Exhibit 10.1


 


EXECUTION COPY


 


 


AMENDED AND RESTATED


 


GOVERNANCE AGREEMENT


 


among


 


IAC/INTERACTIVECORP,


 


LIBERTY MEDIA CORPORATION,


 


and


 


BARRY DILLER


 


DATED AS OF AUGUST 9, 2005


 





















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  ARTICLE I

  	
   

  	
   

  
	
   

  	
   

  	
  TRANSFEREES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE II

  	
   

  	
   

  
	
   

  	
   

  	
  BOARD OF DIRECTORS AND RELATED MATTERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
   

  	
  Board of Directors

  	
   

  	
   

  
	
  Section 2.02.

  	
   

  	
  Management of the Business

  	
   

  	
   

  
	
  Section 2.03.

  	
   

  	
  Contingent Matters

  	
   

  	
   

  
	
  Section 2.04.

  	
   

  	
  Notice of Events

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE III

  	
   

  	
   

  
	
   

  	
   

  	
  PREEMPTIVE
  RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Liberty Preemptive Rights

  	
   

  	
   

  
	
  Section 3.02.

  	
   

  	
  Investment Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE IV

  	
   

  	
   

  
	
   

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Representations and Warranties of the Company

  	
   

  	
   

  
	
  Section 4.02.

  	
   

  	
  Representations and Warranties of the Stockholders

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
   

  	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  “2001 Governance Agreement”

  	
   

  	
   

  
	
  Section 5.02.

  	
   

  	
  “Affiliate”

  	
   

  	
   

  
	
  Section 5.03.

  	
   

  	
  “Amended and Restated Stockholders Agreement”

  	
   

  	
   

  
	
  Section 5.04.

  	
   

  	
  “BDTV Entities”

  	
   

  	
   

  
	
  Section 5.05.

  	
   

  	
  “Beneficial Ownership”

  	
   

  	
   

  
	
  Section 5.06.

  	
   

  	
  “CEO”

  	
   

  	
   

  
	
  Section 5.07.

  	
   

  	
  “CEO Termination Date”

  	
   

  	
   

  
	
  Section 5.08.

  	
   

  	
  “Commission”

  	
   

  	
   

  
	
  Section 5.09.

  	
   

  	
  “Company”

  	
   

  	
   

  
	
  Section 5.10.

  	
   

  	
  “Company Common Shares”

  	
   

  	
   

  
	
  Section 5.11.

  	
   

  	
  “Company Class B Stock”

  	
   

  	
   

  
	
  Section 5.12.

  	
   

  	
  “Company Common Stock”

  	
   

  	
   

  
	
  Section 5.13.

  	
   

  	
  “Consenting Party”

  	
   

  	
   

  
	
  Section 5.14.

  	
   

  	
  “Demand Registration”

  	
   

  	
   

  
	
  Section 5.15.

  	
   

  	
  “Disabled”

  	
   

  	
   

  
	
  Section 5.16.

  	
   

  	
  “EBITDA”

  	
   

  	
   

  
	
  Section 5.17.

  	
   

  	
  “Equity Securities”

  	
   

  	
   

  
	
  Section 5.18.

  	
   

  	
  “Exchange Act”

  	
   

  	
   

  



 


i





















 


	
  Section 5.19.

  	
   

  	
  “Excluded Issuance”

  	
   

  	
   

  
	
  Section 5.20.

  	
   

  	
  “Fair Market Value”

  	
   

  	
   

  
	
  Section 5.21.

  	
   

  	
  “IAC”

  	
   

  	
   

  
	
  Section 5.22.

  	
   

  	
  “Issue Price”

  	
   

  	
   

  
	
  Section 5.23.

  	
   

  	
  “Liberty Director”

  	
   

  	
   

  
	
  Section 5.24.

  	
   

  	
  “Liberty Holdco”

  	
   

  	
   

  
	
  Section 5.25.

  	
   

  	
  “Ownership Percentage”

  	
   

  	
   

  
	
  Section 5.26.

  	
   

  	
  “Permitted Transferee”

  	
   

  	
   

  
	
  Section 5.27.

  	
   

  	
  “Person”

  	
   

  	
   

  
	
  Section 5.28.

  	
   

  	
  “Sale Transaction”

  	
   

  	
   

  
	
  Section 5.29.

  	
   

  	
  “Securities Act”

  	
   

  	
   

  
	
  Section 5.30.

  	
   

  	
  “Stockholders”

  	
   

  	
   

  
	
  Section 5.31.

  	
   

  	
  “Stockholders Group”

  	
   

  	
   

  
	
  Section 5.32.

  	
   

  	
  “Subsidiary”

  	
   

  	
   

  
	
  Section 5.33.

  	
   

  	
  “Third Party Transferee”

  	
   

  	
   

  
	
  Section 5.34.

