Exhibit 10.2


 


EXECUTION COPY


 


AMENDED AND RESTATED

STOCKHOLDERS AGREEMENT


 


between


 


LIBERTY MEDIA CORPORATION


 


and


 


BARRY DILLER


 


Dated as of August 9, 2005


 


 


IAC/INTERACTIVECORP


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE I                                     DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  Certain Defined Terms

  	
   

  
	
  Section 1.2.

  	
  Other Defined Terms

  	
   

  
	
  Section 1.3.

  	
  Other Definitional Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II                                 RESERVED

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III                             CORPORATE GOVERNANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Voting on Certain Matters

  	
   

  
	
  Section 3.2.

  	
  Restrictions on Other Agreements

  	
   

  
	
  Section 3.3.

  	
  Irrevocable Proxy of Liberty

  	
   

  
	
  Section 3.4.

  	
  Cooperation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV                             TRANSFER OF COMMON SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Restrictions on Transfer by Liberty and
  Diller

  	
   

  
	
  Section 4.2.

  	
  Tag-Along for Diller and Liberty for
  Transfers by the Other

  	
   

  
	
  Section 4.3.

  	
  Right of First Refusal Between Liberty and
  Diller

  	
   

  
	
  Section 4.4.

  	
  Transfers of Class B Shares

  	
   

  
	
  Section 4.5.

  	
  Transferees

  	
   

  
	
  Section 4.6.

  	
  Notice of Transfer

  	
   

  
	
  Section 4.7.

  	
  Compliance with Transfer Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V                                 BDTV ENTITY ARRANGEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Management

  	
   

  
	
  Section 5.2.

  	
  Changes to BDTV Structures

  	
   

  
	
  Section 5.3.

  	
  Transfers of BDTV Interests

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI                             MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Conflicting Agreements

  	
   

  
	
  Section 6.2.

  	
  Duration of Agreement

  	
   

  
	
  Section 6.3.

  	
  Further Assurances

  	
   

  
	
  Section 6.4.

  	
  Amendment and Waiver

  	
   

  
	
  Section 6.5.

  	
  Severability

  	
   

  
	
  Section 6.6.

  	
  Effective Time

  	
   

  
	
  Section 6.7.

  	
  Entire Agreement

  	
   

  
	
  Section 6.8.

  	
  Successors and Assigns

  	
   

  
	
  Section 6.9.

  	
  Counterparts

  	
   

  
	
  Section 6.10.

  	
  Liabilities Under Federal Securities Laws

  	
   

  
	
  Section 6.11.

  	
  Remedies

  	
   

  



 





















 


	
  Section 6.12.

  	
  Notices

  	
   

  
	
  Section 6.13.

  	
  Adjustment of Shares Numbers

  	
   

  
	
  Section 6.14.

  	
  Governing Law; Consent to Jurisdiction

  	
   

  
	
  Section 6.15.

  	
  Interpretation

  	
   

  



 


ii





















 


AMENDED AND
RESTATED 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.


 


WHEREAS, the
parties hereto have agreed that Liberty and Diller shall enter into this
Agreement in order to amend and restate in its entirety the respective rights
and obligations of the parties set forth in the Amended and Restated Stockholders
Agreement, dated as of December 16, 2001 (the “2001 Stockholders Agreement”);
and


 


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
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, Expedia, Inc. 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 Amended and Restated
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 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.


 


“CEO” means the Chief Executive Officer of the
Company.


 


“CEO Termination Date” means the later of (i) such
time as Diller no longer serves as CEO 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


 


2





















 


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).


 


“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 IAC/InterActiveCorp, 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 Equity) 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 Equity) 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


 


3





















 


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 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 Amended and
Restated 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.


 


4





















 


“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.


 


“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.


 


5





















 


“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 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

  	
   

  	
  Section

  	
   

  
	
  Appraisal

  	
   

  	
  Section 4.3(c)

  	
   

  
	
  Diller

  	
   

  	
  Preamble

  	
   

  
	
  Diller Termination Date

  	
   

  	
  Section 6.2(b)

  	
   

  
	
  Exchange Notice

  	
   

  	
  Section 4.4(a)

  	
   

  
	
  Expedia 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)

  	
   

  






 


6





















 




	
  Term

  	
   

  	
  Section

  	
   

  
	
  Liberty Termination Date

  	
   

  	
  Section 6.2(a)

  	
   

  
	
  Litigation

  	
   

  	
  Section 6.14

  	
   

  
	
  Non-Transferring Stockholder

  	
   

  	
  Section 4.4(a)

  	
   

  
	
  Settlement Threshold

  	
   

  	
  Section 4.3(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


 


7





















 


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).


 


(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).


 


8





















 


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
CEO 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 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 CEO for any reason other than Cause, Diller shall be deemed to
continue to be CEO 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 CEO 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 CEO).


 


(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


 


9





















 


execute all written consents in lieu of meetings, as applicable, to
effectuate the provisions of this Article III.


 


ARTICLE IV


 


TRANSFER OF COMMON SHARES


 


Section 4.1. 
Restrictions on Transfer
by Liberty and Diller.
 (a)  Until the CEO 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 


 


10





















 


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 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


 


11





















 


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.


 


(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 CEO other than any Transfer made in connection with Diller
ceasing to be CEO.  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


 


12





















 


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 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.


 


13





















 


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 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, Expedia, Inc. (but only for so long
as Diller is Chairman of the Board of Directors of Expedia, Inc.) Liberty
or Diller in any significant matter for the three years prior to the date of
such


 


14





















 


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 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


 


15





















 


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).


 


(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


 


16





















 


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 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


 


17





















 


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 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 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


 


18





















 


case, will require the unanimous approval of the holders of all voting
and non-voting equity interests in such BDTV Entity.


 


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 separately shares of capital stock
of Expedia, Inc. (“Expedia Shares”) to be held by it immediately
following the effective time of the Company’s spin off of Expedia, Inc.,
to sell such Expedia Shares, directly or indirectly, separately from a sale of
the Common Shares (but only as permitted by the agreements between Liberty and
Diller with respect to the Expedia Shares), to reorganize the assets of any or
all of the BDTV Entities to reflect ownership of the Expedia Shares, including,
without limitation, to transfer Common Shares and/or Expedia 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 Expedia 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.


 


19





















 


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


 


In addition,
at such time as the CEO 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


 


20





















 


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, 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 immediately
following the effective time of the Company’s spin off of Expedia, Inc.


 


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 1997 Stockholders Agreement, and (d) as
provided in Section 5.2 hereof, the agreements relating to Expedia, Inc.,
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.  Effective upon the effective time of this
Agreement, the 2001 Stockholders Agreement shall terminate and shall be
superseded by this Agreement.


 


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


 


21





















 


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 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

  



 


22





















 


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 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”.


 


23





















 


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


 


	
   

  	
  LIBERTY MEDIA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ AUTHORIZED REPRESENTATIVE

  	
   

  
	
   

  	
   

  	
     Name:

  
	
   

  	
   

  	
     Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ BARRY DILLER

  	
   

  
	
   

  	
   

  	
  BARRY DILLER

  



 


 


[SIGNATURE
PAGE TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT]