

“BDTV II” means BDTV II, Inc., a Delaware corporation.

 

“BDTV III” means BDTV III, Inc., a Delaware corporation.

 

“BDTV IV” means BDTV IV, Inc., a Delaware corporation.

 

“BDTV Entities” means, collectively, the BDTV Limited Entities and the BDTV
Unrestricted Entities.

 

“BDTV Limited Entities” means, collectively, BDTV I and BDTV II.

 

“BDTV Unrestricted Entities” means BDTV III, BDTV IV and each other BDTV Entity
that may be formed subsequent to the date hereof; provided that each of Liberty
and Diller

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acknowledges and agrees that any corporation, partnership, limited liability
company or other business association hereafter formed by Diller and Liberty to
hold Common Shares will be a BDTV Unrestricted Entity and will be a corporation,
partnership, limited liability company or other business association having a
capital structure and governance rights substantially similar to that of BDTV
III.

 

“beneficial owner” or “beneficially own” has the meaning given such term in Rule
13d-3 under the Exchange Act and a Person’s beneficial ownership of Common
Shares or Voting Securities shall be calculated in accordance with the
provisions of such Rule; provided, however, that for purposes of determining
beneficial ownership, (i) a Person shall be deemed to be the beneficial owner of
any Equity 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 Diller shall be deemed to be exercisable), rights or other
securities issued by the Company, (ii) no Person shall be deemed to beneficially
own any Equity solely as a result of such Person’s execution of this Agreement
(including by virtue of holding a proxy with respect to any shares) or the
Governance Agreement, and (iii) Liberty shall be deemed to be the beneficial
owner of all of the Common Shares owned by each BDTV Entity, other than for
purposes of Articles III and V of this Agreement. Notwithstanding the foregoing,
for purposes of calculating the Minimum Stockholder Amount, a Person shall be
deemed to be the beneficial owner only of Common Shares which are issued and
outstanding.

 

“Board” means the Board of Directors of the Company.

 

“Business Day” shall mean 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.

 

“Capital Stock” means, with respect to any Person at any time, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in or issued by such
Person.

 

“Cause” means (i) the conviction of, or pleading guilty to, any felony, or
(ii) the willful, continued and complete failure to attend to managing the
business affairs of the Company, after written notice of such failure from the
Board and reasonable opportunity to cure.

 

“Chairman” means the Chairman of the Board.

 

“Chairman Termination Date” means the later of (i) such time as Diller no longer
serves as Chairman and (ii) such time as Diller no longer holds the Liberty
Proxy (other than suspension of such proxy pursuant to Section 3.3(e)).

 

“Class B Common Stock” means the Class B common stock, par value $0.001 per
share, of the Company and any securities of the Company issued in respect
thereof, or in substitution therefor, in connection with any stock split,
dividend or combination, or any reclassification, recapitalization, merger,
consolidation, exchange or other similar reorganization (other than Common Stock
issued upon conversion of Class B Common Stock).

 

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“Commission” means the Securities and Exchange Commission, and any successor
commission or agency having similar powers.

 

“Common Shares” means, collectively, the Common Stock and the Class B Common
Stock.

 

“Common Stock” means the common stock, par value $0.001 per share, of the
Company and any securities of the Company issued in respect thereof, or in
substitution therefor, in connection with any stock split, dividend or
combination, or any reclassification, recapitalization, merger, consolidation,
exchange or other similar reorganization.

 

“Company” means Expedia, Inc., a Delaware corporation, and any successor by
merger, consolidation, or other business combination.

 

“Contingent Matters” shall have the meaning ascribed to such term in the
Governance Agreement.

 

“control” (including the terms “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise.

 

“Daily Hedging Limit” means a number of shares of Common Stock not to exceed on
any single day 25% of the average daily trading volume of the Common Stock
during the three full calendar months preceding the date of determination
(disregarding any sales by Liberty).

 

“Diller Interest Purchase Price” means the cash amount (or cash value of shares
of capital stock of IAC/InterActiveCorp) contributed by Diller to a BDTV Entity
plus interest on such amount, from the date of such contribution to the date of
purchase of Diller’s Interest in such BDTV Entity by a member of the Liberty
Stockholder Group, at the rate of interest per annum in effect from time to time
and publicly announced by The Bank of New York as its prime rate of interest,
compounded annually. For purposes of BDTV I, BDTV II, BDTV III and BDTV IV, the
cash amount (or cash value of capital stock) initially contributed by Diller was
$100 in each such BDTV Entity.

 

“Diller Stockholder Group” means (i) Diller and (ii) any Affiliate of Diller
which (A) Diller controls and (B) in which Diller owns, directly or indirectly,
90% or more of the outstanding Capital Stock or other ownership interests, which
such Affiliate holds Equity subject to this Agreement.

 

“Director” means any member of the Board.

 

“Disabled” means the disability of 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
Diller, his spouse or a personal representative designated by Diller; provided
that Diller shall be deemed to be disabled only following the expiration of 90
days following receipt of a written notice from the Company and

 

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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. A
total disability shall mean mental or physical incapacity that prevents Diller
from managing the business affairs of the Company.

 

“Eligible Stockholder Amount” means, in the case of Diller, the equivalent of
2,200,000 Common Shares and, in the case of Liberty (including, in the case of
Liberty, all of the Common Shares owned by the BDTV Entities), 2,000,000 shares
of Common Stock, in each case determined on a fully diluted basis (taking into
account, in the case of Diller, all unexercised Options, whether or not then
exercisable).

 

“Equity” means any and all shares of Capital Stock of the Company, securities of
the Company convertible into, or exchangeable for, such shares, and options,
warrants or other rights to acquire such shares.

 

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

 

“Fair Market Value” means, as to any securities or other property, the cash
price at which a willing seller would sell and a willing buyer would buy such
securities or property in an arm’s-length negotiated transaction without time
constraints.

 

“FCC” means the Federal Communications Commission or its successor.

 

“FCC Regulations” means, as of any date, all federal communications statutes and
all rules, regulations, orders, decrees and policies of the FCC as then in
effect, and any interpretations or waivers thereof or modifications thereto.

 

“Governance Agreement” means the Governance Agreement, among the Company, Diller
and Liberty, of even date herewith, as it may be amended, supplemented, restated
or modified from time to time hereafter.

 

“Group” shall have the meaning assigned to it in Section 13(d)(3) of the
Exchange Act.

 

“Hedging Transaction” means any (i) short sale, (ii) any purchase, sale or grant
of any right (including, without limitation, any put or call option), or
(iii) any forward sale (whether for a fixed or variable number of shares or at a
fixed or variable price) of or with respect to, or any non-recourse loan secured
by, Common Stock or any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its value
from Common Stock, and such term includes (a) the pledge of Common Stock in
connection with any of the foregoing to secure the obligations of the pledgor
under a Hedging Transaction and (b) the pledge of a Hedging Transaction itself
to secure any extension of credit to a party based, in whole or part, on the
value thereof.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“Independent Investment Banking Firm” means an investment banking firm of
nationally recognized standing that is, in the reasonable judgment of the Person
engaging such firm, qualified to perform the task for which it has been engaged.

 

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“Liberty Stockholder Group” means Liberty and those Subsidiaries of Liberty
that, from time to time, hold Equity subject to this Agreement.

 

“Market Sale” means a “brokers’ transaction” within the meaning of
Section 4(4) of the Securities Act.