  	
   

  	
  “Total Debt”

  	
   

  	
   

  
	
  Section 5.35.

  	
   

  	
  “Total Debt Ratio”

  	
   

  	
   

  
	
  Section 5.36.

  	
   

  	
  “Total Equity Securities”

  	
   

  	
   

  
	
  Section 5.37.

  	
   

  	
  “Transfer”

  	
   

  	
   

  
	
  Section 5.38.

  	
   

  	
  “Voting Securities”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE VI

  	
   

  	
   

  
	
   

  	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Notices

  	
   

  	
   

  
	
  Section 6.02.

  	
   

  	
  Amendments; No Waivers

  	
   

  	
   

  
	
  Section 6.03.

  	
   

  	
  Successors And Assigns

  	
   

  	
   

  
	
  Section 6.04.

  	
   

  	
  Governing Law; Consent To Jurisdiction

  	
   

  	
   

  
	
  Section 6.05.

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
  Section 6.06.

  	
   

  	
  Specific Performance

  	
   

  	
   

  
	
  Section 6.07.

  	
   

  	
  Registration Rights

  	
   

  	
   

  
	
  Section 6.08.

  	
   

  	
  Termination

  	
   

  	
   

  
	
  Section 6.09.

  	
   

  	
  Severability

  	
   

  	
   

  
	
  Section 6.10.

  	
   

  	
  Cooperation

  	
   

  	
   

  
	
  Section 6.11.

  	
   

  	
  Adjustment Of Share Numbers

  	
   

  	
   

  
	
  Section 6.12.

  	
   

  	
  Effective Time

  	
   

  	
   

  
	
  Section 6.13.

  	
   

  	
  Entire Agreement

  	
   

  	
   

  
	
  Section 6.14.

  	
   

  	
  Interpretation

  	
   

  	
   

  
	
  Section 6.15.

  	
   

  	
  Headings

  	
   

  	
   

  



 


ii





















 


EXECUTION COPY


 


Amended and Restated Governance Agreement


 


Amended and
Restated Governance Agreement, dated as of August 9, 2005, among IAC/InterActiveCorp,
a Delaware corporation (“IAC,” or the “Company”), Liberty Media
Corporation, for itself and on behalf of the members of its Stockholder Group (“Liberty”)
and Mr. Barry Diller (“Mr. Diller”) for himself and on behalf
of the members of his Stockholder Group.


 


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


 


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


 


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


 


ARTICLE I


 


TRANSFEREES


 


No Third Party
Transferee shall have any rights or obligations under this Agreement, except as
specifically provided for in this Agreement and except that if such Third Party
Transferee shall acquire Beneficial Ownership of more than 5% of the
outstanding Total Equity Securities upon consummation of any Transfer or series
of related Transfers from a Stockholder, to the extent such Stockholder has the
right to Transfer a Demand Registration and assigns such right in connection
with a Transfer, such Third Party Transferee shall have the right to initiate
one or more Demand Registrations pursuant to Section 6.07 or any registration
rights agreement that replaces or supersedes Section 6.07 (and shall be
entitled to such other rights that a Stockholder would have applicable to such
Demand Registration), subject to the obligations of such Stockholder applicable
to such demand (and the number of Demand Registrations to which such Stockholder
is entitled under Section 6.07 hereof shall be correspondingly decreased).


 


ARTICLE II


 


BOARD
OF DIRECTORS AND RELATED MATTERS


 


Section 2.01.                             Board of Directors.


 


(a)                                  Liberty shall have the right to
nominate up to two Liberty Directors so long as Liberty Beneficially Owns at
least 33,651,963 Equity Securities (so long as the Ownership Percentage of
Liberty is at least equal to 15% of the Total Equity Securities.  Liberty shall have the right to nominate one
Liberty Director so long as Liberty Beneficially Owns at least 22,434,642
Equity Securities (so long as Liberty’s Ownership Percentage is at least equal
to 5% of the Total Equity Securities).


 





















 


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


 


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


 


(d)                                 In the event that a vacancy is
created at any time by the death, disability, retirement, resignation or
removal (with or without cause) of any Liberty Director, Liberty shall have the
right to designate a replacement Liberty Director to fill such vacancy, and the
Company agrees to use its best efforts to cause such vacancy to be filled with
the replacement Liberty Director so designated. Upon the written request of
Liberty, each Stockholder shall vote (and cause each of the members of its Stockholder
Group to vote, if applicable), or act by written consent with respect to, all
Equity Securities Beneficially Owned by it and otherwise take or cause to be
taken all actions necessary to remove the director designated by Liberty and to
elect any replacement director designated by Liberty as provided in the first
sentence of this Section 2.01(d). 
The parties hereto hereby acknowledge that as of the date of this
Agreement there exist two vacancies with respect to which Liberty has the right
to designate Liberty Directors in accordance with the terms of this Agreement
and that, upon Liberty’s designation of Liberty Directors to fill such
vacancies, the Company will use its best efforts to cause such vacancies to be
filled within a reasonable period of time by such Liberty Directors so
designated.


 


Section 2.02.                             Management of the Business.  Except as indicated in Section 2.03
below or as required by Delaware law or the Certificate of Incorporation of the
Company and the By-Laws and the agreements contemplated thereby, Mr. Diller,
so long as he is CEO and has not become Disabled, will continue to have full
authority to operate the day-to-day business affairs of the Company to the same
extent as prior to the date hereof.  The
Company shall use its reasonable best efforts to cause one Liberty Director designated
by Liberty for such purpose to be appointed as a member of a committee of the
Board of Directors and, to the extent such person qualifies under applicable law
(including stock exchange or NASDAQ requirements, as applicable, and tax laws)
and Section 16(b) under the Exchange Act or other similar requirements,
all committees and subcommittees of the Board of Directors that make
determinations relating to the compensation of executives of the Company.


 


Section 2.03.                             Contingent Matters.  So long as Liberty or Mr. Diller
Beneficially Owns, in the case of Liberty, at least 29,912,856 Equity
Securities (including all Equity Securities held by the BDTV Entities) (so long
as such Ownership Percentage equals at least 5% of the Total Equity
Securities), or, in the case of Mr. Diller, at least five million Company Common
Shares with respect to which he has a pecuniary interest and the CEO
Termination Date (as defined in the Amended and Restated Stockholders Agreement
and not as defined in this Agreement) has not occurred and Mr. Diller has
not become Disabled, neither the Company nor any Subsidiary


 


2





















 


shall take any of the following actions (any such action, a “Contingent
Matter”) without the prior approval of Mr. Diller and/or Liberty, whichever
(or both) satisfy the foregoing Beneficial Ownership requirements:


 


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


 


(b)                                 if the Total Debt Ratio
continuously equals or exceeds 4:1 over a twelve-month period, then, for so
long as the Total Debt Ratio continues to equal or exceed 4:1:


 


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


 


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


 


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


 


(iv)                              engagement by the Company
in any line of business other than media, communications and entertainment
products, services and programming,


 


3





















 


and electronic retailing and commerce, or other businesses engaged in
by the Company as of the date of determination of the Total Debt Ratio;


 


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


 


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


 


Section 2.04.                             Notice of Events.  In the event that (a) the Company
intends to engage in a transaction of a type that is described in Section 2.03,
and (b) the Company does not intend to seek consent from Liberty and/or Mr. Diller,
whichever (or both) are required to consent to a Contingent Matter (a “Consenting
Party”) due to the Company’s good faith belief that the specific provisions
of Section 2.03 do not require such consent but that reasonable people
acting in good faith could differ as to whether consent is required pursuant to
such Section, the Company shall notify the Consenting Parties as to the
material terms of the transaction (including the Company’s estimate of the
timing thereof) by written notice (including a statement of the Total Debt
Ratio) delivered as far in advance of engaging in such transaction as is
reasonably practicable unless such transaction was previously publicly
disclosed.


 


ARTICLE III


 


PREEMPTIVE RIGHTS


 


Section 3.01.                             Liberty Preemptive Rights.  (a) In the event that after the date
hereof, the Company issues or proposes to issue (other than to the Company and
its Affiliates or Liberty and its Affiliates, and other than pursuant to an Excluded
Issuance) any Company Common Shares (including Company Common Shares issued
upon exercise, conversion or exchange of options, warrants and convertible
securities (other than shares of Company Common Stock issued upon conversion of
shares of Company Class B Stock) and such issuance, together with any
prior issuances aggregating less than 1% with respect to which Liberty’s
preemptive right has not become exercisable (including issuances prior to the
date hereof which would be included for purposes of calculating the 1%
threshold that have not previously been taken into account in connection with
the preemptive right last preceding the date of this Agreement pursuant to the
2001 Governance Agreement), shall be in excess of 1% of the total number of Company
Common Shares outstanding after giving effect to such issuance (an “Additional
Issuance”), the Company shall give written notice to Liberty not later than
five business days after the issuance, specifying the number of Company Common
Shares issued or to be issued and the Issue Price (if known) per share.  Liberty shall have the right (but not the obligation)
to purchase or cause one or more of the Liberty Holdcos to purchase for cash a
number (but not less than such number) of Company Common Shares (allocated
between Company Common Stock and Company Class B Stock in the same
proportion as the issuance or issuances giving rise to the preemptive right hereunder,
except to the extent that Liberty opts to receive Company Common Stock in lieu
of


 


4





















 


Company Class B Common Stock), so that Liberty and the Liberty Holdcos
shall collectively maintain the identical percentage equity Beneficial Ownership
interest in the Company that Liberty and the Liberty Holdcos collectively owned
immediately prior to the notice from the Company to Liberty described in the
first sentence of this paragraph (but not in excess of 20.01% of the
outstanding Total Equity Securities) after giving effect to such Additional
Issuance and to shares of Company Common Stock that are to be issued to Liberty
and the Liberty Holdcos pursuant to this Section 3.01 by sending an
irrevocable written notice to the Company not later than fifteen business days
after receipt of such notice (or, if later, two business days following the
determination of the Issue Price) from the Company that it elects to purchase or
to cause one or more of the Liberty Holdcos to purchase all of such Company
Common Shares (the “Additional Shares”). 
The closing of the purchase of Additional Shares shall be the later of
ten business days after the delivery of the notice of election by Liberty and
five business days after receipt of any necessary regulatory approvals.


 


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


 


Section 3.02.                             Investment Agreement.  Section 1.7 and Section 1.8 of the Investment
Agreement shall be of no further force or effect and Liberty shall cease to
have any preemptive rights with respect to Equity Securities, except as otherwise
provided with respect to Liberty in Section 3.01 of this Agreement.


 


ARTICLE IV


 


REPRESENTATIONS
AND WARRANTIES


 


Section 4.01.                             Representations and Warranties
of the Company.  The Company represents and warrants to Mr. Diller
and Liberty that (a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, and, assuming this Agreement constitutes a valid and
binding obligation of each Stockholder, is enforceable against the Company in
accordance with its terms, (d) neither the execution, delivery or performance
of this Agreement by the Company constitutes a breach or violation of or
conflicts with the Company’s Certificate of Incorporation or By-laws or any
material agreement to which the Company is a party and (e) none of such
material agreements would impair in any material respect the ability of the
Company to perform its obligations hereunder.


 


Section 4.02.                             Representations and Warranties
of the Stockholders.  Each Stockholder, severally as to itself
(and, in the case of Mr. Diller, as applicable), represents and warrants
to the


 


5





















 


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


 


ARTICLE V


 


DEFINITIONS


 


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


 


Section 5.01.                             “2001 Governance Agreement”
shall have the meaning set forth in the Recitals to this Agreement.


 


Section 5.02.                             “Affiliate” shall have
the meaning set forth in Rule 12b-2 under the Exchange Act (as in effect
on the date of this Agreement).  For purposes
of this definition, (i) natural persons shall not be deemed to be
Affiliates of each other, (ii) none of Mr. Diller, Liberty or any of
their respective Affiliates shall be deemed to be an Affiliate of the Company
or its Affiliates, (iii) none of the Company, Liberty or any of their
respective Affiliates shall be deemed to be an Affiliate of Mr. Diller or
his Affiliates, (iv) none of the Company, Mr. Diller or any of their
respective Affiliates shall be deemed to be an Affiliate of Liberty or its
Affiliates, and (v) the Company shall not be deemed to be an Affiliate of Expedia, Inc.
based upon the common control of the Company and Expedia, Inc. by the
Stockholders.


 


Section 5.03.                             “Amended and Restated
Stockholders Agreement” shall mean the stockholders agreement dated as of
the date hereof between Liberty and Mr. Diller.


 


Section 5.04.                             “BDTV Entities” shall
have the meaning specified in the Amended and Restated Stockholders Agreement.


 


Section 5.05.                             “Beneficial Ownership” or
“Beneficially Own” shall have the meaning given such term in Rule 13d-3
under the Exchange Act and a Person’s Beneficial Ownership of Company Common
Shares shall be calculated in accordance with the provisions of such Rule; provided,
however, that for purposes of Beneficial Ownership, (a) a Person shall
be deemed to be the Beneficial Owner of any Equity Securities which may be
acquired by such Person


 


6





















 


(disregarding any legal impediments to such Beneficial Ownership), whether
within 60 days or thereafter, upon the conversion, exchange or exercise of any
warrants, options (which options held by Mr. Diller shall be deemed to be exercisable),
rights or other securities issued by the Company or any Subsidiary thereof, (b) no
Person shall be deemed to Beneficially Own any Equity Securities solely as a
result of such Person’s execution of this Agreement (including by virtue of
holding a proxy with respect to any Equity Securities), or the Amended and
Restated Stockholders Agreement, or with respect to which such Person does not
have a pecuniary interest, and (c) Liberty shall be deemed to be the
Beneficial Owner of all of the Company Common Shares held by each BDTV Entity.


 


Section 5.06.                             “CEO” shall mean the
Chief Executive Officer of the Company or any successor entity.


 


Section 5.07.                             “CEO Termination Date”  shall mean the date that Mr. Diller no
longer serves as CEO.


