Document:

Exhibit 10.2

 

SERVICES AGREEMENT

 

SERVICES AGREEMENT (this “Agreement”), dated as of July 22, 2016, by and between Liberty Media Corporation, a Delaware corporation (the “Provider”), and CommerceHub, Inc., a Delaware corporation (“CH Parent”).

 

RECITALS

 

WHEREAS, on the date hereof CH Parent is a subsidiary of Liberty Interactive Corporation, a Delaware corporation (“LIC”), and will hold, at the time of the Spin-Off (as defined below), among other things, LIC’s ownership interest in Commerce Technologies, LLC (f/k/a Commerce Technologies, Inc. (d/b/a CommerceHub), a New York corporation,) as a result of the consummation of the transactions described in the plan of restructuring set forth in Schedule 1.1 to the Reorganization Agreement, dated as of July 15, 2016 (the “Reorganization Agreement”), to which LIC and CH Parent are each parties;

 

WHEREAS, in accordance with the Reorganization Agreement, all of the issued and outstanding shares of common stock of CH Parent held by LIC will be distributed as a pro rata dividend to the holders of LIC’s Liberty Ventures common stock, with the effect that CH Parent will be spun-off (the “Spin-Off”) from LIC, and LIC will cease to have an equity interest in CH Parent; and

 

WHEREAS, Provider currently provides services to LIC pursuant to an existing services agreement, and LIC has requested that Provider provide certain similar services directly to CH Parent following the Spin-Off, and that CH Parent compensate the Provider for the performance of such services, in each case, on the terms and condition set forth herein.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing recitals, the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be bound legally, agree as follows:

 

 

ARTICLE I

 

ENGAGEMENT AND SERVICES

 

Section 1.1            Engagement.  CH Parent engages the Provider to provide to CH Parent, commencing on the date of the Spin-Off (the “Spin-Off Effective Date”), the services set forth in Section 1.2 (collectively, the “Services”), and the Provider accepts such engagement, subject to and upon the terms and conditions of this Agreement.  The parties acknowledge that certain of the Services will be performed by officers, employees or consultants of the Provider, who may also serve, from time to time, as officers, employees or consultants of other companies, including, without limitation, CH Parent, LIC, Liberty TripAdvisor Holdings, Inc. (“LTAH”) and Liberty Broadband Corporation (“LBC”).

 

Section 1.2            Services.

 

(a)           The Services will include the following, if and to the extent requested by CH Parent during the Term of this Agreement:

 

(i)            services performed by the Provider’s finance, accounting, treasury, cash management, legal, disclosure compliance, human resources, employee benefits, investor relations, and tax departments; and

 

(ii)           such other services as the Provider may obtain from its officers, employees and consultants in the management of its own operations that CH Parent may from time to time request or require.

 

(b)           The Services are intended to be those services and functions that are appropriate for the operation and management of CH Parent as a publicly-traded company, and are not intended to be duplicative of services and functions for the operating subsidiaries of CH Parent that are to be performed by officers, employees and consultants of those companies.

 

Section 1.3            Services Not to Interfere with the Provider’s Business.  CH Parent acknowledges and agrees that in providing Services hereunder the Provider will not be required to take any action that would disrupt, in any material respect, the orderly operation of the Provider’s business activities.

 

Section 1.4            Books and Records.   The Provider will maintain books and records, in reasonable detail in accordance with the Provider’s standard business practices, with respect to its provision of Services to CH Parent pursuant to this Agreement, including records supporting the determination of the Services Fee and other costs and expenses to CH Parent pursuant to Article II (collectively, “Supporting Records”). The Provider will give CH Parent and its duly authorized representatives, agents, and attorneys reasonable access to all such Supporting Records during the Provider’s regular business hours upon CH Parent’s request after reasonable advance notice.

 

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ARTICLE II

 

COMPENSATION

 

Section 2.1            Services Fee.

 

CH Parent agrees to pay, and the Provider agrees to accept, an annual fee (the “Services Fee”) initially equal to $300,000, payable in monthly installments in arrears as set forth in Section 2.3. The initial Services Fee was determined by the Provider, in consultation with LIC, on or prior to the Spin-Off Effective Date. Provider and CH Parent will review and evaluate the Services Fee for reasonableness quarterly during the Term and will negotiate in good faith to reach agreement on any appropriate adjustments to the Services Fee. Based on such review and evaluation, Provider and CH Parent will agree on the appropriate effective date (which may be retroactive) of any such adjustment to the Services Fee.

 

Section 2.2            Cost Reimbursement.  In addition to (and without duplication of) the Services Fee payable pursuant to Section 2.1, CH Parent also will reimburse the Provider for all reasonable and documented direct out-of-pocket costs, with no markup (“Out-of-Pocket Costs”), incurred by the Provider in performing the Services (e.g., postage and courier charges, software license fees attributable to desktop or laptop computers utilized by Employees, travel and meal expenses that are incurred by the Provider or the Employees in the conduct of the Services); provided, that such Out-of-Pocket Costs shall include any third-party fees relating to projects undertaken by the Provider’s tax department on behalf of or with respect to CH Parent, and provided, further, that any such cost or expense in excess of $25,000, in the aggregate, that is not consistent with the historical practice of the Provider shall require advance written approval of CH Parent.

 

Section 2.3            Payment Procedures.

 

(a)           CH Parent will pay the Provider, by wire or intrabank transfer of funds or in such other manner specified by the Provider to CH Parent, in arrears on or before the last day of each calendar month beginning with July 31, 2016, the Services Fee then in effect, in monthly installments, provided, that the monthly installment of the Services Fee with respect to the calendar month ended July 31, 2016 shall be prorated based on the date of this Agreement.

 

(b)           Any reimbursement to be made by CH Parent to the Provider pursuant to Section 2.2 will be paid by CH Parent to the Provider within 15 days after receipt by CH Parent of an invoice therefor, by wire or intrabank transfer of funds or in such other manner specified by the Provider to CH Parent.  The Provider will invoice CH Parent monthly for reimbursable expenses incurred by the Provider on behalf of CH Parent during the preceding calendar month as contemplated in Section 2.2; provided, however, that the Provider may separately invoice CH Parent at any time for any single reimbursable expense incurred by the Provider on behalf of CH Parent in an amount equal to or greater than $25,000. Any invoice or statement pursuant to this Section 2.3(b) will be accompanied by supporting documentation in reasonable detail consistent with Provider’s own expense reimbursement policy with respect to the costs and expenses incurred by the Provider for which the Provider is seeking reimbursement hereunder.

 

(c)           Any undisputed payments not made when due under this Section 2.3 will bear interest at the rate of 1.0% per month on the outstanding amount from and including the due date to but excluding the date paid.

 

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Section 2.4            Survival.  The terms and conditions of this Article II will survive the expiration or earlier termination of this Agreement.

 

ARTICLE III

 

TERM

 

Section 3.1            Term Generally.  The term of this Agreement will commence on the Spin-Off Effective Date and will continue until the third anniversary of the Spin-Off Effective Date (the “Term”).  This Agreement is subject to termination prior to the end of the Term in accordance with Section 3.3.

 

Section 3.2            Discontinuance or Suspension of Select Services.  At any time during the Term, on not less than 30 days’ prior notice by CH Parent to the Provider, CH Parent may elect to discontinue or temporarily suspend obtaining any of the Services from the Provider.  In such event, the Provider’s obligation to provide Services that have been discontinued or suspended pursuant to this Section 3.2, and CH Parent’s obligation to compensate the Provider for such Services, will cease as of the end of such 30-day period (or such later date as may be specified in the notice), and this Agreement will remain in effect for the remainder of the Term with respect to those Services that have not been so discontinued or suspended (until reactivated). CH Parent may determine to reactivate a previously suspended Service during the remainder of the Term on not less than 30 days’ prior notice by CH Parent to the Provider.  The Provider and CH Parent will promptly evaluate the Services Fee for reasonableness following the discontinuance or suspension of any Services, or reactivation of  a previously suspended Service, and will negotiate in good faith to reach agreement on any appropriate adjustment to the Services Fee.  Each party will remain liable to the other for any required payment or performance accrued prior to the effective date of discontinuance or suspension of any Service.

 

Section 3.3            Termination.  This Agreement will be terminated prior to the expiration of the Term in the following events:

 

(a)           at any time upon at least 30 days’ prior written notice by CH Parent to the Provider;

 

(b)           at any time upon at least six months’ prior written notice by the Provider to CH Parent;

 

(c)           immediately upon written notice (or at any later time specified in such notice) by the Provider to CH Parent if a Change in Control or Bankruptcy Event occurs with respect to CH Parent; or

 

(d)           immediately upon written notice (or at any later time specified in such notice) by CH Parent to the Provider if a Change in Control or Bankruptcy Event occurs with respect to the Provider.

 

For purposes of this Section 3.3, a “Change in Control” will be deemed to have occurred with respect to a party if a merger, consolidation, binding share exchange, acquisition, or similar transaction (each, a “Transaction”), or series of related Transactions, involving such party occurs 

 

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as a result of which the voting power of all voting securities of such party outstanding immediately prior thereto represent (either by remaining outstanding or being converted into voting securities of the surviving entity) less than 75% of the voting power of such party or the surviving entity of the Transaction outstanding immediately after such Transaction (or if such party or the surviving entity after giving effect to such Transaction is a subsidiary of the issuer of securities in such Transaction, then the voting power of all voting securities of such party outstanding immediately prior to such Transaction represent (by being converted into voting securities of such issuer) less than 75% of the voting power of the issuer outstanding immediately after such Transaction).

 

For purposes of this Section 3.3, a “Bankruptcy Event” will be deemed to have occurred with respect to a party upon such party’s insolvency, general assignment for the benefit of creditors, such party’s voluntary commencement of any case, proceeding, or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution, or consolidation of such party’s debts under any law relating to bankruptcy, insolvency, or reorganization, or relief of debtors, or seeking appointment of a receiver, trustee, custodian, or other similar official for such party or for all or any substantial part of such party’s assets (each, a “Bankruptcy Proceeding”), or the involuntary filing against CH Parent or the Provider, as applicable, of any Bankruptcy Proceeding that is not stayed within 60 days after such filing.

 

Each party will remain liable to the other for any required payment accrued prior to the termination of this Agreement.

 

ARTICLE IV

 

PERSONNEL AND EMPLOYEES

 

Section 4.1            Personnel to Provide Services.

 

(a)           The Provider will make available to CH Parent, on a non-exclusive basis, the appropriate personnel (the “Personnel”) to perform the Services.  The personnel made available to perform selected Services are expected to be substantially the same personnel who provide similar services in connection with the management and administration of the business and operations of the Provider.

 

(b)           CH Parent acknowledges that:

 

(i)            certain of the Personnel also will be performing services for the Provider, LIC, LTAH, LBC and/or other companies, from time to time, including certain Subsidiaries and Affiliates of each of the foregoing, in each case, while also potentially performing services directly for CH Parent and certain of its Subsidiaries and Affiliates under a direct employment, consultancy or other service relationship between such Person and CH Parent and irrespective of this Agreement; and

 

(ii)           the Provider may elect, in its discretion, to utilize independent contractors rather than employees of the Provider to perform Services from time to time, and such independent contractors will be deemed included within the definition of “Personnel” for all purposes of this Agreement.

 

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Section 4.2            Provider as Payor.  The parties acknowledge and agree that the Provider, and not CH Parent, will be solely responsible for the payment of salaries, wages, benefits (including health insurance, retirement, and other similar benefits, if any) and other compensation applicable to all Personnel; provided, however, that (a) CH Parent is responsible for the payment of the Services Fee in accordance with Section 2.1, and (b) CH Parent is responsible for the payment of all compensation based on, comprised of or related to the equity securities of CH Parent (“Excluded Compensation”).  The parties acknowledge that Personnel may provide services directly to CH Parent in consideration for the receipt of Excluded Compensation pursuant to such Personnel’s separate employment, consultancy or other service relationship with CH Parent.  All Personnel will be subject to the personnel policies of the Provider and will be eligible to participate in the Provider’s employee benefit plans to the same extent as similarly situated employees of the Provider performing services in connection with the Provider’s business.  The Provider will be responsible for the payment of all federal, state, and local withholding taxes on the compensation of all Personnel (other than Excluded Compensation) and other such employment related taxes as are required by law, and CH Parent will be responsible for the payment of all federal, state, and local withholding taxes on Excluded Compensation paid to any Personnel by CH Parent and other such employment related taxes as are required by law.  Each of CH Parent and Provider will cooperate with the other to facilitate the other’s compliance with applicable federal, state, and local laws, rules, regulations, and ordinances applicable to the employment or engagement of all Personnel by either party.

 

Section 4.3            Additional Employee Provisions.  The Provider will have the right to terminate its employment of any Personnel at any time.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

Section 5.1            Representations and Warranties of the Provider.  The Provider represents and warrants to CH Parent as follows:

 

(a)           The Provider is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.

 

(b)           The Provider has the power and authority to enter into this Agreement and to perform its obligations under this Agreement, including the Services.

 

(c)           The Provider is not subject to any contractual or other legal obligation that materially interferes with its full, prompt, and complete performance under this Agreement.

 

(d)           The individual executing this Agreement on behalf of the Provider has the authority to do so.

 

Section 5.2            Representations and Warranties of CH Parent.  CH Parent represents and warrants to the Provider as follows:

 

(a)           CH Parent is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.

 

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(b)           CH Parent has the power and authority to enter into this Agreement and to perform its obligations under this Agreement.

 

(c)           CH Parent is not subject to any contractual or other legal obligation that materially interferes with its full, prompt, and complete performance under this Agreement.

 

(d)           The individual executing this Agreement on behalf of CH Parent has the authority to do so.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.1            Indemnification by the Provider.  The Provider will indemnify, defend, and hold harmless CH Parent and each of its Subsidiaries, Affiliates, officers, directors, employees and agents, successors and assigns (collectively, the “CH Parent Indemnitees”), from and against any and all Actions, judgments, Liabilities, losses, costs, damages, or expenses, including reasonable counsel fees, disbursements, and court costs (collectively, “Losses”), that any CH Parent Indemnitee may suffer arising from or out of, or relating to, (a) any material breach by the Provider of its obligations under this Agreement, or (b) the gross negligence, willful misconduct, fraud, or bad faith of the Provider in connection with the performance of any provision of this Agreement except to the extent such Losses (i) are fully covered by insurance maintained by CH Parent or such other CH Parent Indemnitee or (ii) are payable by CH Parent pursuant to Section 7.11.

 

Section 6.2            Indemnification by CH Parent.  CH Parent will indemnify, defend, and hold harmless the Provider and its Subsidiaries, Affiliates, officers, directors, employees and agents, successors and assigns (collectively, the “Provider Indemnitees”), from and against any and all Losses that any Provider Indemnitee may suffer arising from or out of, or relating to (a) any material breach by CH Parent of its obligations under this Agreement, or (b) any acts or omissions of the Provider in providing the Services pursuant to this Agreement (except to the extent such Losses (i) arise from or relate to any material breach by the Provider of its obligations under this Agreement, (ii) are attributable to the gross negligence, willful misconduct, fraud, or bad faith of the Provider or any other Provider Indemnitee seeking indemnification under this Section 6.2, (iii) are fully covered by insurance maintained by the Provider or such other Provider Indemnitee, or (iv) are payable by the Provider pursuant to Section 7.11).

 

Section 6.3            Indemnification Procedures.

 

(a)           (i)            In connection with any indemnification provided for in Section 6.1 or 6.2, the party seeking indemnification (the “Indemnitee”) will give the party from which indemnification is sought (the “Indemnitor”) prompt notice whenever it comes to the attention of the Indemnitee that the Indemnitee has suffered or incurred, or may suffer or incur, any Losses for which it is entitled to indemnification under Section 6.1 or 6.2, and, if and when known, the facts constituting the basis for such claim and the projected amount of such Losses (which shall not be conclusive as to the amount of such Losses), in each case in reasonable detail. Without 

 

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limiting the generality of the foregoing, in the case of any Action commenced by a third party for which indemnification is being sought (a “Third-Party Claim”), such notice will be given no later than ten business days following receipt by the Indemnitee of written notice of such Third-Party Claim.  Failure by any Indemnitee to so notify the Indemnitor will not affect the rights of such Indemnitee hereunder except to the extent that such failure has a material prejudicial effect on the defenses or other rights available to the Indemnitor with respect to such Third-Party Claim.  The Indemnitee will deliver to the Indemnitor as promptly as practicable, and in any event within five business days after Indemnitee’s receipt, copies of all notices, court papers and other documents received by the Indemnitee relating to any Third-Party Claim.

 

(ii)           After receipt of a notice pursuant to Section 6.3(a)(i) with respect to any Third-Party Claim, the Indemnitor will be entitled, if it so elects, to take control of the defense and investigation with respect to such Third-Party Claim and to employ and engage attorneys reasonably satisfactory to the Indemnitee to handle and defend such claim, at the Indemnitor’s cost, risk and expense, upon written notice to the Indemnitee of such election, which notice acknowledges the Indemnitor’s obligation to provide indemnification under this Agreement with respect to any Losses arising out of or relating to such Third-Party Claim. The Indemnitor will not settle any Third-Party Claim that is the subject of indemnification without the written consent of the Indemnitee, which consent will not be unreasonably withheld, conditioned or delayed; provided, however, that, after reasonable notice, the Indemnitor may settle a claim without the Indemnitee’s consent if such settlement (A) makes no admission or acknowledgment of Liability or culpability with respect to the Indemnitee, (B) includes a complete release of the Indemnitee and (C) does not seek any relief against the Indemnitee other than the payment of money damages to be borne by the Indemnitor. The Indemnitee will cooperate in all reasonable respects with the Indemnitor and its attorneys in the investigation, trial and defense of any lawsuit or action with respect to such claim and any appeal arising therefrom (including the filing in the Indemnitee’s name of appropriate cross-claims and counterclaims).  The Indemnitee may, at its own cost, participate in any investigation, trial and defense of any Third-Party Claim controlled by the Indemnitor and any appeal arising therefrom, including participating in the process with respect to the potential settlement or compromise thereof.  If the Indemnitee has been advised by its counsel that there may be one or more legal defenses available to the Indemnitee that conflict with those available to, or that are not available to, the Indemnitor (“Separate Legal Defenses”), or that there may be actual or potential differing or conflicting interests between the Indemnitor and the Indemnitee in the conduct of the defense of such Third-Party Claim, the Indemnitee will have the right, at the expense of the Indemnitor, to engage separate counsel reasonably acceptable to the Indemnitor to handle and defend such Third-Party Claim, provided, that, if such Third-Party Claim can be reasonably separated between those portion(s) for which Separate Legal Defenses are available (“Separable Claims”) and those for which no Separate Legal Defenses are available, the Indemnitee will instead have the right, at the expense of the Indemnitor, to engage separate counsel reasonably acceptable to the Indemnitor to handle and defend the Separable Claims, and the Indemnitor will not have the right to control the defense or investigation of such Third-Party Claim or such Separable Claims, as the case may be (and, in which latter case, the Indemnitor will have the right to control the defense or investigation of the remaining portion(s) of such Third-Party Claim).

 

(iii)          If, after receipt of a notice pursuant to Section 6.3(a)(i) with respect to any Third-Party Claim as to which indemnification is available hereunder, the Indemnitor does not 

 

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undertake to defend the Indemnitee against such Third-Party Claim, whether by not giving the Indemnitee timely notice of its election to so defend or otherwise, the Indemnitee may, but will have no obligation to, assume its own defense, at the expense of the Indemnitor (including attorneys fees and costs), it being understood that the Indemnitee’s right to indemnification for such Third-Party Claim shall not be adversely affected by its assuming the defense of such Third-Party Claim.  The Indemnitor will be bound by the result obtained with respect thereto by the Indemnitee; provided, that the Indemnitee may not settle any lawsuit or action with respect to which the Indemnitee is entitled to indemnification hereunder without the consent of the Indemnitor, which consent will not be unreasonably withheld, conditioned or delayed; provided further, that such consent shall not be required if (i) the Indemnitor had the right under this Section 6.3 to undertake control of the defense of such Third-Party Claim and, after notice, failed to do so within thirty days of receipt of such notice (or such lesser period as may be required by court proceedings in the event of a litigated matter), or (ii) (x) the Indemnitor does not have the right to control the defense of the entirety of such Third-Party Claim pursuant to Section 6.3(a)(ii) or (y) the Indemnitor does not have the right to control the defense of any Separable Claim pursuant to Section 6.3(a)(ii) (in which case such settlement may only apply to such Separable Claims), the Indemnitee provides reasonable notice to Indemnitor of the settlement, and such settlement (A) makes no admission or acknowledgment of Liability or culpability with respect to the Indemnitor, (B) does not seek any relief against the Indemnitor and (C) does not seek any relief against the Indemnitee for which the Indemnitor is responsible other than the payment of money damages.

 

(b)           In no event will the Indemnitor be liable to any Indemnitee for any special, consequential, indirect, collateral, incidental or punitive damages, however caused and on any theory of liability arising in any way out of this Agreement, whether or not such Indemnitor was advised of the possibility of any such damages;  provided, that the foregoing limitations shall not limit a party’s indemnification obligations for any Losses incurred by an Indemnitee as a result of the assertion of a Third-Party Claim.

 

(c)           The Indemnitor and the Indemnitee shall use commercially reasonable efforts to avoid production of confidential information, and to cause all communications among employees, counsel and others representing any party with respect to a Third-Party Claim to be made so as to preserve any applicable attorney-client or work-product privilege.

 

(d)           The Indemnitor shall pay all amounts payable pursuant to this Section 6.3 by wire transfer of immediately available funds, promptly following receipt from an Indemnitee of a bill, together with all accompanying reasonably detailed backup documentation, for any Losses that are the subject of indemnification hereunder, unless the Indemnitor in good faith disputes the amount of such Losses or whether such Losses are covered by the Indemnitor’s indemnification obligation in which event the Indemnitor shall promptly so notify the Indemnitee. In any event, the Indemnitor shall pay to the Indemnitee, by wire transfer of immediately available funds, the amount of any Losses for which it is liable hereunder no later than three (3) days following any final determination of the amount of such Losses and the Indemnitor’s liability therefor. A “final determination” shall exist when (a) the parties to the dispute have reached an agreement in writing or (b) a court of competent jurisdiction shall have entered a final and non-appealable order or judgment.

 

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(e)           If the indemnification provided for in this Section 6.3 shall, for any reason, be unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses for which it is entitled to indemnification hereunder, then the Indemnitor shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses, in such proportion as shall be appropriate to reflect the relative benefits received by and the relative fault of the Indemnitor on the one hand and the Indemnitee on the other hand with respect to the matter giving rise to such Losses.

 

(f)            The remedies provided in this Section 6.3 shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against an Indemnitor, subject to Section 6.3(b).

 

(g)           To the fullest extent permitted by applicable law, the Indemnitor will indemnify the Indemnitee against any and all reasonable fees, costs and expenses (including attorneys’ fees), incurred in connection with the enforcement of his, her or its rights under this Article VI.

 

Section 6.4            Survival.  The terms and conditions of this Article VI will survive the expiration or termination of this Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1            Defined Terms.

 

(a)           The following terms will have the following meanings for all purposes of this Agreement:

 

“Action” means any demand, action, claim, suit, countersuit, litigation, arbitration, prosecution, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court, grand jury or other governmental authority or any arbitrator or arbitration panel.

 

“Affiliate” means, with respect to any Person, any other Person controlled by such first Person, with “control” for such purpose meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract, or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, none of the Persons listed in the following clauses (i), (ii), (iii), (iv), (v) or (vi) shall be deemed to be Affiliates of any Person listed in any other such clause: (i) Provider taken together with its Subsidiaries, (ii) CH Parent taken together with its Subsidiaries, (iii) LIC taken together with its Subsidiaries, (iv) Starz (formerly named Liberty Media Corporation) taken together with any of its Subsidiaries, (v) LTAH taken together with its Subsidiaries or (vi) LBC taken together with its Subsidiaries.

 

“Confidential Information” means any information marked, noticed, or treated as confidential by a party which such party holds in confidence, including all trade secrets, technical, business, or other information, including customer or client information, however 

 

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communicated or disclosed, relating to past, present and future research, development and business activities.

 

“Liabilities” means any and all debts, liabilities, commitments and obligations, whether or not fixed, contingent or absolute, matured or unmatured, direct or indirect, liquidated or unliquidated, accrued or unaccrued, known or unknown, and whether or not required by GAAP to be reflected in financial statements or disclosed in the notes thereto (other than taxes).

 

“Person” means any natural person, corporation, limited liability company, partnership, trust, unincorporated organization, association, governmental authority, or other entity.

 

“Subsidiary” when used with respect to any Person, means (i)(A) a corporation a majority in voting power of whose share capital or capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person, or by such Person and one or more Subsidiaries of such Person, whether or not such power is subject to a voting agreement or similar encumbrance, (B) a partnership or limited liability company in which such Person or a Subsidiary of such Person is, at the date of determination, (1) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (2) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company, or (C) any other Person (other than a corporation) in which such Person, one or more Subsidiaries of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has or have (1) the power to elect or direct the election of a majority of the members of the governing body of such Person, whether or not such power is subject to a voting agreement or similar encumbrance, or (2) in the absence of such a governing body, at least a majority ownership interest or (ii) any other Person of which an aggregate of 50% or more of the equity interests are, at the time, directly or indirectly, owned by such Person and/or one or more Subsidiaries of such Person.  Notwithstanding the foregoing, for purposes of this Agreement, none of the Subsidiaries of the Provider will be deemed to be Subsidiaries of CH Parent or any of its Subsidiaries, nor will any of CH Parent’s Subsidiaries be deemed to be Subsidiaries of the Provider or any of its Subsidiaries.

 

“Tax Sharing Agreement” means the Tax Sharing Agreement, dated July 22, 2016, by and between LIC and CH Parent.

 

(b)           The following terms will have the meanings for all purposes of this Agreement set forth in the Section reference provided next to such term:

 

	
Definition
    	
 
    	
Section Reference
    
	
 
    	
 
    	
 
    
	
Agreement
    	
 
    	
Preamble
    
	
Bankruptcy Event
    	
 
    	
Section 3.3
    
	
Bankruptcy Proceeding
    	
 
    	
Section 3.3
    
	
CH Parent
    	
 
    	
Preamble
    
	
CH Parent Indemnitees
    	
 
    	
Section 6.1
    
	
Change in Control
    	
 
    	
Section 3.3
    

 

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Definition
    	
 
    	
Section Reference
    
	
 
    	
 
    	
 
    
	
Excluded Compensation
    	
 
    	
Section 4.2
    
	
Indemnitee
    	
 
    	
Section 6.3(a)(i)
    
	
Indemnitor
    	
 
    	
Section 6.3(a)(i)
    
	
LBC
    	
 
    	
Section 1.1
    
	
LIC
    	
 
    	
Recitals
    
	
LTAH
    	
 
    	
Section 1.1
    
	
Losses
    	
 
    	
Section 6.1
    
	
Out-of-Pocket Costs
    	
 
    	
Section 2.2
    
	
Personnel
    	
 
    	
Section 4.1(a)
    
	
Provider
    	
 
    	
Preamble
    
	
Provider Indemnitees
    	
 
    	
Section 6.2
    
	
Reorganization Agreement
    	
 
    	
Recitals
    
	
Separable Claim
    	
 
    	
Section 6.3(a)(ii)
    
	
Separate Legal Defenses
    	
 
    	
Section 6.3(a)(ii)
    
	
Services
    	
 
    	
Section 1.1
    
	
Services Fee
    	
 
    	
Section 2.1
    
	
Spin-Off
    	
 
    	
Recitals
    
	
Spin-Off Effective Date
    	
 
    	
Section 1.1
    
	
Supporting Records
    	
 
    	
Section 1.4
    
	
Term
    	
 
    	
Section 3.1
    
	
Third-Party Claim
    	
 
    	
Section 6.3(a)(i)
    
	
Transaction
    	
 
    	
Section 3.3
    

 

Section 7.2            Entire Agreement; Severability.  This Agreement, the Tax Sharing Agreement and the Reorganization Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings, oral and written, among the parties hereto with respect to such subject matter. It is the intention of the parties hereto that the provisions of this Agreement will be enforced to the fullest extent permissible under all applicable laws and public policies, but that the unenforceability of any provision hereof (or the modification of any provision hereof to conform with such laws or public policies, as provided in the next sentence) will not render unenforceable or impair the remainder of this Agreement. Accordingly, if any provision is determined to be invalid or unenforceable either in whole or in part, this Agreement will be deemed amended to delete or modify, as necessary, the invalid or unenforceable provisions and to alter the balance of this Agreement in order to render the same valid and enforceable, consistent (to the fullest extent possible) with the intent and purposes hereof.

 

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Section 7.3            Notices.  All notices and communications hereunder will be in writing and will be deemed to have been duly given if delivered personally or mailed, certified or registered mail with postage prepaid, or sent by email or confirmed facsimile, addressed as follows:

 

	
If to the Provider:
    	
Liberty Media Corporation
    
	
 
    	
12300 Liberty Boulevard
    
	
 
    	
Englewood, Colorado 80112
    
	
 
    	
Attention: General Counsel
    
	
 
    	
Facsimile:
    
	
 
    	
Email:
    
	
 
    	
 
    
	
If to CH Parent:
    	
CommerceHub, Inc.
    
	
 
    	
201 Fuller Road, 6th Floor
    
	
 
    	
Albany, New York 12203
    
	
 
    	
Attention: General Counsel
    
	
 
    	
Email:
    

 

or to such other address (or to the attention of such other person) as the parties may hereafter designate in writing.  All such notices and communications will be deemed to have been given on the date of delivery if sent by email, facsimile or personal delivery, or the third day after the mailing thereof, except that any notice of a change of address will be deemed to have been given only when actually received.

 

Section 7.4            Governing Law.  This Agreement and the legal relations among the parties hereto will be governed in all respects, including validity, interpretation and effect, by the laws of the State of Colorado applicable to contracts made and performed wholly therein, without giving effect to any choice or conflict of laws provisions or rules that would cause the application of the laws of any other jurisdiction.

 

Section 7.5            Rules of Construction.  The descriptive headings in this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.  Words used in this Agreement, regardless of the gender and number specifically used, will be deemed and construed to include any other gender, masculine, feminine, or neuter, and any other number, singular or plural, as the context requires.  As used in this Agreement, the word “including” or any variation thereof is not limiting, and the word “or” is not exclusive.  The word day means a calendar day.  If the last day for giving any notice or taking any other action is a Saturday, Sunday, or a day on which banks in New York, New York or Denver, Colorado are closed, the time for giving such notice or taking such action will be extended to the next day that is not such a day.

 

Section 7.6            No Third-Party Rights.  Nothing expressed or referred to in this Agreement is intended or will be construed to give any Person other than the parties hereto and their respective successors and permitted assigns any legal or equitable right, remedy or claim under or with respect to this Agreement, or any provision hereof, it being the intention of the parties hereto that this Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their respective successors and assigns.

 

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Section 7.7            Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be an original and all of which together will constitute one and the same instrument.

 

Section 7.8            Payment of Expenses. From and after the Spin-Off Effective Date, and except as otherwise expressly provided in this Agreement, each of the parties to this Agreement will bear its own expenses, including the fees of any attorneys and accountants engaged by such party, in connection with this Agreement.

 

Section 7.9            Binding Effect; Assignment.

 

(a)           This Agreement will inure to the benefit of and be binding on the parties to this Agreement and their respective legal representatives, successors and permitted assigns.

 

(b)           Except as expressly contemplated hereby (including by Section 4.1), this Agreement, and the obligations arising hereunder, may not be assigned by either party to this Agreement, provided, however, that CH Parent and Provider may assign their respective rights, interests, duties, liabilities and obligations under this Agreement to any of their respective wholly-owned Subsidiaries, but such assignment shall not relieve CH Parent or the Provider, as the assignor, of its obligations hereunder.

 

Section 7.10          Amendment, Modification, Extension or Waiver.  Any amendment, modification or supplement of or to any term or condition of this Agreement will be effective only if in writing and signed by both parties hereto.  Either party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of the other party to this Agreement, or (b) waive compliance by the other party with any of the agreements or conditions contained herein or any breach thereof. Any agreement on the part of either party to any such extension or waiver will be valid only if set forth in an instrument in writing signed on behalf of such party. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instance, will be deemed or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition, but any party hereto may waive its rights in any particular instance by written instrument of waiver.

 

Section 7.11          Legal Fees; Costs.  If either party to this Agreement institutes any action or proceeding to enforce any provision of this Agreement, the prevailing party will be entitled to receive from the other party reasonable attorneys’ fees, disbursements and costs incurred in such action or proceeding, whether or not such action or proceeding is prosecuted to judgment.

 

Section 7.12          Force Majeure.  Neither party will be liable to the other party with respect to any nonperformance or delay in performance of its obligations under this Agreement to the extent such failure or delay is due to any action or claims by any third party, labor dispute, labor strike, weather conditions or any cause beyond a party’s reasonable control.  Each party agrees that it will use all commercially reasonable efforts to continue to perform its obligations under this Agreement, to resume performance of its obligations under this Agreement, and to minimize any delay in performance of its obligations under this Agreement notwithstanding the occurrence of any such event beyond such party’s reasonable control.

 

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Section 7.13          Specific Performance.  Each party agrees that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that each of the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 7.14          Further Actions.  The parties will execute and deliver all documents, provide all information, and take or forbear from all actions that may be necessary or appropriate to achieve the purposes of this Agreement.

 

Section 7.15          Confidentiality.

 

(a)           Except with the prior consent of the disclosing party, each party will:

 

(i)            limit access to the Confidential Information of the other party disclosed to such party hereunder to its employees, agents, representatives, and consultants on a need-to-know basis;

 

(ii)           advise its employees, agents, representatives, and consultants having access to such Confidential Information of the proprietary nature thereof and of the obligations set forth in this Agreement; and

 

(iii)          safeguard such Confidential Information by using a reasonable degree of care to prevent disclosure of the Confidential Information to third parties, but not less than that degree of care used by that party in safeguarding its own similar information or material.

 

(b)           A party’s obligations respecting confidentiality under Section 7.15(a) will not apply to any of the Confidential Information of the other party that a party can demonstrate: (i) was, at the time of disclosure to it, in the public domain; (ii) after disclosure to it, is published or otherwise becomes part of the public domain through no fault of the receiving party; (iii) was in the possession of the receiving party at the time of disclosure to it without being subject to any obligation of confidentiality; (iv) was received after disclosure to it from a third party who, to its knowledge, had a lawful right to disclose such information to it; (v) was independently developed by the receiving party without reference to the Confidential Information; (vi) was required to be disclosed to any regulatory body having jurisdiction over a party or any of their respective clients; or (vii) was required to be disclosed by reason of legal, accounting, or regulatory requirements beyond the reasonable control of the receiving party.  In the case of any disclosure pursuant to clauses (vi) or (vii) of this paragraph (b), to the extent practical, the receiving party will give prior notice to the disclosing party of the required disclosure and will use commercially reasonable efforts to obtain a protective order covering such disclosure.

 

(c)           The provisions of this Section 7.15 will survive the expiration or termination of this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the parties has signed this Agreement, or has caused this Agreement to be signed by its duly authorized officer, as of the date first above written.

 

	
 
    	
PROVIDER:
    
	
 
    	
 
    
	
 
    	
LIBERTY   MEDIA CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pamela L. Coe
    
	
 
    	
Name:
    	
Pamela   L. Coe
    
	
 
    	
Title:
    	
Senior   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CH   PARENT:
    
	
 
    	
 
    
	
 
    	
COMMERCEHUB, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Craig Troyer
    
	
 
    	
Name:
    	
Craig   Troyer
    
	
 
    	
Title:
    	
Vice   PresidentExhibit 10.3

 

COMMERCEHUB, INC.

LEGACY STOCK APPRECIATION RIGHTS PLAN

 

1.                                      Purpose of the Plan. The purpose of the Plan is to provide for the supplemental grant of stock options to purchase the common stock of CommerceHub, Inc., a Delaware corporation (together with any successor thereto, the “Company”) to holders of certain outstanding stock appreciation rights issued under the Commerce Technologies, Inc. 2010 Stock Appreciation Rights Plan administered by Commerce Technologies, Inc. (“Commerce Technologies”) in connection with adjustments made to outstanding stock appreciation rights relating to Commerce Technologies Common Stock (as defined below) as a result of the reorganization of Commerce Technologies, merger of Commerce Technologies with and into a subsidiary of the Company and the anticipated subsequent spin-off of the Company from Liberty Interactive Corporation, a Delaware corporation.

 

2.                                      Eligibility. The Options under this Plan may be granted only to persons who are Participants.

 

3.                                      Definitions. Capitalized terms used herein shall have the meanings assigned to such terms in this Section 3.

 

a.                                      “Applicable Laws” means the requirements relating to the administration of equity-based compensation plans under Federal and State corporate laws, Federal and State securities laws, the Code, any stock exchange or quotation system on which the Common Shares are listed or quoted, and the applicable laws of any other country or jurisdiction where Options are granted under this Plan.

 

b.                                      “Affiliate” means any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which includes the Company; any trade or business (whether or not incorporated) which is under common control (as defined in Code Section 414(c)) with the Company; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes the Company, and any other entity required to be aggregated with the Company pursuant to Regulations under Code Section 414(o).

 

c.                                       “Board” or “Board of Directors” means (i) the Board of Directors of the Company, or (ii) a committee or subcommittee of the Board appointed by the Board from among its members.

 

d.                                      “Cause” shall mean (i) willful malfeasance or willful misconduct by the Participant in connection with his service to the Company, including but not limited to fraud, misappropriation, embezzlement or dishonesty; (ii) failure by the Participant to observe material policies of the Company applicable to the Participant; (iii) the commission by the Participant of any felony, or (B) misdemeanor involving moral turpitude; or (iv) in lieu of the foregoing, any applicable definition contained in an employment 

 

 

agreement or consulting agreement between the Company and the Participant. The Committee shall determine, in its sole discretion, whether a Separation from Service is for Cause.

 

e.                                       “Code” means the Internal Revenue Code of 1986, and regulations thereunder, as such law and regulations may be amended from time to time.

 

f.                                        “Commerce Technologies Common Stock” means shares of common stock of Commerce Technologies, Inc., par value $.001 per share.

 

g.                                       “Commerce Technologies SAR” means an unexercised and unexpired stock appreciation right with regard to Commerce Technologies Common Stock granted pursuant to the Commerce Technologies, Inc. 2010 Stock Appreciation Rights Plan, as amended.

 

h.                                      “Committee” means the committee described in Section 9.

 

i.                                          “Common Shares” means shares of the Company’s Series C common stock.

 

j.                                         “Company” means CommerceHub, Inc., a Delaware corporation.

 

k.                                      “Conversion Ratio” means 2.181694489.

 

l.                                          “Disability” shall mean the Participant’s absence from his duties with the Company on a full-time basis for six consecutive months, or for shorter periods aggregating seven months or more in any year as a result of the Participant’s incapacity due to physical or mental illness, unless within 30 days after the Company gives written notice of termination following such absence the Participant shall have returned to the full-time performance of his duties. The determination of whether a Participant has suffered a Disability shall be made by the Committee based upon such evidence as it deems necessary and appropriate, and shall be conclusive and binding on the Participant. A Participant shall not be considered disabled unless he furnishes such medical or other evidence of the existence of the Disability as the Committee, in its sole discretion, may require.

 

m.                                  “Fair Market Value” of a Common Share on any day means (i) for Option exercise transactions effected on any third-party incentive award administration system provided by the Company, the current high bid price of a Common Share as reported on the consolidated transaction reporting system on the principal national securities exchange on which Common Shares are listed on such day or if such Common Shares are not then listed on a national securities exchange, then as quoted by OTC Markets Group Inc., or (ii) for all other purposes under this Plan, the last sale price (or, if no last sale price is reported, the average of the high bid and low asked prices) for a Common Share on such day (or, if such day is not a trading day, on the next preceding trading day) as reported on the consolidated transaction reporting system for the principal national 

 

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securities exchange on which Common Shares are listed on such day or if such Common Shares are not then listed on a national securities exchange, then as quoted by OTC Markets Group Inc. If for any day the Fair Market Value of a Common Share is not determinable by any of the foregoing means, then the Fair Market Value for such day shall be determined in good faith by the Committee on the basis of such quotations and other considerations as the Committee deems appropriate.

 

n.                                      “Option” means an option to purchase a Common Share, granted by the Company to a Participant pursuant to Section 4(a) of the Plan.

 

o.                                      “Option Agreement” means the agreement evidencing the grant of an Option under the Plan.

 

p.                                      “Participant” means a person who as of the Reorganization Date, holds an outstanding Commerce Technologies SAR.

 

q.                                      “Plan” means the CommerceHub Inc. Legacy Stock Appreciation Rights Plan, as set forth herein and as amended from time to time.

 

r.                                         “Reorganization Date” means 5:00 p.m. New York City time, on July 21, 2016.

 

s.                                        “Retirement” means retirement, in good standing, after attaining normal retirement age (65) under the provisions of any retirement plan of the Company.

 

t.                                         “Separation from Service” means a termination of services with the Company or any Affiliate.

 

4.                                      Grants of Options.

 

a.                                      Subject to the provisions of the Plan, the Committee may at any time, and from time to time, grant Options to any Participant. Subject to adjustment in accordance with Section 7, the total number of Common Shares with respect to which Options may be issued under the Plan is 5,734,906 Common Shares. In the event any Options lapse or terminate for any reason, the Common Shares with respect to which such Options were issued may be the basis for the issuance of Options to other persons.

 

b.                                      Options granted under the Plan shall be evidenced by Option Agreements in such form as the Committee shall from time to time approve, containing such provisions not inconsistent with the terms of the Plan and which need not be the same for all Options.

 

c.                                       Each award of Options shall be for the number of Common Shares equal to (i) the number of Commerce Technologies SARs to which the Options relate multiplied by (ii) the Conversion Ratio, as determined by the Committee, rounded down to the nearest whole share.

 

d.                                      Subject to the foregoing and the other provisions of this section, Options may be exercisable upon achievement of specified objectives and/or satisfaction of one or more waiting periods prior to exercise.

 

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e.                                       The Committee may at any time accelerate the date on which Options become exercisable, and no additional consideration need be received by the Company in exchange for such acceleration.

 

f.                                        Unless otherwise provided in the Plan or in the Option Agreement, Options, to the extent they become exercisable, may be exercised at any time in whole or in part until they expire or terminate. However, if the term of an Option expires when trading in the Common Shares is prohibited by law or the Company’s insider trading policy, then the term of such Option shall expire on the 30th day after the expiration of such prohibition.

 

g.                                       No Options shall be exercisable after the tenth anniversary of the date on which the Commerce Technologies SARs to which the Options relate were granted. If Commerce Technologies SARs with a lesser term than that permitted by the preceding sentence were granted, the Committee may, at any time prior to expiration of the Options, extend their term to the maximum term permitted by the preceding sentence, and no additional consideration need be received by the Company in exchange for such extension.

 

h.                                      The purchase price per Common Share under each Option shall be equal to (i) the exercise price of the applicable Commerce Technologies SAR divided by (ii) the Conversion Ratio, as determined by the Committee, rounded up to the nearest cent. The Option price shall be subject to adjustment in accordance with the provisions of Section 7 hereof.

 

i.                                          Subject to Section 6 below, Options shall be exercisable during the life of the Participant only by him or his guardian or legal representative, and after death only by his beneficiary.

 

j.                                         The Committee shall not have the authority to alter the purchase price per Common Share under each Option except as permitted by Section 7 below, nor shall the Committee have the authority to cancel outstanding Options and replace such Options with Options having a lower purchase price.

 

k.                                      Subject to the provisions of the Plan, after an Option has been granted,

 

i.                  the Committee may waive any term or condition thereof that could have been excluded from such Option when it was granted; and

 

ii.               With the written consent of the affected Participant, may amend any Option after it has been granted to include (or exclude) any provision which could have been included in (or excluded from) such Option when it was granted, and no additional consideration need be received by the Company in exchange for such waiver or amendment.

 

l.                                          No grant of an Option may provide for the payment to the recipient of dividend equivalents thereon in cash or Common Shares on a current,

 

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deferred or contingent basis.

 

m.                                  Successive grants of Options may be made to the same Participant regardless of whether any Options previously granted to the Participant remain unexercised.

 

n.                                      Any Option Agreement shall be consistent with this Plan and incorporate it by reference.

 

o.                                      Except as provided below in Section 10, in the event that a Participant has a Separation from Service with the Company for any reason other than an involuntary Separation from Service without Cause, Death, Disability, or Retirement; or, in the event that the Committee determines, in its sole discretion, that any conduct of a Participant constitutes Grounds for Forfeiture, all rights of such Participant under the Plan (including rights with respect to outstanding Options) will terminate. Notwithstanding the foregoing, if provided in the applicable Option Agreement, a change in the nature of the services provided to the Company shall not constitute a Separation from Service, provided that the Participant continues to provide bonafide services to the Company or an Affiliate (e.g. an employee who becomes only a director; or a consultant that subsequently becomes an employee). As used herein, the term “Grounds for Forfeiture”, if not defined in the applicable Option Agreement, shall mean any of the following conduct of any Participant: (i) using for profit or disclosing confidential information or trade secrets of the Company to unauthorized persons, (ii) breaching any contract with or violating any legal obligation to the Company, (iii) failing to make himself available to consult with, supply information to, or otherwise cooperate with the Company at reasonable times and upon a reasonable basis, (iv) while employed by the Company, engaging, directly or indirectly, as an officer, employee, or consultant, or otherwise having, directly or indirectly, ownership or interest in any business that is competitive with the manufacture, sale or distribution of products and services of the type in which the Company is engaged or which may be developed or be in the process of development by the Company during the Participant’s employment; provided, however, that the Participant may own beneficially or maintain voting power of the shares of common stock of companies listed on national securities exchanges or publicly traded that do not exceed 5% of the outstanding shares of such companies, or (v) engaging in any other activity which would have constituted grounds for his discharge for Cause by the Company.

 

p.                                      The Plan, and all grants issued pursuant to the Plan, shall be structured, interpreted and applied in all circumstances in a manner that is consistent with the intent that Options shall not be subject to the premature income recognition or adverse tax provisions of Code Section 409A.

 

5.                                      Exercise of Options.

 

a.                                      No Common Shares shall be issued on the exercise of an Option unless 

 

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paid for in full at the time of purchase. Payment for Common Shares purchased upon the exercise of an Option and any amounts required under Section 8 shall be determined by the Committee and may consist of (i) cash, (ii) check, (iii) promissory note (subject to applicable law), (iv) whole Common Shares, (v) the withholding of Common Shares issuable upon such exercise of the Option, (vi) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase price, or (vii) any combination of the foregoing methods of payment, or such other consideration and method of payment as may be permitted for the issuance of shares under the Delaware General Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Option agreement and may be subject to such conditions as the Committee deems appropriate.

 

b.                                      Unless otherwise determined by the Committee and provided in the applicable Option Agreement, Common Shares delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and Common Shares withheld for such payment, shall be valued for such purpose at their Fair Market Value as of the exercise date.

 

c.                                       The Company shall effect the transfer of the Common Shares purchased under the Option as soon as practicable after the exercise thereof and payment in full of the purchase price therefor and of any amounts required by Section 8, and within a reasonable time thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise determined by the Committee and provided in the applicable Option Agreement, (i) no Participant or other person exercising an Option shall have any of the rights of a stockholder of the Company with respect to Common Shares subject to an Option granted under the Plan until due exercise and full payment has been made, and (ii) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment.

 

d.                                      For purposes of this Section 5, the date of exercise of an Option shall mean the date on which the Company shall have received both full payment and notice from the holder of the Option of the exercise of such Option (unless otherwise determined by the Committee and provided in the applicable Option Agreement).

 

6.                                      Transferability. Except as otherwise determined by the Committee, no Option granted under the Plan shall be transferable by a Participant other than by will or the laws of descent and distribution. Except as otherwise determined by the Committee, Options shall be exercisable during the Participant’s lifetime only by him or by his guardian or legal representative.

 

7.                                      Adjustments. The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Options described in this Plan and granted 

 

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hereunder, in the exercise price provided in outstanding Options, and in the kind of shares covered thereby, as the Committee determines is equitably required to prevent dilution or enlargement of the rights of Participants that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets (including, without limitation, a special or large non-recurring dividend), issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Committee shall provide in substitution for any or all outstanding Options under this Plan such alternative consideration as it determines to be equitable in the circumstances, and may require in connection therewith the surrender of all Options so replaced. The Committee shall also make or provide for the adjustments specified in this Section 7 as the Committee determines are appropriate.

 

8.                                      Withholding Taxes. The Company shall have the right, but shall not be obligated, to deduct from any payment under this Plan an amount equal to the Federal, State, local, foreign and other taxes, which in the opinion of the Company are required to be withheld by it with respect to such payment. To the extent that the amounts available to the Company for such withholding are insufficient, it shall be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld. At the discretion of the Committee, such arrangements may include relinquishment of a portion of such benefit.

 

9.                                      Administration of the Plan.

 

a.                                      This Plan shall be administered by a committee (the “Committee”) consisting of not less than three (3) persons (or such other minimum number of persons as the Board may determine) who shall be appointed by, and serve at the pleasure of, the Board. The Board may, from time to time, appoint members of the Committee in substitution for members previously appointed and fill vacancies, however caused, in the Committee. In the event a Committee has not been established, the Board shall be the Committee. A majority of the Committee shall constitute a quorum, and the action of the members of the Committee present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the Committee. The Board may perform any function of the Committee hereunder, in which case the term “Committee” shall refer to the Board.

 

b.                                      Option Agreements, in the forms as approved by the Board or the Committee, and containing such terms and conditions consistent with the provisions of this Plan as are determined by the Board or the Committee, may be executed on behalf of the Company by the Chairman of the Board, the President & Chief Executive Officer, Chief Financial Officer & Treasurer, or the Secretary of the Company.

 

c.                                       The interpretation and construction by the Committee of any provision of this Plan or of any agreement, notification or document evidencing the 

 

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grant of Options granted under the Plan, and any determination by the Committee pursuant to any provision of this Plan or of any such agreement, notification or document, shall be final and conclusive. No member of the Committee shall be liable for any such action or determination made in good faith.

 

10.                               Separation from Service, Death and Disability Provisions. Unless otherwise provided in the Plan, Option Agreement, or other agreement between the Company and a Participant:

 

a.                                      In case of the involuntary Separation from Service without Cause, or by reason of death, Disability or Retirement, or in the case of hardship or other special circumstances, of a Participant who holds an Option not immediately exercisable, the Committee may, in its sole discretion, accelerate the time at which such Option may be exercised. In addition, the Committee may waive any other limitation or requirement under any Option granted under this Plan.

 

b.                                      The Committee may, in its sole discretion, modify any Option to extend the period following a Participant’s Separation from Service which such Option will remain outstanding and be exercisable, provided that no such extension shall result in any Option being exercisable more than ten years after the date on which the Commerce Technologies SARs to which the Options relate were granted.

 

c.                                       In the case of a Participant’s Separation from Service for Cause, all of the Participant’s rights under this Plan (whether or not vested) shall be cancelled upon termination.

 

d.                                      In the case of a Participant’s Separation from Service for any reason other than Cause, all of the Participant’s rights under this Plan (whether or not vested) shall be cancelled upon termination except to the extent that such Participant was entitled to exercise the Option as of the date of termination and a post termination exercise period is provided in the Option Agreement.

 

11.                               Leave of Absence. The Board or the Committee shall determine the extent to which military or Government services or leave of absence for any other reason shall constitute Separation from Service, boardship or consultancy for the purposes of the Plan or any Options granted hereunder.

 

12.                               Participant Rights. This Plan shall not confer upon any Participant any right with respect to continuance of employment with or service to the Company nor shall it interfere in any way with any right the Company would otherwise have to terminate such Participant’s employment or service at any time, with or without Cause. Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire any right or title to any assets, finds or property of the Company, including without limitation, any specific finds, assets or other property which the Company may set aside in anticipation of any liability under the Plan. A Participant shall have only a contractual right to a Option, if any, payable under the Plan, 

 

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unsecured by any assets of the Company, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company shall be sufficient to pay any benefits to any person.

 

13.                               Indemnification of Board and Committee. Without limiting any other rights of indemnification which they may have from the Company and any parent or subsidiary, the members of the Board and the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any claim, action, suit, or proceeding to which they or any of them may be a defendant party by reason of any action taken or failure to act under, or in connection with, the administration of the Plan, or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit, or proceeding, except a judgment based upon a finding of willful misconduct or recklessness on their part. Upon the making or institution of any such claim, action, suit, or proceeding, the member of the Board or Committee shall notify the Company in writing, giving the Company an opportunity, at its own expense, to handle and defend the same before such member of the Board or Committee undertakes to handle it on his or her own behalf. The provisions of this Section shall not give the Board or Committee greater rights than they would have under the Company’s by-laws or New York law.

 

14.                               Severability of Provisions. If any provision of the Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Option under any Applicable Law, such provision shall be construed or deemed amended or limited in scope to conform to Applicable Laws, or in the discretion of the Committee, it shall be fully severable, and the Plan shall be construed and enforced as if such provision had never been inserted herein.

 

15.                               Governing Laws. The validity, construction, interpretation and administration of the Plan, each Option Agreement, and any determinations or decisions made thereunder, and the rights of all persons having or claiming to have any interest therein or thereunder, shall be governed by the laws of the State of New York and the United States, as applicable, without reference to any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. Without limiting the generality of the foregoing, the period within which any actions arising under or in connection with the Plan must be commenced, shall be governed by the laws of the State of New York, irrespective of the place where the act or omission complained of took place and the residence of any party to such action and irrespective of the place where the action may be brought. A Participant’s acceptance of any Option shall constitute his irrevocable and unconditional waiver of the right to a jury trial in any action or proceeding concerning the Option, the Plan or any rights or obligations of the Participant or the Company under or with respect to the Options or the Plan.

 

16.                               Amendments and Termination.

 

a.                                      The Board may at any time and from time to time amend the Plan in whole or in part.

 

b.                                      The Committee shall not, without the further approval of the Board, authorize the amendment of any outstanding Option to reduce the exercise price. Furthermore, no Option shall be cancelled and replaced with a Option having a lower exercise price without further approval of 

 

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the Board. This Section 16(b) is intended to prohibit the repricing of “underwater” Options, and shall not be construed to prohibit the adjustments provided for in Section 7 of this Plan.

 

c.                                       Notwithstanding any other provision of the Plan to the contrary, the Board may at any time terminate this Plan as of any date specified in a resolution adopted by the Board. If not earlier terminated, this Plan shall terminate on the last date that any Option granted hereunder may be exercised.

 

d.                                      Upon the termination or amendment of the Plan, the Committee shall not, without the consent of the affected Participant, reduce, cancel or adversely affect any Option which was granted prior to the termination or amendment of the Plan. In addition, any Option which was granted pursuant to the Plan will continue to be governed by the terms of the Plan after the termination or expiration of the Plan.

 

17.                               Acceptance. By accepting any benefits under the Plan, each Participant, and each person claiming under or through him, shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, all provisions of the Plan and any action or decision under the Plan by the Company, its agents and employees, and the Board and the Committee.

 

18.                               Miscellaneous. The use of the masculine gender shall also include within its meaning the feminine. The use of the singular shall include within its meaning the plural and vice versa.

 

19.                               Restatement of Financial Statements.  If the Participant holds the office of Vice President or above as of the grant date, and if (i) a material restatement of any financial statement of the Company (including any consolidated financial statement of the Company and its consolidated subsidiaries) is required and (ii) in the reasonable judgment of the Committee, (A) such restatement is due to material noncompliance with any financial reporting requirement under applicable securities laws and (B) such noncompliance is a result of misconduct on the part of the Participant, the Participant will repay to the Company Forfeitable Benefits received by the Participant during the Misstatement Period in such amount as the Committee may reasonably determine, taking into account, in addition to any other factors deemed relevant by the Committee, the extent to which the market value of Common Shares during the Misstatement Period was affected by the error(s) giving rise to the need for such restatement. “Forfeitable Benefits” means any proceeds received by the Participant from the sale, exchange, transfer or other disposition during the Misstatement Period of Common Shares received by the Participant upon the exercise during the Misstatement Period of any Option held by the Participant.  “Misstatement Period” means the 12-month period beginning on the date of the first public issuance or the filing with the Securities and Exchange Commission, whichever occurs earlier, of the financial statement requiring restatement.

 

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