 

“Minimum Stockholder Amount” means Common Shares representing at least 50.1% of
the outstanding voting power of the outstanding Common Shares.

 

“Options” means options to acquire Capital Stock of the Company granted by the
Company to Diller and outstanding from time to time.

 

“Permitted Designee” means any Person designated by a Stockholder, who shall be
reasonably acceptable to the other Stockholder, to exercise such Stockholder’s
rights pursuant to Section 4.3.

 

“Permitted Transferee” means (i) with respect to Liberty, any member of the
Liberty Stockholder Group, and (ii) with respect to Diller, any member of the
Diller Stockholder Group. In addition, each of Liberty and Diller shall be a
Permitted Transferee of its respective Permitted Transferees.

 

“Person” means any individual, corporation, limited liability company, limited
or general partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivisions
thereof or any Group comprised of two or more of the foregoing.

 

“Public Stockholder” means any Person that, together with its Affiliates (a) has
sole or shared voting power with respect to Voting Securities representing no
more than 10% of the voting power of the outstanding Voting Securities or
(b) has sole or shared power to dispose of Equity representing no more than 10%
of the Equity to be tendered or exchanged in any applicable tender or exchange
offer, as the case may be.

 

“Reference Rate” means, for any day, a fixed rate per annum equal to the yield,
expressed as a percentage per annum, obtained at the official auction of 90-day
United States Treasury Bills most recently preceding the date thereof plus 100
basis points.

 

“Related Hedging Transactions” means a series of Hedging Transactions between
members of the Liberty Stockholder Group on the one hand, and the same
counterparty or its Affiliates, on the other hand, which Hedging Transactions
each have specified maturity dates occurring within a period of thirty days.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stockholder” means each of Liberty and Diller.

 

“Stockholder Group” means one or more of the Diller Stockholder Group and the
Liberty Stockholder Group. For purposes of this Agreement, (i) prior to the time
that Liberty acquires Diller’s interest in a BDTV Entity, each BDTV Entity shall
be deemed to be a member of the

 

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Liberty Stockholder Group except as otherwise expressly set forth herein and
(ii) a Stockholder’s Permitted Designee shall be deemed to be a member of the
designating Stockholder’s Stockholder Group (other than for purposes of
Section 4.1(a)(w)).

 

“Subsidiary” means, with respect to any Person, any corporation or other entity
of which at least a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.

 

“Third Party Transferee” means any Person to whom a Stockholder (including a
Third Party Transferee subject to this Agreement pursuant to Sections 4.5(b) and
4.5(c)) or a Permitted Transferee Transfers Common Shares, other than a
Permitted Transferee of such Stockholder or a member of another Stockholder
Group.

 

“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any Common Shares
beneficially owned by a Stockholder or any interest in any Common Shares
beneficially owned by a 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 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).

 

“Voting Securities” means at any time shares of any class of Capital Stock of
the Company which are then entitled to vote generally in the election of
Directors.

 

Section 1.2. Other Defined Terms. The following terms shall have the meanings
defined for such terms in the Sections set forth below:

 

Term

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Section

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Appraisal

  

Section 4.3(c)

Diller

  

Preamble

Diller Termination Date

  

Section 6.2(b)

Exchange Notice

  

Section 4.4(a)

IAC Shares

  

Section 5.2

Initiating Party

  

Section 4.2(a)

L/D Offer Notice

  

Section 4.3(b)

L/D Offer Price

  

Section 4.3(c)

L/D Other Party

  

Section 4.3(b)

L/D Transferring Party

  

Section 4.3(a)

Liberty

  

Preamble

Liberty Lending Limit

  

Section 4.3(f)

Liberty Proxy

  

Section 3.3(a)

Liberty Proxy Shares

  

Section 3.3(a)

Liberty Termination Date

  

Section 6.2(a)

Litigation

  

Section 6.14

Non-Transferring Stockholder

  

Section 4.4(a)

 

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Term

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Section

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Settlement Threshold

  

Section 4.2(e)

Stock Lending Transaction

  

Section 4.2(f)

Tag-Along Notice

  

Section 4.2(a)

Tag-Along Sale

  

Section 4.2(a)

Tag-Along Shares

  

Section 4.2(a)

Tag Party

  

Section 4.2(a)

Transferring Stockholders

  

Section 4.4(a)

 

Section 1.3. Other Definitional Provisions. (a) 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 this
Agreement, and Article and Section references are to this Agreement unless
otherwise specified.

 

(b) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(c) For purposes of calculating the amount of outstanding Common Shares or
Equity as of any date and the number of Common Shares or Equity beneficially
owned by any Person as of any date, any Common Shares held in the Company’s
treasury or owned by any Subsidiaries of the Company shall be disregarded.

 

ARTICLE II

 

RESERVED

 

ARTICLE III

 

CORPORATE GOVERNANCE

 

Section 3.1. Voting on Certain Matters. (a) In the event that Section 2.03 of
the Governance Agreement is applicable, in connection with any vote or action by
written consent of the stockholders of the Company relating to any matter that
constitutes a Contingent Matter, Liberty and Diller agree (and each agrees to
cause each member of its Stockholder Group, if applicable), with respect to any
Common Shares with respect to which it or he has the power to vote (whether by
proxy, the ownership of voting securities of a BDTV Entity or
otherwise) (including all Common Shares held by any BDTV Entity), (x) to vote
against (and not act by written consent to approve) such Contingent Matter
(including causing each BDTV Entity to vote all Common Shares held by it against
approval of such Contingent Matter and not executing any written consents with
respect to such Common Shares held by any BDTV Entity) unless Liberty and Diller
(or, if either such Stockholder’s consent is no longer required pursuant to the
Governance Agreement, the Stockholder whose consent is then required) have
consented to such Contingent Matter in accordance with the provisions of the
Governance Agreement and (y) to take or cause to be taken all other reasonable
actions required, to the extent permitted by law, to prevent the taking of any
action by the Company with respect to a Contingent Matter without the consent of
Liberty and/or Diller (as applicable).

 

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(b) Each Stockholder agrees to vote (and cause each member of its or his
Stockholder Group to vote, if applicable), or act by written consent with
respect to, any Common Shares with respect to which it or he has the power to
vote (whether by proxy, the ownership of voting securities of a BDTV Entity or
otherwise) (including all Common Shares held by any BDTV Entity) in favor of
each of the Director designees of Liberty which Liberty has a right to designate
pursuant to the Governance Agreement.

 

(c) Upon the written request of Liberty, Diller, in his capacity as a
stockholder only, agrees to vote (and cause each member of the Diller
Stockholder Group to vote, if applicable), or act by written consent, with
respect to any Common Shares with respect to which it or he has the power to
vote (whether by proxy, the ownership of voting securities of a BDTV Entity or
otherwise) (including all shares held by any BDTV Entity) and otherwise take or
cause to be taken all actions necessary to remove any Director designated by
Liberty and to elect any replacement Director designated by Liberty as provided
in the Governance Agreement. Unless Liberty and Diller otherwise agree, neither
Diller nor any member of the Diller Stockholder Group, shall take any action to
cause the removal of any Director designated by Liberty except upon the written
request of Liberty.

 

(d) Liberty will not be deemed to be in violation of paragraphs (a), (b) or
(c) of this Section 3.1 as a result of any action by Diller (including actions
taken by a BDTV Entity as a result of an action by Diller) that is not within
Liberty’s control.

 

Section 3.2. Restrictions on Other Agreements. No Stockholder or any of its or
his Permitted Transferees shall enter into or agree to be bound by any
stockholder agreements or arrangements of any kind with any Person with respect
to any Equity (including, without limitation, the deposit of any Common Shares
in a voting trust or forming, joining or in any way participating in or
assisting in the formation of a Group with respect to any Common Shares, other
than any such Group consisting exclusively of Liberty and Diller and any of
their respective Affiliates, Permitted Designees and Permitted Transferees and,
to the extent contemplated by Section 4.5, any Third Party Transferee) and no
Stockholder (other than Liberty or any of its Permitted Transferees) or any of
its or his Permitted Transferees shall enter into or agree to be bound by any
agreements or arrangements of any kind with any Person to incur indebtedness for
purposes of purchasing Equity (other than to exercise Options or to purchase
Common Shares pursuant to Section 4.3 of this Agreement), except (i) for such
agreements or arrangements as are now in effect, (ii) in connection with a
proposed sale of BDTV Entity securities or Common Shares otherwise permitted
hereunder, (iii) for such agreements or arrangements with a Permitted Designee
as are reasonably acceptable to the other Stockholder and not inconsistent with
or for the purpose of evading the terms of this Agreement, (iv) agreements
between a Stockholder and its Permitted Transferee that are reasonably
acceptable to the other Stockholder and not inconsistent with this Agreement or
(iv) for Hedging Transactions as contemplated by Section 4.2(e).

 

Section 3.3. Irrevocable Proxy of Liberty. (a) Subject to paragraphs (b) and
(c) below, until the earlier of the date that (x) Diller is no longer Chairman
or (y) Diller is Disabled, Diller shall be entitled to exercise voting authority
and authority to act by written consent over all Common Shares beneficially
owned by each member of the Liberty Stockholder Group (the “Liberty Proxy
Shares”), on all matters submitted to a vote of the Company’s stockholders or by

 

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which the Company’s stockholders may act by written consent, pursuant to a
conditional proxy (which proxy is irrevocable and coupled with an interest for
purposes of Section 212 of the Delaware General Corporation Law) (the “Liberty
Proxy”); provided, that in the event that Diller is removed by the Board as
Chairman for any reason other than Cause, Diller shall be deemed to continue to
be Chairman for purposes of this Agreement and shall be entitled to the Liberty
Proxy set forth herein until the earlier of (A) such time as he has abandoned
efforts to cause his reinstatement as Chairman and (B) the next stockholders
meeting of the Company at which he had an adequate opportunity to nominate and
elect his slate of directors (unless at such stockholders meeting Diller’s slate
of directors is elected and Diller is promptly thereafter reinstated as
Chairman).

 

(b) Notwithstanding the foregoing, the Liberty Proxy shall not be valid with
respect to any of the Liberty Proxy Shares (and Diller will have no right to
vote the Liberty Proxy Shares) in connection with any vote on (or consent to
approve) any matter that is a Contingent Matter with respect to which Liberty’s
consent is required pursuant to the terms of the Governance Agreement with
respect to which Liberty has not consented.

 

(c) The Liberty Proxy shall terminate as provided for in Section 3.3(a) or, if
earlier, (i) immediately upon a material breach by Diller of the terms of
Section 3.1(a), Section 3.1(b), Section 3.1(c) or Section 3.3(b) of this
Agreement, (ii) at such time as Diller has been convicted of, or has pleaded
guilty to, any felony involving moral turpitude or (iii) at such time as Diller
ceases to beneficially own 5,000,000 Common Shares with respect to which he has
a pecuniary interest; provided, in the case of clauses (ii) and (iii) above,
that Liberty sends notice of such termination to Diller within 30 days after
receiving notice of the event giving rise to such termination, in which case the
Liberty Proxy shall terminate immediately upon the receipt of such notice.

 

(d) Notwithstanding anything to the contrary set forth herein, the Liberty Proxy
is personal to Diller and may not be assigned by Diller by operation of law or
otherwise and shall not inure to Diller’s successors without the prior written
consent of Liberty.

 

(e) Notwithstanding the foregoing, and without affecting the termination of the
Liberty Proxy pursuant to Section 3.3 hereof, the Liberty Proxy will be
suspended during any period in which Diller has suffered a mental or physical
disability preventing Diller from voting or acting by written consent with
respect to the Liberty Proxy Shares, and during such period of disability,
Liberty will be entitled to vote or consent in writing with respect to all
Liberty Proxy Shares. The Liberty Proxy will be reinstated (unless sooner
terminated in accordance with Section 3.3) upon Diller ceasing to be so
disabled.

 

Section 3.4. Cooperation. Each Stockholder shall vote (or act or not act by
written consent with respect to) all of its Common Shares (and any Common Shares
with respect to which it has the power to vote (whether by proxy or
otherwise) and shall, as necessary or desirable, attend all meetings in person
or by proxy for purposes of obtaining a quorum, and execute all written consents
in lieu of meetings, as applicable, to effectuate the provisions of this Article
III.

 

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ARTICLE IV

 

TRANSFER OF COMMON SHARES

 

Section 4.1. Restrictions on Transfer by Liberty and Diller. (a) Until the
Chairman Termination Date or such time as Diller becomes Disabled, subject to
the other provisions of this Agreement, neither Liberty nor Diller shall
Transfer or otherwise dispose of (including pledges), directly or indirectly,
any Common Shares beneficially owned by its Stockholder Group other than
(v) Transfers of Common Shares by Diller in order to pay taxes arising from the
granting, vesting and/or exercise of the Options, (w) Transfers of Common Shares
by Liberty to members of the Liberty Stockholder Group or by Diller to members
of the Diller Stockholder Group, (x) a pledge or grant of a security interest in
vested Common Shares (other than the pledge of certain Common Shares pursuant to
prior arrangements between Diller and the Company) or pledges by a member of the
Liberty Stockholder Group of securities of a BDTV Entity that Liberty is
entitled to Transfer under (b)(ii) below in connection with bona fide
indebtedness in which the pledgee of the applicable Common Shares (or securities
of such BDTV Entity) agrees that, upon any default or exercise of its rights
under such pledge or security arrangement, it will offer to sell the pledged
Common Shares (or securities of such BDTV Entity) to the non-pledging
Stockholder (or its or his designee) for an amount equal to the lesser of the
applicable amount of such indebtedness and the fair market value of such pledged
Common Shares (or securities of such BDTV Entity), (y) Transfers of Options or
Common Shares to the Company by Diller or his Affiliates in connection with a
“cashless” exercise of the Options (including Options granted to Diller
heretofore or in the future), and (z) Transfers of Common Shares made pursuant
to Sections 4.2, 4.3 and 4.4. The restrictions on Transfer by Liberty provided
in this Section 4.1 shall be for the sole benefit of Diller and the restrictions
on Transfer by Diller provided in this Section 4.1 shall be for the sole benefit
of Liberty.