 


Section 5.08.                             “Commission” shall mean
the Securities and Exchange Commission.


 


Section 5.09.                             “Company” shall have the
meaning set forth in the Recitals to this Agreement.


 


Section 5.10.                             “Company Common Shares”
shall mean shares of Company Common Stock and Company Class B Stock.


 


Section 5.11.                             “Company Class B Stock”
shall mean class B common stock, $0.001 par value per share, of the Company.


 


Section 5.12.                             “Company Common Stock”
shall mean common stock, $0.001 par value per share, of the Company.


 


Section 5.13.                             “Consenting Party” shall
have the meaning set forth in Section 2.03 of this Agreement.


 


Section 5.14.                             “Demand Registration” shall
have the meaning set forth in Section 6.07(b) of this Agreement.


 


Section 5.15.                             “Disabled” shall mean the
disability of Mr. Diller after the expiration of more than 180 consecutive
days after its commencement which is determined to be total and permanent by a
physician selected by Liberty and reasonably acceptable to Mr. Diller, his
spouse or a personal representative designated by Mr. Diller; provided
that Mr. Diller shall be deemed to be disabled only following the
expiration of 90 days following receipt of a written notice from the Company and
such physician specifying that a disability has occurred if within such 90-day
period he fails to return to managing the business affairs of the Company.  Total disability shall mean mental or
physical incapacity that prevents Mr. Diller from managing the business
affairs of the Company.


 


Section 5.16.                             “EBITDA” shall mean, for
any period, for the Company and its Subsidiaries, on a combined consolidated
basis: net income plus (to the extent reflected in the


 


7





















 


determination of net income) (i) provision for income taxes, (ii) minority
interest, (iii) interest income and expense, (iv) depreciation and
amortization, (v) amortization of cable distribution fees, and (vi) amortization
of non-cash distribution and marketing expense and non-cash compensation
expense.


 


Section 5.17.                             “Equity Securities” shall
mean the equity securities of the Company calculated on a Company Common Stock
equivalent basis, including the Company Common Shares and those shares issuable
upon exercise, conversion or redemption of other securities of the Company not
otherwise included in this definition.


 


Section 5.18.                             “Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.


 


Section 5.19.                             “Excluded Issuance” shall
mean any issuance of Company Common Shares (i) in a Sale Transaction, or (ii) which
is “restricted stock” or the ownership of which is otherwise subject to
forfeiture (“Restricted Stock”), provided that for purposes of this
definition and Section 3.01 of this Agreement any stock covered by the provisions
of clause (ii) shall be deemed to have been issued for purposes of Section 3.01
of this Agreement on the date (the “Lapse Date”) the restrictions on
such stock lapse or on which the stock is no longer subject to forfeiture.


 


Section 5.20.                             “Fair Market Value” for a
security publicly traded in the over-the-counter market (on either NASDAQ-NMS
or NASDAQ) or on a recognized exchange shall be the average closing price of
such security for the three trading days ending on the applicable day (or, if
such day is not a trading day, the trading day immediately preceding the
applicable day), and for all other securities or property “Fair Market Value”
shall be determined, by a nationally recognized investment banking firm which
has not been engaged by the Company or Liberty or their respective Affiliates (including,
with respect to the Company, for so long as Mr. Diller is Chairman of the
Board of Expedia, Inc., Expedia, Inc.) for the prior three years,
selected by (i) the Company and (ii) Liberty; provided that, if the
Company and Liberty cannot agree on such an investment banking firm within 10
business days, such investment banking firm shall be selected by a panel
designated in accordance with the rules of the American Arbitration
Association.  The fees, costs and expenses
of the American Arbitration Association and the investment banking firm so
selected shall be borne equally by the Company and Liberty.


 


Section 5.21.                             “IAC” shall have the
meaning set forth in the Recitals to this Agreement.


 


Section 5.22.                             “Issue Price” shall mean
the price per share equal to (i) in connection with an underwritten
offering of Company Common Shares, the initial price at which the stock is
offered to the public or other investors, (ii) in connection with other
sales of Company Common Shares for cash, the cash price paid for such stock, (iii) in
connection with the deemed issuances of Restricted Stock, the Fair Market Value
of the stock on the Lapse Date (as defined in the definition of “Excluded
Issuance” above), (iv) in connection with the issuance of Company Common
Shares as consideration in an acquisition by the Company, the average of the
Fair Market Value of the stock for the five trading days ending on the third
trading day immediately preceding (a) the date upon which definitive
agreements with respect to such acquisition were entered into if the number of
Company Common Shares issuable in such transaction is fixed on


 


8





















 


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


 


Section 5.23.                             “Liberty Director” shall
mean (a) any executive officer or director of Liberty designated by
Liberty to serve on the Company’s Board of Directors, provided that the Company’s
Board of Directors is not unable, in the exercise of its fiduciary
responsibilities, to recommend that the Company’s stockholders elect such
individual to serve on the Company’s  Board
of Directors, or (b) any other Person designated by Liberty who is reasonably
acceptable to the Company.


