Exhibit 10.5


 


EXECUTION COPY


 


 


TRANSITION
SERVICES AGREEMENT


 


by
and between


 


IAC/INTERACTIVECORP


 


and


 


EXPEDIA,
INC.


 


DATED AS OF August 9, 2005


 





















 


TRANSITION
SERVICES AGREEMENT


 


This TRANSITION SERVICES AGREEMENT, dated as
of August 9, 2005 (this “Services Agreement”), is entered into by
and between IAC/InterActiveCorp, a Delaware corporation (“IAC”), and
Expedia, Inc., a Delaware corporation and wholly owned Subsidiary of IAC (“Expedia”).  Capitalized terms used herein but not defined
herein shall have the meaning set for the in that certain Separation Agreement,
dated as of the date hereof, by and between IAC and Expedia (the “Separation
Agreement”).


 


WHEREAS, the Board of Directors of IAC 
has determined it is appropriate and desirable to separate IAC and
Expedia into two publicly-traded companies by separating IAC’s principal travel
and travel-related businesses, and related assets and liabilities, and
contributing them to Expedia and effecting a reclassification of the capital
stock of IAC;


 


WHEREAS, IAC and Expedia expect to enter into the Separation Agreement
on the date hereof, which sets forth, among other things, the assets,
liabilities, rights and obligations of each of the Parties for purposes of
effecting the separation of IAC and Expedia; and


 


WHEREAS, in connection therewith, (a) Expedia desires to procure
certain services from IAC, and IAC is willing to provide such services to
Expedia, during a transition period commencing on the Effective Date, on the
terms and conditions set forth in this Services Agreement; and (b) IAC
desires to procure certain services from Expedia, and Expedia is willing to
provide such services to IAC, during a transition period commencing on the
Effective Date, on the terms and conditions set forth in this Services Agreement.


 


NOW THEREFORE, in consideration of the mutual agreements, covenants and
other provisions set forth in this Services Agreement, the Parties hereby agree
as follows:


 


ARTICLE I


 


Definitions


 


1.01.       All terms used
herein and not defined herein shall have the meanings assigned to them in the
Separation Agreement.


 


ARTICLE II


 


Agreement To Provide and Accept Services


 


2.01.       Provision of
Services.  


 


(a)           On the terms and subject to the conditions contained
herein, IAC shall provide, or shall cause its Subsidiaries and Affiliates and
their respective employees designated by IAC (such designated Subsidiaries,
Affiliates and employees, together with IAC, being herein collectively referred
to as the “IAC Service Providers”) to provide, to Expedia the services (“IAC
Services”) listed on the attached
Schedules (the “Schedules”) as being
performed by the IAC.  Subject to Section 3.01,
any decisions as to which of the IAC Service Providers (including the decisions
to use third parties) shall provide the IAC Services shall be made by IAC in
its sole


 





















 


discretion,
except to the extent specified in the applicable Schedule.  Each IAC Service shall be provided in
exchange for the consideration set forth with respect to such IAC Service on
the applicable Schedule or as the Parties may otherwise agree in
writing.  Each IAC Service shall be
provided and accepted in accordance with the terms, limitations and conditions
set forth herein and on the applicable Schedule.


 


(b)           On the terms and subject to the conditions contained
herein, Expedia shall provide, or shall cause its Subsidiaries and Affiliates
and their respective employees designated by it (such designated Subsidiaries,
Affiliates and employees, together with Expedia, being herein collectively
referred to as the “Expedia Service Providers” and together with the IAC
Service Providers, the “Service Providers”) to provide, to IAC the services (“Expedia
Services” and together with the IAC
Services, the “Services”) listed on the
attached Schedules as being performed by Expedia.  Subject to Section 3.01, any
decisions as to which of the Expedia Service Providers (including the decisions
to use third parties) shall provide the Expedia Services shall be made by
Expedia in its sole discretion, except to the extent specified in the
applicable Schedule.  Each Expedia
Service shall be provided in exchange for the consideration set forth with
respect to such Service on the applicable Schedule or as the Parties may
otherwise agree in writing.  Each Expedia
Service shall be provided and accepted in accordance with the terms,
limitations and conditions set forth herein and on the applicable Schedule.


 


(c)           As used in this Services Agreement, the term “Receiving
Party” shall mean the Party receiving
Services.  


 


2.02.      Books and
Records; Availability of Information. 
Each Party shall create and maintain accurate books in connection with
the provision of the Services performed by it and, upon reasonable notice from
the other Party, shall make available for inspection and copy by such other Party’s
agents such records during reasonable business hours.  Each Party shall make available on a timely
basis to the Service Providers all information and materials reasonably
requested by such Service Providers to enable them to provide the
Services.  Each Party shall provide to
the Service Providers reasonable access to such Party’s premises to the extent
necessary for the purpose of providing the Services.


 


ARTICLE III


 


Services; Payment; Independent Contractors


 


3.01.       Services To
Be Provided.  (a)  Unless
otherwise agreed by the Parties (including to the extent specified in the
applicable Schedule), (i) the Service Providers shall be required to
perform the Services only in a manner, scope, nature and quality as provided by
or within IAC that is similar in all material respects to the manner in which
such Services were performed immediately prior to the Effective Date, and (ii) the
Services shall be used for substantially the same purposes and in substantially
the same manner (including as to volume, amount, level or frequency, as
applicable) as the Services have been used immediately prior to the Effective
Date; provided, however, that the applicable Schedule shall
control the scope of the Service to be performed (to the extent provided
therein), unless otherwise agreed in writing. 
Each Party and the Service Providers shall act under this Services
Agreement solely as an independent contractor and not as an agent or employee
of any other Party or any of such Party’s Affiliates.


 





















 


(b)           The provision of Services by Service Providers shall be
subject to Article V hereof.


 


(c)           Each Party agrees to use its reasonable efforts to reduce
or eliminate its dependency on the Services as soon as is reasonably
practicable; provided that a breach of this Section 3.01(c) shall
not affect a Service Provider’s obligation to provide any Service through the
term applicable to such Service.


 


3.02.       The Parties will
use good-faith efforts to reasonably cooperate with each other in all matters
relating to the provision and receipt of Services.  Such cooperation shall include obtaining all
consents, licenses or approvals necessary to permit each Party to perform its
obligations hereunder; provided, however, under no circumstances
shall any Service Provider be required to make any payments to any third party
in respect of any such consents, licenses or approvals nor shall any Service
Provider be required to make any alternative arrangements in the event that any
such consents, licenses or approvals are not obtained.


 


3.03.       Additional
Services.


 


(a)           From time to time during the term, each of IAC and Expedia
may request the other Party (i) to provide additional (including as to
volume, amount, level or frequency, as applicable) or different services which
the other Party is not expressly obligated to provide under this Agreement if
such services are of the type and scope provided within IAC during fiscal year
2005 or (ii) expand the scope of any Service (such additional or expanded
services, the “Additional Services”). 
The Party receiving such request shall consider such request in good
faith and shall use commercially reasonable efforts to provide such Additional
Service; provided, no Party shall be obligated to provide any Additional
Services if it does not, in its reasonable judgment, have adequate resources to
provide such Additional Services or if the provision of such Additional
Services would interfere with the operation of its business.  The Party receiving the request for
Additional Services shall notify the requesting Party within fifteen (15) days
as to whether it will or will not provide the Additional Services.


 


(b)           If a Party agrees to provide Additional Services pursuant
to Section 3.03(a), then a representative of each party shall in good
faith negotiate the terms of a supplemental Schedule to this Agreement
which will describe in detail the service, project scope, term, price and
payment terms to be charged for the Additional Service.  Once agreed to in writing, the supplemental Schedule shall
be deemed part of this Agreement as of such date and the Additional Services
shall be deemed “Services” provided hereunder, in each case subject to the
terms and conditions of this Agreement.


 


3.04.         Payments.


 


(a)           Statements will be delivered to the Receiving Party within
fifteen days after the end of each month by the Service Providers designated by
each Party for Services provided to the Receiving Party during the preceding
month, and each such statement shall set forth a brief description of such
Services, the amounts charged therefor, and, except as the Parties may agree,
such amounts shall be due and payable by the Receiving Party within 30 days
after the date of such statement. 
Statements not paid within such 30-day period shall be subject


 





















 


to late
charges, calculated at an interest rate per annum equal to the Prime Rate plus
2% (or the maximum legal rate, whichever is lower), and calculated for the
actual number of days elapsed, accrued from the date on which such payment was
due up to the date of the actual receipt of payment.  Payments shall be made by wire transfer to an
account designated in writing from time to time by Service Provider.


 


3.05.         Disclaimer
of Warranty.  EXCEPT AS EXPRESSLY SET
FORTH IN THIS SERVICES AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS
SERVICES AGREEMENT ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. In the event that the
provision of any Service for the account of a Receiving Party by a Service
Provider conflicts with such Service Provider’s provision of such Service for
its own account, priority for the provision of such Service shall be allocated
in a equitable manner on an aggregate basis, and in a manner consistent with
the Receiving Party’s level of use of such Service during fiscal year 2005 up
to the Effective Date (or as described in the applicable Schedule).