 

(b) Notwithstanding the restrictions contained in subsection (a) above (and in
addition to the foregoing exceptions, but subject to the right of first refusal
described in Section 4.3 on behalf of Diller (or his designee) with respect to
Transfers by members of the Liberty Stockholder Group and to a right of first
refusal on behalf of Liberty (or its designee) with respect to Transfers by
members of the Diller Stockholder Group (which rights shall be assignable)):
(i) either Liberty or Diller may Transfer all or any portion of the Common
Shares beneficially owned by its Stockholder Group (and, in the case of Liberty
only, its entire interest in the BDTV Entities) to an unaffiliated third party,
provided, however, that a Transfer by either Liberty or Diller of Common Shares
to a third party shall be subject to the tag-along right pursuant to
Section 4.2, after, in the case of any Transfer of Class B Common Stock,
compliance with the right of first refusal described in Section 4.3 and the swap
provisions described in Section 4.4, and (ii) either Liberty or Diller may
Transfer any portion of the Common Shares (including, in the case of Liberty,
all or a portion of a BDTV Entity interest) held by its Stockholder Group to an
unaffiliated third party; provided that, (a) following such Transfer such
Stockholder Group retains its Eligible Stockholder Amount of Common Shares and
(b) in the case of the Transfer of an interest in or Common Shares held by a
BDTV Limited Entity as of the date hereof, following such Transfer, the Liberty
Stockholder Group and the Diller Stockholder Group collectively beneficially own
the Minimum Stockholder Amount. Notwithstanding the previous sentence and the
restrictions contained in paragraph (a) above and subject to the requirement,
with respect to a Transfer by Liberty of an interest in or Common

 

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Shares held by a BDTV Limited Entity as of the date hereof, that the
Stockholders and their respective Stockholder Groups collectively beneficially
own the Minimum Stockholder Amount, either Liberty or Diller may transfer any of
its Common Shares in one or more transactions that comply with the requirements
of Rule 144 or 145 (as applicable) under the Securities Act.

 

Section 4.2. Tag-Along for Diller and Liberty for Transfers by the Other. (a) If
either Diller or Liberty shall desire to Transfer to any unaffiliated third
party any of the Common Shares beneficially owned by him or it or any member of
his or its Stockholder Group (other than the Transfers referred to in paragraphs
(e) and (f) below), in one transaction or a series of related transactions (the
“Tag-Along Sale”), Diller or Liberty, as applicable (the “Initiating Party),
shall give prior written notice to the other (the “Tag Party”) of such intended
Transfer. Such notice (the “Tag-Along Notice”) shall set forth the terms and
conditions of such proposed Transfer, including the number of Common Shares
proposed to be Transferred (the “Tag-Along Shares”), the purchase price per
Common Share proposed to be paid therefor and the payment terms and type of
Transfer to be effectuated.

 

(b) Within ten days after delivery of the Tag-Along Notice, the Tag Party will
have the opportunity and right (exercisable by such Tag Party by written notice
to the Initiating Party not later than the end of such ten day period) to sell
to the acquiring Person in such proposed Tag-Along Sale (upon the same terms and
conditions as the Initiating Party), subject to the following sentence, up to
that number of Common Shares beneficially owned by it (including, in the case of
Liberty, all of the Common Shares held by the BDTV Entities) as shall equal the
product of (x) a fraction, the numerator of which is the number of Tag-Along
Shares and the denominator of which is the aggregate number of Common Shares
beneficially owned as of the date of the Tag-Along Notice by the Initiating
Party (including all of the Common Shares held by the BDTV Entities if Liberty
is the Initiating Party), multiplied by (y) the number of Common Shares
beneficially owned by the Tag Party (including all of the Common Shares held by
the BDTV Entities if Liberty is the Tag Party) as of the date of the Tag-Along
Notice. The number of Common Shares that Diller or Liberty may sell to an
unaffiliated third party pursuant to Section 4.2(a) shall be determined by
multiplying the maximum number of Tag-Along Shares that such third party is
willing to purchase on the terms set forth in the Tag-Along Notice by a
fraction, the numerator of which is the number of Common Shares that such
Stockholder proposes to sell hereunder (subject to the maximum amount for Diller
or Liberty, as applicable, calculated pursuant to the preceding sentence) and
the denominator of which is the aggregate number of Common Shares that Diller
and Liberty propose to sell hereunder.

 

(c) At the closing of any proposed Transfer in respect of which a Tag-Along
Notice has been delivered, the Tag Party shall deliver, free and clear of all
liens (other than liens caused by the acquiring Person in the Tag-Along Sale),
to such third party certificates evidencing the Common Shares to be sold thereto
duly endorsed with Transfer powers and shall receive in exchange therefore the
consideration to be paid by such third party in respect of such Common Shares as
described in the Tag-Along Notice. No transferee shall be required to purchase
shares of a BDTV Entity in connection with the Tag-Along Sale and each of
Liberty and Diller shall cooperate so that any transferee will be able to
purchase directly any Common Shares held by a BDTV Entity and not the shares of
any BDTV Entity.

 

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(d) Neither Diller and the members of his Stockholder Group, on the one hand,
nor Liberty and the members of its Stockholder Group, on the other hand, shall
effect any Transfer or Transfers constituting a Tag-Along Sale absent compliance
with this Section 4.2.

 

(e) This Section 4.2 shall not be applicable to the Transfer by Diller or any
member of his Stockholder Group (i) of an aggregate of not more than 2,000,000
Common Shares within any rolling twelve-month period, (ii) pursuant to
Section 4.1(a)(v) or 4.1(a)(y), (iii) in a Market Sale, or (iv) following such
time as Diller is no longer Chairman other than any Transfer made in connection
with Diller ceasing to be Chairman. This Section 4.2 shall not be applicable to
(i) the Transfer of Common Stock by the Liberty Stockholder Group in a Market
Sale, provided that the total volume of sales effected on any single day shall
not exceed the Daily Hedging Limit, or (ii) the entry into, maintenance of,
performance of obligations under and unwinding of Hedging Transactions effected
by the Liberty Stockholder Group, including, without limitation, the Transfer of
Common Stock in connection therewith through the delivery of Common Stock to a
third party in connection with the settlement or satisfaction of a Hedging
Transaction or the foreclosure and sale by a secured party of any Common Stock
pledged to secure the obligations of a party under a Hedging Transaction or in
respect of any extension of credit to a party based, in whole or part, on the
value of such Hedging Transaction; provided, that: (A) no Hedging Transaction
shall, prior to the settlement of such Hedging Transaction, impair Diller’s
right to vote any shares of the Common Stock pursuant to Section 3.3 (it being
understood that a settlement of a Hedging Transaction may result in a
disposition of the shares subject to such Hedging Transaction and that, upon
such disposition, Diller will not have the right to vote such shares); provided,
that such right shall not be deemed to be impaired to the extent that a
counterparty to a Hedging Transaction to whom Common Stock has been pledged has
obtained the right to vote or take consensual action with respect to the Common
Stock so pledged as a result of an event of default or termination event with
respect to the Liberty Stockholder Group under the Hedging Transaction;
provided, further, that the terms of such pledging arrangement shall permit the
Liberty Stockholder Group to exercise voting rights and to take consensual
action with respect to the Common Stock so pledged in circumstances where no
event of default or termination event has occurred; (B) a significant purpose of
Liberty’s engaging in the Hedging Transaction shall not be the circumvention of
Diller’s tag along rights under Section 4.2 of this Agreement (and there shall
be a rebuttable presumption that no such purpose exists if the Hedging
Transaction is effected with a financial institution and neither Liberty nor its
Affiliates have any oral or written understanding or agreement with the
financial institution relating to the subsequent Transfer to any Person or
group, if any, of the shares of Common Stock subject to the Hedging
Transaction); (C) if pursuant to a Hedging Transaction or Related Hedging
Transactions, a number of shares of Common Stock representing 5% or more of the
outstanding shares of such class (determined as of the date the Hedging
Transaction or the date of the initial Hedging Transaction in any series of
Related Hedging Transactions is effected) (such 5% amount, the “Settlement
Threshold”), could be Transferred by the Liberty Stockholder Group to such
counterparty in connection with the settlement of such Hedging Transaction or
Related Hedging Transactions, then Liberty shall cause such members of the
Liberty Stockholder Group to settle or satisfy the obligations with respect to
such Hedging Transaction or Related Hedging Transactions in such a manner so
that the number of shares delivered to such counterparty in connection with the
settlement of such Hedging Transaction or Related Hedging Transactions does not
exceed the Settlement Threshold unless the counterparty has indicated to Liberty
and Diller (if requested by Diller) that it will utilize such shares of Common
Stock to fill a

 

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preexisting short position in the shares of Common Stock; (D) for each
twelve-month period beginning on the date hereof and each anniversary of the
date hereof, Liberty shall ensure that the Liberty Stockholder Group shall not
enter into Hedging Transactions with respect to more than one third (1/3) of the
shares of Common Stock that the Liberty Stockholder Group owns (including all
shares of Common Stock owned by the BDTV Entities) on the first day of such
twelve-month period; (E) Liberty will advise Diller (which may be oral) that it
is contemplating entering into a Hedging Transaction (including a brief
description of the general structure of the Hedging Transaction contemplated and
the potential timing of such Hedging Transaction) as far in advance as
reasonably practicable prior to effecting such Hedging Transaction, but in no
event more than ten Business Days prior to effecting such Hedging Transaction,
and, if Diller (i) has determined in good faith that such Hedging Transaction
would adversely affect a contemplated significant corporate transaction
(including financing) of the Company, and uses his reasonable best efforts to
make such a determination as soon as practicable (but in no event later than
10:00 a.m. New York City time on the second Business Day immediately following
the date of the giving of such notice by Liberty) and requests that the Liberty
Stockholder Group delay any such Hedging Transaction because of the matters
referred to in clause (i) above, then Liberty shall cause the Liberty
Stockholder Group to delay such Hedging Transaction for a period not to exceed
ten Business Days commencing on the Business Day after the date Diller has been
advised that Liberty is contemplating a Hedging Transaction, and after such ten
Business Day period, if any, Liberty shall be entitled to effect such Hedging
Transaction; and (F) Liberty shall ensure that all sales or short sales in
connection with establishing the initial hedge with respect to one or more
Hedging Transactions shall not, taking all such sales or short sales during a
particular day in the aggregate, exceed the Daily Hedging Limit.

 

(f) During the term of this Agreement, the Liberty Stockholder Group will be
entitled to engage in Stock Lending Transactions from time to time (which Stock
Lending Transactions will be deemed not to impair the proxy granted pursuant to
Section 3.3) with respect to the Common Stock subject to the following
limitations: (i) the maximum number of shares of Common Stock Beneficially Owned
by the Liberty Stockholder Group which may be lent at any one time to others in
Stock Lending Transactions during the period from the date hereof to the first
anniversary of this Agreement may not exceed an aggregate of 15,000,000 shares
of Common Stock (subject to adjustment pursuant to Section 6.13 hereof) (the
“Liberty Lending Limit”); and (ii) following such first anniversary the Liberty
Lending Limit will be increased to an aggregate of 16,250,000 shares of Common
Stock (subject to adjustment as aforesaid). For purposes hereof, a “Stock
Lending Transaction” shall mean a transaction effected in connection with any
Hedging Transaction whereby the Liberty Stockholder Group lends shares of Common
Stock to a third party or permits a third party to sell, pledge, rehypothecate,
assign, invest, use, commingle or otherwise dispose of, or otherwise use in its
business such shares of Common Stock.

 

(g) Upon written request made from time to time by Liberty, Diller will use
reasonable efforts to cause the Company to deliver to Liberty and Diller a
written statement specifying the number of shares of Company Common Stock,
Company Class B Common Stock and other Voting Securities issued and outstanding
as of the most recent practicable date. Liberty and Diller will, in connection
with any applicable calculations hereunder or under the Governance Agreement, be
entitled to rely upon the information set forth in such statement. In the event
such statement is not delivered to Liberty within five Business Days following

 

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Liberty’s request therefor, Liberty and Diller (and their respective successors
and permitted assigns) shall be entitled to rely for purposes of such
calculations on the number of shares of Company Common Stock, Company Class B
Common Stock and other Voting Securities listed as issued and outstanding in the
Company’s most recent quarterly or annual report publicly filed with the
Commission or the most recent statement from the Company.

 

Section 4.3. Right of First Refusal Between Liberty and Diller. (a) Any Transfer
of shares of Class B Common Stock by a member of the Liberty Stockholder Group
or a member of the Diller Stockholder Group (the “L/D Transferring Party”) will
be subject to the right of first refusal provisions of this Section 4.3, other
than a Transfer by a member of the Liberty Stockholder Group or the Diller
Stockholder Group permitted by Section 4.1(a) hereof or a Transfer that is a
sale described in clause (i) of the first or second sentence of Section 4.2 (e).

 

(b) Prior to effecting any Transfer referred to in Section 4.3(a), the L/D
Transferring Party shall deliver written notice (the “L/D Offer Notice”) to
Diller, if the L/D Transferring Party is a member of the Liberty Stockholder
Group, or to Liberty, if the L/D Transferring Party is a member of the Diller
Stockholder Group (the recipient of such notice, the “L/D Other Party”), which
L/D Offer Notice shall specify (i) the Person to whom the L/D Transferring Party
proposes to make such Transfer, (ii) the number or amount of the shares of Class
B Common Stock to be Transferred, (iii) the L/D Offer Price (as defined below),
and (iv) all other material terms and conditions of the proposed Transfer,
including a description of any non-cash consideration sufficiently detailed to
permit valuation thereof, and which L/D Offer Notice shall be accompanied by any
written offer from the prospective transferee to purchase such shares of Class B
Common Stock, if available and permitted pursuant to the terms thereof. The L/D
Offer Notice shall constitute an irrevocable offer to the L/D Other Party, for
the period of time described below, to purchase all (but not less than all) of
such shares of Class B Common Stock.

 

(c) For purposes of this Section 4.3, “L/D Offer Price” shall mean the purchase
price per share of Class B Common Stock to be paid to the L/D Transferring Party
in the proposed transaction (as it may be adjusted in order to determine the net
economic value thereof). In the event that the consideration payable to the L/D
Transferring Party in a proposed transaction consists of securities, the
purchase price per share shall equal the fair market value of such securities
divided by the number of shares of Class B Common Stock to be Transferred. Such
fair market value shall be the market price of any publicly traded security and,
if such security is not publicly traded, the fair market value shall be equal to
the Fair Market Value of such security determined as follows: Each of Liberty
and Diller shall select an Independent Investment Banking Firm each of which
shall promptly make a determination (each such determination, an “Appraisal”) of
the Fair Market Value of such security. If the higher of such Appraisals is less
than or equal to 110% of the lower of such Appraisals, then the Fair Market
Value shall be equal to the average of such Appraisals. If the higher of such
Appraisals is greater than 110% of the lower of such Appraisals, then a third
Independent Investment Banking Firm (which shall be an Independent Investment
Banking Firm that shall not have been engaged by the Company,
IAC/InterActiveCorp (but only for so long as Diller is the Chief Executive
Officer of IAC/InterActiveCorp) Liberty or Diller in any significant matter for
the three years prior to the date of such selection) shall be selected by the
first two Independent Investment Banking Firms, which third Independent
Investment Banking Firm shall promptly make a determination of the

 

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Fair Market Value. The Fair Market Value shall equal the average of the two of
such three Appraisals closest in value (or if there are no such two, then of all
three Appraisals).

 

(d) If the L/D Other Party elects to purchase the offered shares of Class B
Common Stock, it shall give notice to the L/D Transferring Party within ten
Business Days after receipt of the L/D Offer Notice of its election (or in the
case of a third party tender offer or exchange offer, at least five Business
Days prior to the expiration date of such offer, provided that all conditions to
such offer that need to be satisfied prior to acceptance for payment (other than
with respect to the number of shares of Class B Common Stock tendered) shall
have been satisfied or waived and the L/D Offer Notice shall have been provided
at least ten Business Days prior to the expiration date of such offer), which
shall constitute a binding obligation, subject to standard terms and conditions
for a stock purchase contract between two significant stockholders of an issuer
(provided that the L/D Transferring Party shall not be required to make any
representations or warranties regarding the business of the Company), to
purchase the offered shares of Class B Common Stock, which notice shall include
the date set for the closing of such purchase, which date shall be at least 20
Business Days following the delivery of such election notice, or, if later, five
Business Days after receipt of all required regulatory approvals; provided that
the closing shall only be delayed pending receipt of required regulatory
approvals if (i) the L/D Other Party is using reasonable efforts to obtain the
required regulatory approvals, (ii) there is a reasonable prospect of receiving
such regulatory approvals and (iii) if such closing is delayed more than 90 days
after the date of the L/D Other Party’s notice of election to purchase, then the
L/D Other Party agrees to pay interest on the aggregate L/D Offer Price at the
Reference Rate to the L/D Transferring Party from such date to the closing date.
Notwithstanding the foregoing, such time periods shall not be deemed to commence
with respect to any purported notice that does not comply in all material
respects with the requirements of this Section 4.3(d). Liberty and Diller may
assign their respective rights to purchase under this Section 4.3 to any Person
who is a Permitted Designee.

 

(e) If the L/D Other Party does not respond to the L/D Offer Notice within the
required response time period or elects not to purchase the offered shares of
Class B Common Stock, the L/D Transferring Party shall be free to complete the
proposed Transfer (to the same proposed transferee, in the case of a
privately-negotiated transaction) on terms no less favorable to the L/D
Transferring Party or its Affiliate, as the case may be, than those set forth in
the L/D Offer Notice, provided that (x) such Transfer is closed within (I) 90
days after the latest of (A) the expiration of the applicable period for the L/D
Other Party to accept the offer from the L/D Transferring Party, or (B) the
receipt by the L/D Transferring Party of notice declining the offer to purchase
the shares of Class B Common Stock or, in the case of (A) or (B), if later, five
Business Days following receipt of all required regulatory approvals; provided
that the closing shall only be delayed pending receipt of required regulatory
approvals if (i) the L/D Transferring Party is using reasonable efforts to
obtain the required regulatory approvals and (ii) there is a reasonable prospect
of receiving such regulatory approvals, or (II) in the case of a public
offering, within 20 days of the declaration by the Commission of the
effectiveness of a registration statement filed with the Commission pursuant to
this Agreement, and (y) the price at which the shares of Class B Common Stock
are transferred must be equal to or higher than the L/D Offer Price (except in
the case of a public offering, in which case the price at which the shares of
Class B Common Stock are sold (before deducting underwriting discounts and
commissions) shall be equal to at least 90% of the L/D Offer Price).

 

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(f) If the L/D Other Party elects to exercise its right of first refusal under
this Section 4.3, the L/D Other Party shall pay the L/D Offer Price in cash (by
wire transfer of immediately available funds) or by the delivery of marketable
securities having an aggregate fair market value equal to the L/D Offer Price,
provided, that if the securities to be so delivered by the L/D Other Party would
not, in the L/D Transferring Party’s possession, have at least the same general
degree of liquidity as the securities the L/D Transferring Party was to receive
in such proposed transaction (determined by reference to the L/D Transferring
Party’s ability to dispose of such securities (including, without limitation,
the trading volume of such securities and the L/D Other Party’s percentage
ownership of the issuer of such securities)), then the L/D Other Party shall be
required to deliver securities having an appraised value (calculated in
accordance with the method described in Section 4.3(c)) equal to the L/D Offer
Price. If the L/D Other Party delivers securities in payment of the L/D Offer
Price, it will cause the issuer of such securities to provide the L/D
Transferring Party with customary registration rights related thereto (if, in
the other transaction, the L/D Transferring Party would have received cash, cash
equivalents, registered securities or registration rights). Each of Diller and
Liberty agrees to use his or its commercially reasonable efforts (but not to
expend any money) to preserve for the other Stockholder, to the extent possible,
the tax benefits available to it in such proposed transaction, and to otherwise
seek to structure such transaction in the most tax efficient method available.
Notwithstanding the foregoing, if Diller pays the L/D Offer Price in securities,
such securities must be securities that Liberty is permitted to own under
applicable FCC Regulations.

 

(g) Notwithstanding anything to the contrary contained in this Section 4.3, the
time periods applicable to an election by the L/D Other Party to purchase the
offered securities shall not be deemed to commence until the Fair Market Value
has been determined, provided that, in the case of a third party tender offer or
exchange offer, in no event shall any such election be permitted within five
Business Days prior to the latest time by which shares of Class B Common Stock
shall be tendered in such offer if all conditions to such offer that need to be
satisfied prior to acceptance for payment (other than the number of shares
tendered) have been satisfied or waived. Each of Diller and Liberty agrees to
use his and its best efforts to cause the Fair Market Value to be determined as
promptly as practicable, but in no event later than ten Business Days after the
receipt by the L/D Other Party of the L/D Offer Notice.

 

Section 4.4. Transfers of Class B Shares. (a) Subject to the rights of first
refusal pursuant to Section 4.3 and subject to paragraph (c) below, in the event
that any Stockholder or any members of its Stockholder Group (the “Transferring
Stockholder”) proposes to Transfer any shares of Class B Common Stock, such
Transferring Stockholder shall send a written notice (which obligation may be
satisfied by the delivery of the applicable L/D Offer Notice) (the “Exchange
Notice,” which term will include any corresponding L/D Offer Notice) to Diller,
if the Transferring Stockholder is Liberty or a member of the Liberty
Stockholder Group, or to Liberty, if the Transferring Stockholder is Diller or a
member of the Diller Stockholder Group (the recipient of such notice, the
“Non-Transferring Stockholder”), that such Transferring Stockholder intends to
Transfer shares of Class B Common Stock, including the number of such shares
proposed to be Transferred. The Non-Transferring Stockholder shall give notice
to the Transferring Stockholder within 10 Business Days of its receipt of the
Exchange Notice of its desire to exchange some or all of such shares of Class B
Common Stock proposed to be Transferred for an equivalent number of shares of
Common Stock or its election to purchase all such offered shares of Class B
Common Stock pursuant to Section 4.3. If the Non-Transferring

 

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Stockholder desires to exchange some or all of such shares rather than exercise
its right of first refusal pursuant to Section 4.3, such shares of Class B
Common Stock shall be exchanged. Except to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act and subject to applicable law,
any such exchange shall be consummated immediately prior to the consummation of
any such Transfer.