 


Section 5.24.                             “Liberty Holdco” shall
mean any holding company wholly owned by Liberty and reasonably acceptable to
the Company, formed solely for the purpose of acquiring and holding an equity
interest in the Company.


 


Section 5.25.                             “Ownership Percentage” means,
with respect to any Stockholder, at any time, the ratio, expressed as a
percentage, of (i) the Equity Securities Beneficially Owned by such
Stockholder (disregarding any legal impediments to such Beneficial Ownership)
and its Affiliates to (ii) the sum of (x) the Total Equity Securities and
(y) with respect to such Stockholder, any Company Common Shares included in
clause (i) that are issuable upon conversion, exchange or exercise of
Equity Securities that are not included in clause (x).


 


Section 5.26.                             “Permitted Transferee”
shall mean Liberty or Mr. Diller and the members of their respective
Stockholder Groups.


 


Section 5.27.                             “Person” shall mean any
individual, partnership, joint venture, corporation, limited liability company,
trust, unincorporated organization, government or department or agency of a
government.


 


Section 5.28.                             “Sale Transaction” shall
mean the consummation of a merger, consolidation or amalgamation between the
Company and another entity (other than an Affiliate of the Company) in which
the Company is acquired by such other entity or a Person who controls such
entity, or a sale of all or substantially all of the assets of the Company to
another entity, other than a Subsidiary of the Company.


 


Section 5.29.                             “Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder.


 


Section 5.30.                             “Stockholders” shall mean
Liberty and Mr. Diller.


 


Section 5.31.                             “Stockholder Group” shall
mean (a) in respect of Liberty, the Liberty Stockholder Group (as defined
in the Amended and Restated Stockholders Agreement) and (b) in respect of Mr. Diller,
the Diller Stockholder Group (as defined in the Amended and Restated
Stockholders Agreement).


 


9





















 


Section 5.32.                             “Subsidiary” shall mean,
as to any Person, any corporation or other Person at least a majority of the
shares of stock or other ownership interests of which having general voting
power under ordinary circumstances to elect a majority of the Board of
Directors or similar governing body of such corporation or other entity
(irrespective of whether or not at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency) is, at the time as of which the determination is being made, owned
by such Person, or one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries.


 


Section 5.33.                             “Third Party Transferee”
shall have the meaning ascribed to such term in the Amended and Restated
Stockholders Agreement.


 


Section 5.34.                             “Total Debt” shall mean
all obligations of the Company and its Subsidiaries for money borrowed, at such
time (including all long-term senior and subordinated indebtedness, all
short-term indebtedness, the stated amount of all letters of credit issued for
the account of the Company or any of its Subsidiaries and (without duplication)
all unreimbursed draws thereunder (but excluding trade letters of credit)), net
of cash (other than working capital) or cash equivalent securities, as shown on
the consolidated quarterly or annual financial statements, including the notes
thereto, of the Company and its Subsidiaries included in the Company’s filings
under the Exchange Act for such period, determined in accordance with GAAP,
provided, however, that Total Debt shall not include hedging, pledging,
securitization or similar transactions involving securities owned by the
Company or its Subsidiaries to monetize the underlying securities, to the
extent such securities are the sole means of satisfying such obligations and
otherwise the fair value thereof.


 


Section 5.35.                             “Total Debt Ratio” shall
mean, at any time, the ratio of (i) Total Debt of the Company and its
Subsidiaries on a combined consolidated basis as of such time to (ii) EBITDA
for the four fiscal quarter period ending as of the last day of the most
recently ended fiscal quarter as of such time.


 


Section 5.36.                             “Total Equity Securities”
at any time shall mean, subject to the next sentence, the total number of the
Company’s outstanding equity securities calculated on a Company Common Stock
equivalent basis.  Any Equity Securities Beneficially
Owned by a Person that are not outstanding Voting Securities but that, upon
exercise, conversion or exchange, would become Voting Securities, shall be
deemed to be outstanding for the purpose of computing Total Equity Securities
and the percentage of Equity Securities owned by such  Person but shall not be deemed to be
outstanding for the purpose of computing Total Equity Securities and the
percentage of the Equity Securities owned by any other Person.


 


Section 5.37.                             “Transfer” shall mean,
directly or indirectly, to sell, transfer, assign, pledge, encumber,
hypothecate or similarly dispose of, either voluntarily or involuntarily, or to
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation
or similar disposition of, any Company Common Shares Beneficially Owned by such
Stockholder or any interest in any Company Common Shares Beneficially Owned by
such Stockholder, provided, however, that, a merger or
consolidation in which a Stockholder is a constituent corporation shall not be
deemed to be the Transfer of any Company Common Shares Beneficially Owned by
such Stockholder


 


10





















 


(provided, that a significant purpose of any such transaction is
not to avoid the provisions of this Agreement). 
For purposes of this Agreement, the conversion of Company Class B
Stock into Company Common Stock shall not be deemed to be a Transfer.


 


Section 5.38.                             “Voting Securities” shall
mean at any particular time the shares of any class of capital stock of the
Company which are then entitled to vote generally in the election of directors.


 


ARTICLE VI


 


MISCELLANEOUS


 


Section 6.01.                             Notices.  All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy)
and shall be given, if to Liberty Media Corporation, to:


 


Liberty Media
Corporation

12300 Liberty Boulevard

Englewood, Colorado 80112

Attention:  General Counsel

Facsimile:  (720) 875-5382


 


with a copy
to:


 


Baker Botts
L.L.P.

30 Rockefeller Plaza

44th Floor

New York, New York 10112

Attention:  Frederick H.  McGrath

Facsimile:  (212) 408-2501


 


if to Mr. Diller,
to:


 


Barry Diller

Chairman and Chief Executive Officer

IAC/InterActiveCorp

Carnegie Hall Tower

152 West 57th Street

New York, New York 10019

Facsimile:  (212) 632-9642


 


with a copy
to:


 


11





















 


IAC/InterActiveCorp

Carnegie Hall Tower

152 West 57th Street

New York, New York 10019

Attention:  General Counsel

Facsimile:  (212) 632-9642


 


with a copy
to:


 


Wachtell,
Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention:  Pamela S. Seymon


 Andrew J. Nussbaum


Facsimile:  (212)
403-2000


 


if to the
Company, to:


 


IAC/InterActiveCorp

Carnegie Hall Tower

152 West 57th Street

New York, New York 10019

Attention:  General Counsel

Facsimile:  (212) 632-9642


 


with a copy
to:


 


Wachtell,
Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention:  Pamela S.  Seymon


 Andrew J. Nussbaum


Facsimile:  (212)
403-2000


 


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


 


Section 6.02.                             Amendments; No Waivers.  (a) Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the party whose rights or obligations
hereunder are affected by such amendment, or in the case of a waiver, by the
party or parties against whom the waiver is to be effective.  Any amendment or waiver by the Company shall
be authorized by a majority of the Board of Directors (excluding for this
purpose any director who is a Liberty Director as provided for in this
Agreement).


 


12





















 


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


 


Section 6.03.                             Successors And Assigns.  Except as provided in Article I, neither
this Agreement nor any of the rights or obligations under this Agreement shall
be assigned, in whole or in part (except by operation of law pursuant to a merger
of Liberty with another Person a significant purpose of which is not to avoid
the provisions of this Agreement), by any party without the prior written
consent of the other parties hereto.  Subject
to the foregoing, the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.


 


Section 6.04.                             Governing Law; Consent To
Jurisdiction.  This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Delaware, without
giving effect to the principles of conflicts of laws.  Each of the parties hereto hereby irrevocably
and unconditionally consents to submit to the non-exclusive jurisdiction of the
courts of the State of Delaware, for any action, proceeding or investigation in
any court or before any governmental authority (“Litigation”) arising
out of or relating to this Agreement and the transactions 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 6.05.                             Counterparts .  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.


 


Section 6.06.                             Specific Performance.  The Company, Mr. Diller and Liberty each
acknowledges and agrees that the parties’ respective remedies at law for a  breach or threatened breach of any of the
provisions of this Agreement would be inadequate and, in recognition of that
fact, agrees that, in the event of a breach or threatened breach by the Company
or Liberty of the provisions of this Agreement, in addition to any remedies at
law, Mr. Diller, Liberty and the Company, respectively, without posting
any bond shall be entitled to obtain equitable relief in the form of specific performance,
a temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.


 


Section 6.07.                             Registration Rights.  (a) Liberty and Mr. Diller shall be
entitled to customary registration rights relating to Company Common Stock
owned by them as of the date


 


13





















 


hereof or acquired from the Company (including upon conversion of
Company Class B Stock) in the future (including the ability to transfer
registration rights as set forth in this Agreement in connection with the sale
or other disposition of Company Common Stock).


 


(b)                                 If requested by a Stockholder,
the Company shall be required promptly to cause the Company Common Stock owned
by such Stockholder or its Affiliates to be registered under the Securities Act
in order to permit such Stockholder or such Affiliate to sell such shares in one
or more (but not more than (i) in the case of Liberty, four and (ii) in
the case of Mr. Diller, three) registered public offerings (each, a “Demand
Registration”).  Each Stockholder
shall also be entitled to customary piggyback registration rights.  If the amount of shares sought to be
registered by a Stockholder and its Affiliates pursuant to any Demand
Registration is reduced by more than 25% pursuant to any underwriters’ cutback,
then such Stockholder may elect to request the Company to withdraw such
registration, in which case, such registration shall not count as one of such
Stockholder’s Demand Registrations. If a Stockholder requests that any Demand
Registration be an underwritten offering, then such Stockholder shall select
the underwriter(s) to administer the offering, provided that such
underwriter(s) shall be reasonably satisfactory to the Company.  If a Demand Registration is an underwritten
offering and the managing underwriter advises the Stockholder initiating the
Demand Registration in writing that in its opinion the total number or dollar
amount of securities proposed to be sold in such offering is such as to
materially and adversely affect the success of such offering, then the Company
will include in such registration, first, the securities of the initiating
Stockholder, and, thereafter, any securities to be sold for the account of
others who are participating in such registration (as determined on a fair and
equitable basis by the Company).  In
connection with any Demand Registration or inclusion of a Stockholder’s or its
Affiliate’s shares in a piggyback registration, the Company, such Stockholder
and/or its Affiliates shall enter into an agreement containing terms (including
representations, covenants and indemnities by the Company and such
Stockholder), and shall be subject to limitations, conditions, and blackout
periods, customary for a secondary offering by a selling stockholder.  The costs of the registration (other than
underwriting discounts, fees and commissions) shall be paid by the Company.  The Company shall not be required to register
such shares if a Stockholder would be permitted to sell the Company Common
Stock in the quantities proposed to be sold at such time in one transaction
under Rule 144 of the Securities Act or under another comparable exemption
therefrom.


 


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


 


Section 6.08.                             Termination.  Except as otherwise provided in this
Agreement, this Agreement shall terminate (a) as to Liberty, at such time
that Liberty Beneficially Owns Equity Securities representing less than 5% of
the Total Equity Securities and (b) as to Mr. Diller, at such time
that the CEO Termination Date has occurred or at such time as he becomes
Disabled.  In respect of “Contingent
Matters,” such provisions shall terminate as to Mr. Diller and Liberty as
set forth therein.


 


Section 6.09.                             Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the


 


14





















 


remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, provided that the parties hereto shall
negotiate in good faith to attempt to place the parties in the same position as
they would have been in had such provision not been held to be invalid, void or
unenforceable.


 


Section 6.10.                             Cooperation.  Each of Liberty and Mr. Diller covenants
and agrees with the other to use its reasonable best efforts to cause the
Company to fulfill the Company’s obligations under this Agreement.


 


Section 6.11.                             Adjustment Of Share Numbers and
Prices.  If, after the effective time of this Agreement,
there is a subdivision, split, stock dividend, combination, reclassification or
similar event with respect to any of the shares of capital stock referred to in
this Agreement, then, in any such event, the numbers and types of shares of
such capital stock referred to in this Agreement and, if applicable, the prices
of such shares, shall be adjusted to the number and types of shares of such
capital stock that a holder of such number of shares of such capital stock
would own or be entitled to receive as a result of such event if such holder
had held such number of shares immediately prior to the record date for, or
effectiveness of, such event and the prices for such shares shall be similarly
adjusted.


 


Section 6.12.                             Effective Time.  This Agreement shall become effective
immediately following the effective time of the Company’s spin off of Expedia, Inc.


 


Section 6.13.                             Entire Agreement.  Except as otherwise expressly set forth herein,
this Agreement, the Amended and Restated Stockholders Agreement, and as
provided in Section 5.1 of the Amended and Restated Stockholders
Agreement, the 1997 Stockholders Agreement embody the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof and thereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, that
may have related to the subject matter hereof in any way (including, without
limitation, effective upon the date hereof, all stockholders agreements
relating to the Company (other than the Amended and Restated Stockholders
Agreement) between Liberty and Mr. Diller).  Effective upon the effective time of this
Agreement, the 2001 Governance Agreement shall terminate and shall be superseded
by this Agreement.


 


Section 6.14.                             Interpretation.  References in this Agreement to Articles and Sections
shall be deemed to be references to Articles and Sections of this Agreement
unless the context shall otherwise require. 
The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of such agreement or
instrument.


 


Section 6.15.                             Headings.  The titles of Articles and Sections of this Agreement
are for convenience only and shall not be interpreted to limit or otherwise
affect the provisions of this Agreement.


 


15





















 


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


 


	
   

  	
  IAC/INTERACTIVECORP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Gregory R. Blatt

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gregory R. Blatt

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LIBERTY MEDIA CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Authorized Representative

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Barry Diller

  	
   

  
	
   

  	
   

  	
  BARRY DILLER

  
					



 


 


[SIGNATURE
PAGE TO AMENDED AND RESTATED GOVERNANCE AGREEMENT]