 


3.06.         Taxes.  In the event that any Tax is properly
chargeable on the provision of the Services as indicated on the applicable
Schedule, the Receiving Party shall be responsible for and shall pay the amount
of any such Tax in addition to and at the same time as the Service fees.  All Service fees and other consideration will
be paid free and clear of and without withholding or deduction for or on
account of any Tax, except as may be required by law.


 


3.07.         Use of
Services.  The Receiving Party shall
not, and shall cause its Affiliates not to, resell any Services to any person
whatsoever or permit the use of the Services by any person other than in
connection with the conduct of the Receiving Party’s operations as conducted
immediately prior to the Effective Date.


 


ARTICLE IV


 


Term of Services


 


4.01.       The provision of
Services shall commence on the Effective Date and shall terminate no later than
18 months after the date hereof or as of the date indicated for each such
Service on the applicable Schedule; provided, however, that
subject to the applicable Schedule, any Service may be cancelled or reduced in
amount or any portion thereof by the Receiving Party upon 90 days’ written
notice thereof (or such other notice period if one is set forth for such
Service on the applicable Schedule) subject to the requirement that the
Receiving Party pay to the Service Provider the actual out-of-pocket costs
incurred by the Service Provider, as well as the actual incremental internal
costs incurred by the Service Providers, in each case directly resulting from
such cancellation (including employee severance and other termination costs),
which out-of-pocket and internal costs shall be set forth in a written
statement provided by the Service Provider to the Receiving Party; provided,
further, that such costs shall not exceed amounts payable hereunder in
respect of the applicable Service for the 90 days prior to such
termination.  The forgoing
notwithstanding and subject to Section 7.02, (1) a
Service Provider may immediately terminate any individual Service provided to a
Receiving Party in the event


 





















 


that the Receiving Party fails
to make payments for such Service under Section 3.02 and has not cured
such failure within 30 days of written notice of such failure from the Service
Provider, and (2) upon 90 days’ written
notice, the
Service Provider may terminate any Service provided to the
Receiving Party at such time as the Service Provider no longer provides the
same Service to itself for its own account.


 


4.02.       In the event a
Receiving Party requests an extension of the term of provision of Services,
such request shall be considered in good faith by the Service Provider.  Any terms, conditions or costs or fees to be
paid by the Receiving Party for Services provided during an extended term will
be on mutually acceptable terms.  For the
avoidance of doubt, under no circumstances shall a Service Provider be required
to extend the term of provision of any Service if (i) the Service Provider
does not, in its reasonable judgment, have adequate resources to continue
providing such Services, (ii) the extension of the term would interfere
with the operation of the Service Provider’s business or (iii) the
extension would require capital expenditure on the part of the Service Provider
or otherwise require the Service Provider to renew or extend any Contract with
any third party.


 


ARTICLE V


 


Force Majeure


 


5.01.       The Service
Providers shall not be liable for any expense, loss or damage whatsoever
arising out of any interruption of Service or delay or failure to perform under
this Services Agreement that is due to acts of God, acts of a public enemy,
acts of terrorism, acts of a nation or any state, territory, province or other
political division thereof, changes in applicable law, fires, floods,
epidemics, riots, theft, quarantine restrictions, freight embargoes or other
similar causes beyond the reasonable control of the Service Providers.  In any such event, the Service Providers’
obligations hereunder shall be postponed for such time as its performance is
suspended or delayed on account thereof. 
Each Service Provider will promptly notify the recipient of the Service,
either orally or in writing, upon learning of the occurrence of such event of
force majeure.  Upon the cessation of the
force majeure event, such Service Provider will use commercially reasonable
efforts to resume, or to cause any other relevant Service Provider to resume,
its performance with the least practicable delay (provided that, at the
election of the applicable Receiving Party, the applicable term for such
suspended Services shall be extended by the length of the force majeure event).


 


ARTICLE VI


 


Liabilities


 


6.01.      Consequential
and Other Damages.  Except as
otherwise provided in the Separation Agreement, none of the Service Providers
shall be liable to the Receiving Party with respect to this Services Agreement,
whether in contract, tort (including negligence and strict liability) or
otherwise, for any special, indirect, incidental or consequential damages
whatsoever (except, in each case, to the extent any such amount is paid to
third parties by a Receiving Party or its Affiliates) which in any way arise
out of, relate to or are a consequence of, the performance


 





















 


or
nonperformance by it hereunder or the provision of, or failure to provide, any
Service hereunder, including with respect to loss of profits, business interruptions
or claims of customers.


