iac8k-dillerletteragreement.htm - Generated by SEC Publisher for SEC Filing


Exhibit
10.2





IAC-Diller Letter Agreement


IAC/InterActiveCorp


555
West 18th Street


New
York, NY  10011


December 1, 2010


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


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


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


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


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


	
                                                                                                                                                                                                                                              
  

  












 
















 
 





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


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


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


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


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


 
















 
 





5. 
Restrictions on Transfer.  Other than as permitted by this Section
5, Diller may not Transfer (as defined below) any Restricted Class B Shares
prior to the five year anniversary of the date of this letter agreement (the
date hereof to the date of such five year anniversary, the “Restricted Period”),
and the Company will not register during the Restricted Period any Transfer of
Restricted Class B Shares that does not comply with this letter
agreement.  In the event that Diller proposes to Transfer any of the
Restricted Class B Shares during the Restricted Period, Diller shall notify the
Company prior to such proposed Transfer and convert such Restricted Class B
Shares proposed to be Transferred into shares of Common Stock (or any such
other securities into which such shares are then convertible) prior to such
Transfer; provided, however, that no such conversion shall be required with
respect to any such Transfer of Restricted Class B Shares to any Permitted
Transferee if such Permitted Transferee agrees in a writing reasonably
satisfactory to the Company to be bound for the remainder of the Restricted
Period by this Section 5 (such Permitted Transferee who subsequently proposes
to Transfer Restricted Class B Shares during the Restricted Period, a “Permitted
Transferor”).  In the event that during the Restricted Period Diller
or a Permitted Transferor fails to so convert the Restricted Class B Shares to
be Transferred into shares of Common Stock (or any such other securities into
which such shares are then convertible) prior to such proposed Transfer (other
than to a Permitted Transferee), Diller or the Permitted Transferor, as
applicable, shall be deemed to have elected to convert such Restricted Class B
Shares that are Transferred (and such Restricted Class B Shares that are to be
Transferred shall be deemed to automatically convert) into an equivalent number
of shares of Common Stock immediately upon such Transfer.  Any purported
Transfer of Restricted Class B Shares during the Restricted Period not
permitted hereunder shall be void and of no effect.  The Company shall
reference on the certificates for the Restricted Class B Shares the
restrictions on transfer imposed by this Section 5, with such references and
restrictions to be removed at the expiration of the Restricted Period. 
For purposes of this letter agreement:


“Family
Member” means, with respect to Diller, his spouse or any of his or his
spouse’s lineal descendants.


“Permitted
Transferee” means (i) Diller, any of his Family Members or the estate of
any of the aforementioned individuals, (ii) any trust for the benefit of solely
one or more of the individuals described in clause (i), or (iii) any Affiliate
(other than a trust) of Diller or any of his Family Members which Diller or
such Family Member controls (as defined in the Liberty Diller Agreement).


“Transfer”
means, directly or indirectly, to sell, transfer, assign, pledge, encumber,
hypothecate or similarly dispose of, either voluntarily or involuntarily, or to
enter into any contract, option or other arrangement or understanding with respect
to the sale, transfer, assignment, pledge, encumbrance, hypothecation or
similar disposition, of any Restricted Class B Shares.  


 
















 
 





6. 
Available Shares.  The Company shall at all times prior to the
expiration of the Diller Exchange Right reserve and keep available in its
treasury the full number of shares of Class B Common Stock potentially subject
from time to time to the Diller Exchange Right.


7. 
Section 16 Matters.  The Board of Directors of the Company, or a
committee thereof consisting of non-employee directors (as such term is defined
for purposes of Rule 16b-3 under the Exchange Act), shall with respect to each
exercise of the Diller Exchange Right or as may be otherwise requested by
Diller, adopt resolutions and otherwise take all actions necessary to cause any
acquisitions or deemed acquisitions from the Company of Class B Common Stock
transferred to Diller pursuant to this letter agreement and the Diller Exchange
Right and any dispositions or deemed dispositions to the Company of Common Stock
pursuant to this letter agreement and the Diller Exchange Right to be exempt
under Rule 16b-3 under the Exchange Act. 


8. 
Adjustment.  The one-to-one conversion/exchange ratio with respect
to the Diller Exchange Right shall in all events be equitably preserved in the
event of any recapitalization of the Company, subdivision, reclassification,
stock dividend on, or a stock split or combination of, outstanding Common Stock
or Class B Common Stock, in the event of any merger, consolidation or other
reorganization of the Company with another corporation, or in the event of any
other similar event on or with respect to any shares of Common Stock or Class B
Common Stock (collectively, an “Adjustment Event”).  Without
duplication of the foregoing, the Share Cap shall also be equitably adjusted in
the event of any such Adjustment Event.


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


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


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


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


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


 
















 
 





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


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


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


                       
if to IAC, to:


IAC/InterActiveCorp 

            555 West 18th
Street


                       
New York, New York 10011

                       
Attn:  General Counsel


                       
Facsimile: (212) 632-9551


                       
if to Diller, to:


                       
c/o IAC/InterActiveCorp 

                       
555 West 18th Street


                       
New York, New York 10011

                       
Attn:  General Counsel


                       
Facsimile: (212) 632-9551


 
















 
 





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


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


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


 
















 
 





If the
foregoing is consistent with your understanding, please so indicate by your
signature below, which will constitute the agreement of the parties hereto.




	
   

  	
  IAC/INTERACTIVECORP

   

   

  By: /s/ Gregg
  Winiarski                               
  

       Name: Gregg Winiarski

       Title: Senior Vice President & General
  Counsel

  
	
   

  	
   

  
	
  Accepted and Agreed:

   

   

  /s/ Barry
  Diller                                     
  

  

  Barry Diller