 

(b) If any shares of Class B Common Stock proposed to be Transferred are not
exchanged pursuant to the provisions of paragraph (a) above, prior to any such
Transfer, the Transferring Stockholder shall convert, or cause to be converted,
such shares of Class B Common Stock into shares of Common Stock (or such other
securities of the Company into which such shares are then convertible).

 

(c) The provisions of Section 4.4(a) and 4.4(b) shall not be applicable to any
Transfers (i) to a member of such Stockholder’s Stockholder Group, (ii) pursuant
to a pledge or grant of a security interest in compliance with clause (x) of
Section 4.1(a), or (iii) from Liberty, Diller or their respective Stockholder
Group to the other Stockholder or its or his Stockholder Group subject to the
terms of this Agreement.

 

Section 4.5. Transferees. (a) Any Permitted Transferee or Permitted Designee of
a Stockholder shall be subject to the terms and conditions of this Agreement as
if such Permitted Transferee or Permitted Designee were Liberty (if Liberty or a
Permitted Transferee of Liberty is the transferor) or Diller (if Diller or a
Permitted Transferee of Diller is the transferor). Prior to the initial
acquisition of beneficial ownership of any Common Shares by any Permitted
Transferee (or a Permitted Designee), and as a condition thereto, each
Stockholder agrees (i) to cause its respective Permitted Transferees or
Permitted Designees to agree in writing with the other parties hereto to be
bound by the terms and conditions of this Agreement to the extent described in
the preceding sentence and (ii) that such Stockholder shall remain directly
liable for the performance by its respective Permitted Transferees or Permitted
Designees of all obligations of such Permitted Transferees or Permitted
Designees under this Agreement. Except as otherwise contemplated by this
Agreement (including the terms of Sections 4.2, 4.3 and 4.4), (i) each of Diller
and Liberty agrees not to cause or permit any of its respective Permitted
Transferees to cease to qualify as a member of such Stockholder’s Stockholder
Group so long as such Permitted Transferee beneficially owns any Common Shares,
and if any such Permitted Transferee shall cease to be so qualified, such
Permitted Transferee shall automatically upon the occurrence of such event cease
to be a “Permitted Transferee” for any purpose under this Agreement and
(ii) each Stockholder agrees not to Transfer any Common Shares to any Affiliate
other than a Permitted Transferee of such Stockholder.

 

(b) No Third Party Transferee shall have any rights or obligations under this
Agreement, except:

 

(i) in the case of a Third Party Transferee of Liberty (or any member of the
Liberty Stockholder Group) who acquires shares of Common Stock and who (together
with its Affiliates) would not be a Public Stockholder, such Third Party
Transferee shall be subject to the obligations of Liberty (but subject to the
other terms and conditions of this Agreement) pursuant to Section 3.1(a) (but
shall not have the right to consent to any Contingent Matters), Section 3.1(b),
Section 3.1(c), Section 3.2, Section 3.4, this Section

 

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4.5 and Article VI; provided that such Third Party Transferee shall only be
subject to such obligations for so long as it would not be a Public Stockholder;
and

 

(ii) in the case of a Third Party Transferee of Diller (or any member of the
Diller Stockholder Group) who (together with its Affiliates) upon consummation
of any Transfer would not be a Public Stockholder, such Third Party Transferee
shall be subject to the obligations of Diller (but subject to the other terms
and conditions of this Agreement) pursuant to Section 3.1(a) (but shall not have
the right to consent to any Contingent Matters), 3.1(b), Section 3.1(c),
Section 3.4, this Section 4.5 and Article VI; provided that such Third Party
Transferee shall only be subject to such obligations for so long as it would not
be a Public Stockholder.

 

(c) Prior to the consummation of a Transfer described in Section 4.5(b) to the
extent rights and obligations are to be assigned, and as a condition thereto,
the applicable Third Party Transferee shall agree in writing with the other
parties hereto to be bound by the terms and conditions of this Agreement to the
extent described in Section 4.5(b). To the extent the Third Party Transferee is
not an “ultimate parent entity” (as defined in the HSR Act), the ultimate parent
entity of such Third Party Transferee shall agree in writing to be directly
liable for the performance of the Third Party Transferee to the same extent
Liberty would be liable for the performance of its Permitted Transferees.

 

Section 4.6. Notice of Transfer. In addition to any other notices required by
this Agreement, to the extent any Stockholder and its Permitted Transferees
Transfer any Common Shares, such Stockholder shall, within three Business Days
following consummation of such Transfer, deliver notice thereof to the Company
and the other Stockholder, provided, however, that no such notice shall be
required to be delivered unless the aggregate Common Shares transferred by such
Stockholder and its Permitted Transferees since the date of the last notice
delivered by such Stockholder pursuant to this Section 4.6 exceeds 1% of the
outstanding Common Shares.

 

Section 4.7. Compliance with Transfer Provisions. Any Transfer or attempted
Transfer of Common Shares in violation of any provision of this Agreement shall
be void.

 

ARTICLE V

 

BDTV ENTITY ARRANGEMENTS

 

Section 5.1. Management. The business and affairs of each BDTV Entity will be
managed by a Board of Directors elected by the holders of a majority of the
voting equity interests in such BDTV Entity. Notwithstanding the foregoing, the
taking of any action by a BDTV Entity with respect to (i) to the extent
permitted by applicable law, any matter that would have constituted a
Fundamental Change under the 1997 IAC Stockholders Agreement (as applied to such
BDTV Entity and to the Common Shares, mutatis mutandis) or (ii) any acquisition
or disposition (including pledges) of any Common Shares held by such BDTV
Entity, in either case, will require the unanimous approval of the holders of
all voting and non-voting equity interests in such BDTV Entity.

 

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Section 5.2. Changes to BDTV Structures. Liberty and Diller agree, subject to
applicable law and FCC Regulations, to take such actions as may be reasonably
necessary, including but not limited to amending the certificate of
incorporation of each BDTV Entity, in order to provide Liberty with the ability
to transfer, directly or indirectly, such amounts of Common Shares as Liberty is
permitted to sell hereunder, and, if requested by Liberty, Diller agrees,
subject to applicable law and at Liberty’s sole cost and expense to take actions
as are reasonably necessary to permit each BDTV Entity to hold Common Shares
separately from shares of capital stock of IAC/InterActiveCorp (“IAC Shares”),
to sell such Common Shares, directly or indirectly, separately from a sale of
the IAC Shares (but only as permitted by the agreements between Liberty and
Diller with respect to the IAC Shares), to reorganize the assets of any or all
of the BDTV Entities to reflect ownership of the Common Shares, including,
without limitation, to transfer Common Shares and/or IAC Shares to a Subsidiary
of a BDTV Entity (and any such Subsidiary of a BDTV Entity that holds Common
Shares or other entity holding Common Shares as a result of such reorganization
shall be deemed a BDTV Unrestricted Entity or BDTV Limited Entity, as
applicable) or otherwise to enable Liberty to exercise its rights hereunder with
respect to Common Shares and under the agreements between Liberty and Diller
with respect to the IAC Shares.

 

Section 5.3. Transfers of BDTV Interests. Except as otherwise specifically
provided in this Agreement (including Section 4.1(b)), no transfers or other
dispositions (including pledges), directly or indirectly, of any interest in
(a) any BDTV Limited Entity by Liberty or (b) any BDTV Entity by Diller will be
permitted without the consent of the other; provided (i) Liberty shall be
entitled to transfer all or part of its interest in a BDTV Entity to members of
the Liberty Stockholder Group, (ii) at such time Liberty becomes the owner of
any voting securities of any BDTV Limited Entity, such BDTV Limited Entity shall
be deemed to be a BDTV Unrestricted Entity, and (iii) in connection with any
sale by Diller entitling Liberty to a right pursuant to Section 4.2, Liberty and
Diller shall take such reasonable action as may be required in order for
Liberty’s interest in a BDTV Limited Entity to be sold in any such transaction.
Without the prior written consent of Liberty, Diller shall not Transfer any
interest in a BDTV Entity (other than to Liberty or, subject to Liberty’s
reasonable consent, a member of the Diller Stockholder Group).

 

For purposes of determining whether Liberty is permitted to transfer the Common
Shares held by a BDTV Unrestricted Entity, (i) such BDTV Unrestricted Entity
shall be deemed to be a member of the Liberty Stockholder Group and the
restrictions on transfers of interests in BDTV Entities shall not apply to
Liberty (subject, however, to the other restrictions on transfer of Common
Shares set forth herein, including the Right of First Refusal applicable to the
Class B Common Stock) and (ii) in connection with any proposed sale by any
member of the Liberty Stockholder Group of the Common Shares held by a BDTV
Entity (or its equity interest in such BDTV Entity), such member of the Liberty
Stockholder Group shall be entitled to purchase Diller’s entire interest in such
BDTV Entity for an amount in cash equal to the Diller Interest Purchase Price
or, at such purchaser’s election, require Diller to sell his interest in such
BDTV Entity to any such transferee for a pro rata portion of the consideration
to be paid by the applicable transferee in such transaction.

 

At such time as (i) the Chairman Termination Date has occurred or Diller becomes
Disabled or (ii) the Diller Stockholder Group ceases to own its Eligible
Stockholder Amount of

 

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Common Shares, Diller shall be required to sell his entire interest in the BDTV
Entities to Liberty (or Liberty’s designee) at a price equal to the Diller
Interest Purchase Price.

 

ARTICLE VI

 

MISCELLANEOUS

 

Section 6.1. Conflicting Agreements. Each of the parties hereto represents and
warrants that such party has not granted and is not a party to any proxy, voting
trust or other agreement that is inconsistent with or conflicts with any
provision of this Agreement.

 

Section 6.2. Duration of Agreement. Except as otherwise provided in this
Agreement, the rights and obligations of a Stockholder under this Agreement
shall terminate as follows:

 

(a) Each of Liberty and Diller shall cease to be entitled to exercise any rights
and shall cease to have any obligations under this Agreement as of the date that
its Stockholder Group collectively ceases to own its Eligible Stockholder Amount
of Common Shares; provided that Liberty shall cease to be entitled to exercise
any rights and shall cease to have any obligations under Section 4.2 at such
time as the Liberty Stockholder Group ceases to beneficially own at least 5% of
the outstanding Common Shares (the “Liberty Termination Date”).

 

(b) Diller and each member of his Stockholder Group shall cease to be entitled
to exercise any rights under this Agreement if the Chairman Termination Date has
occurred or Diller has become Disabled (the “Diller Termination Date”).

 

In addition, at such time as the Chairman Termination Date has occurred or
Diller has become Disabled, neither the Diller Stockholder Group nor the Liberty
Stockholder Group shall have any obligation under this Agreement with respect to
the matters covered under Sections 3.3, 4.1 and 4.3.

 

Section 6.3. Further Assurances. At any time or from time to time after the date
hereof, the parties agree to cooperate with each other, and at the request of
any other party, to execute and deliver any further instruments or documents and
to take all such further action as the other party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.

 

Section 6.4. Amendment and Waiver. This Agreement may not be amended, modified,
or waived except in a written instrument executed by the parties. The failure of
any party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.

 

Section 6.5. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed,

 

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construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.

 

Section 6.6. Effective Time. This Agreement shall become effective as of the
date hereof.

 

Section 6.7. Entire Agreement. Except as otherwise expressly set forth herein,
(a) this Agreement, (b) the Governance Agreement, (c) as provided in Section 5.1
hereof, the IAC 1997 Stockholders Agreement, and (d) as provided in Section 5.2
hereof, the agreements relating to IAC/InterActiveCorp, embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof or 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.

 

Section 6.8. Successors and Assigns. 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 whose purpose is not to
avoid the provisions of this Agreement), by any party without the prior written
consent of the other party hereto. Subject to the foregoing, this Agreement
shall bind and inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.

 

Section 6.9. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

 

Section 6.10. Liabilities Under Federal Securities Laws. The exercise by any
party (or its Affiliates or Stockholder Group, if applicable) (and including, in
the case of the Liberty Stockholder Group, its exercise of the preemptive rights
under Article III of the Governance Agreement) of any rights under this
Agreement shall be subject to such reasonable delay as may be required to
prevent any party or its respective Stockholder Group from incurring any
liability under the federal securities laws and the parties agree to cooperate
in good faith in respect thereof.

 

Section 6.11. Remedies. (a) Each party hereto acknowledges that money damages
would not be an adequate remedy in the event that any of the covenants or
agreements in this Agreement are not performed in accordance with its terms, and
it is therefore agreed that in addition to and without limiting any other remedy
or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.

 

(b) All rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.

 

Section 6.12. Notices. Except as otherwise provided herein, any notice, request,
claim, demand or other communication under this Agreement shall be in writing,
shall be either

 

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personally delivered, delivered by facsimile transmission, or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service.

 

If to Liberty:

 

Liberty Media Corporation

12300 Liberty Boulevard

Englewood, CO 80112

Attention: General Counsel

Telephone: (720) 875-5400

Facsimile: (720) 875-5382

 

with a copy to:

 

Baker Botts LLP

30 Rockefeller Plaza

44th Floor

New York, NY 10112

Attention: Frederick H. McGrath, Esq.

Telephone: (212) 408-2530

Facsimile: (212) 259-2530

 

If to Diller:

 

c/o IAC/InterActiveCorp

152 West 57th Street

New York, NY 10112

Attention: General Counsel

Telephone: (212) 314-7274

Facsimile: (212) 632-9642

 

with a copy to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention: Pamela S. Seymon, Esq.

                 Andrew J. Nussbaum, Esq.

Telephone: (212) 403-1000

Facsimile: (212) 403-2000

 

Section 6.13. Adjustment of Shares Numbers. 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

 

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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.

 

Section 6.14. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
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 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 6.15. Interpretation. The table of contents and headings contained in
this Agreement are for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation”.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement
as of the date first written above.

 

LIBERTY MEDIA CORPORATION

By:  

/s/ CHARLES Y. TANABE

   

Name: Charles Y. Tanabe

   

Title: Senior Vice President

   

/s/ BARRY DILLER

   

BARRY DILLER