 


6.02.         Limitation
of Liability.  Subject to Section 6.03
hereof, the liability of any Service Provider with respect to this Services
Agreement or any act or failure to act in connection herewith (including, but
not limited to, the performance or breach hereof), or from the sale, delivery,
provision or use of any Service provided under or covered by this Services
Agreement, whether in contract, tort (including negligence and strict
liability) or otherwise, shall be limited to actions or omissions resulting
from intentional breach of this Services Agreement or gross negligence, and, in
any event, such liability shall not exceed the fees previously paid to such
Service Provider under this Services Agreement.


 


6.03.         Obligation
To Re-perform.  In the event of any
breach of this Services Agreement by any Service Provider resulting from any
error or defect in the performance of any Service (which breach Service
Provider can reasonably be expected to cure by re-performance in a commercially
reasonable manner), the Service Provider shall use its reasonable commercial
efforts to correct in all material respects such error, defect or breach or
reperform in all material respects such Service at the request of the Receiving
Party.


 


6.04.         Indemnity.  Except as otherwise provided in this Service
Agreement (including the limitation of liability provisions in this Article VI),
each Party shall indemnify, defend and hold harmless the other Party from and
against any Liability arising out of the intentional breach or gross negligence
of the indemnifying Party or its Affiliates, employees, agents, or contractors
(including with respect to the performance or nonperformance of any Service
hereunder).


 


ARTICLE VII


 


Termination


 


7.01.          Termination.  Notwithstanding anything herein to the
contrary, this Services Agreement shall terminate, and the obligation of the
Service Providers to provide or cause to be provided any Service shall cease,
on the earliest to occur of (i) the last date indicated for the
termination of any Service on the Schedules, as the case may be, (ii) the
date on which the provision of all Services has been terminated or canceled
pursuant to Article IV hereof, or (iii) the date on which this
Services Agreement is terminated by Expedia or IAC, as the case may be, in
accordance with the terms of Section 7.02 hereof; provided
that, in each case, no such termination shall relieve any Party of any
liability for any breach of any provision of this Services Agreement prior to
the date of such termination.


 


7.02.         Breach of
Services Agreement; Dispute Resolution. 
Subject to Article VI hereof, and without limiting a Party’s
obligations under Section 4.01, if a Party shall cause or suffer to exist
any material breach of any of its obligations under this Services Agreement,
including any failure to make a payment within 30 days after receipt of the
statement describing the Services provided for pursuant to Section 3.04
with respect to more than one Service provided hereunder, and that Party does not
cure such default in all material respects within 30 days after receiving
written notice thereof from the non-breaching Party, the non-breaching


 





















 


Party shall
have the right to terminate this Services Agreement immediately
thereafter.  In the event a dispute
arises between the Parties regarding the terms of this Services Agreement, such
dispute shall be governed by Article X of the Separation Agreement.


 


7.03.         Sums Due.  In addition to any other payments required
pursuant to this Service Agreement, in the event of a termination of this
Services Agreement, the Service Providers shall be entitled to the immediate
payment of, and the Receiving Party shall within three Business Days, pay to
the Service Providers, all accrued amounts for Services, Taxes and other
amounts due under this Services Agreement as of the date of termination.


 


7.04.         Effect of
Termination.  Section 2.02
hereof and Articles V, VI, VII and VIII hereof shall
survive any termination of this Services Agreement.


 


ARTICLE VIII


 


Miscellaneous


 


8.01.        Incorporation
of Separation Agreement Provisions. 
The following provisions of the Separation Agreement are hereby
incorporated herein by reference, and unless otherwise expressly specified
herein, such provisions shall apply as if fully set forth herein (references in
this Section 8.01 to an “Article” or “Section” shall mean Articles
or Sections of the Separation Agreement, and references in the material
incorporated herein by reference shall be references to the Separation
Agreement):  Sections 14.02, 14.03,
14.06, 14.07, 14.09, 14.10, 14.11, 14.14
and 14.15.


 


8.02.         Ownership
of Work Product.  Subject to the
terms of the Separation Agreement, (i) each Service Provider acknowledges
and agrees that it will acquire no right, title or interest (including any
license rights or rights of use) to any work product resulting from the
provision of Services hereunder for the Receiving Party’s exclusive use and
such work product shall remain the exclusive property of the Receiving Party
and (ii) each Receiving Party acknowledges and agrees that it will acquire
no right, title or interest (other than a non-exclusive, worldwide right of
use) to any work product resulting from the provision of Services hereunder
that is not for the Receiving Party’s exclusive use and such work product shall
remain the exclusive property, subject to license, of the Service Provider.


 





















 


IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.


 


	
   

  	
  IAC/INTERACTIVECORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory
  R. Blatt

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gregory R.
  Blatt

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXPEDIA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dara
  Khosrowshahi

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dara
  Khosrowshahi

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer