EXPE » Topics » RECITALS:

These excerpts taken from the EXPE 10-Q filed Nov 14, 2005.

RECITALS:

 

WHEREAS, the Board of Directors of IAC (“IAC Board”) 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 pursuant to the Charter Amendments (as defined below);

 

WHEREAS, the IAC Board has adopted a resolution approving an amendment to IAC’s restated certificate of incorporation (the “Reverse Stock Split Charter Amendment”) and recommended that the holders of common stock, par value $0.01 per share, of IAC (“Old IAC Common Stock”), holders of Class B common stock, par value $0.01 per share, of IAC (“Old IAC Class B Common Stock”), and holders of Series A Cumulative Convertible preferred stock, par value $0.01 per share, of IAC (“Old IAC Series A Preferred Stock,” and together with Old IAC Common Stock and Old IAC Class B Common Stock, the “Old IAC Capital Stock”) approve and adopt the Reverse Stock Split Charter Amendment in conformity with Section 242 of the General Corporation Law of the State of Delaware (the “DGCL”), pursuant to which IAC will effectuate a one-for-two reverse stock split with respect to Old IAC Common Stock and Old IAC Class B Common Stock (the “Reverse Stock Split”);

 

WHEREAS, the IAC Board has adopted a resolution approving amendments to IAC’s restated certificate of incorporation (the “Spin-Off Charter Amendments,” and together with the Reverse Stock Split Charter Amendment, the “Charter Amendments”) and recommended that the holders of Old IAC Capital Stock approve and adopt the Spin-Off Charter Amendments in conformity with Section 242 of the DGCL, whereby, among other matters, the Old IAC Common Stock and the Old IAC Class B Common Stock will be reclassified (the “Reclassification”) as follows:

 

Each then issued and outstanding share of Old IAC Common Stock will be reclassified into (a) one share of common stock, par value $0.001 per share, of IAC (“New IAC Common Stock”) and (b) 1/100th of a share of Series 1 Mandatory Exchangeable preferred stock, par value $0.01 per share, of IAC (the “New IAC Series 1 Preferred Stock”), which 1/100th of a share of New IAC Series 1 Preferred Stock shall, pursuant to its terms, automatically and immediately exchange into one share of common stock, par value $0.001 per share, of Expedia (“Expedia Common Stock”);

 

Each then issued and outstanding share of Old IAC Class B Common Stock will be reclassified into (a) one share of Class B common stock, par value $0.001 per share, of IAC and (b) 1/100th of a share of Series 2 Mandatory Exchangeable preferred stock, par value $0.01 per share, of IAC (the “New IAC Series 2 Preferred Stock”), which 1/100th of a share of New IAC Series 2 Preferred Stock shall, pursuant to its terms, automatically and immediately exchange

 

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into one share of Class B common stock, par value $0.001 per share, of Expedia (“Expedia Class B Common Stock”);

 

WHEREAS, at IAC’s Annual Meeting of Stockholders held on July 19, 2005, the holders of Old IAC Capital Stock approved the Charter Amendments by the requisite votes required under the DGCL (and otherwise);

 

WHEREAS, in connection with the Reclassification, holders of Old IAC Series A Preferred Stock will receive one of the following, at the holder’s option, in respect of each share of Old IAC Series A Preferred Stock: (a) $50.00 in cash plus accrued and unpaid dividends, (b) the securities that the holder would have received had the share of Old IAC Series A Preferred Stock been converted based upon the applicable conversion ratio into shares of Old IAC Common Stock immediately prior to the Reverse Stock Split and the Reclassification or (c) one share of Series A Convertible preferred stock, par value $0.001 per share, of Expedia (“Expedia Series A Preferred Stock”) and one share of Series B Convertible preferred stock, par value $0.01 per share, of IAC (“New IAC Series B Preferred Stock”);

 

WHEREAS, pursuant to their terms, the warrants to purchase shares of Old IAC Common Stock set forth on Schedule 1.01(a) (the “Old IAC Severable Warrants”) will be converted into (a) warrants to purchase shares of New IAC Common Stock (“New IAC Unitary Warrants”) and (b) warrants to purchase shares of Expedia Common Stock (“Expedia Warrants”);

 

WHEREAS, pursuant to their terms, the warrants to purchase shares of Old IAC Common Stock set forth on Schedule 1.01(b) (the “Old IAC Integrated Warrants,” and together with the Old IAC Severable Warrants, the “Old IAC Warrants”) will be converted into warrants to purchase shares of New IAC Common Stock and shares of Expedia Common Stock (“New IAC Integrated Warrants”);

 

WHEREAS, the Parties wish to set forth in this Agreement the terms on which, and the conditions subject to which, they intend to implement the measures described above; and

 

WHEREAS, IAC and Expedia intend that the Separation (as defined below) and the Reclassification will qualify for United States federal income tax purposes as transactions that are generally tax free under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”) and hereby adopt the Agreement as a “plan of reorganization.”

 

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

 

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RECITALS:

 

WHEREAS, IAC and Expedia have entered into a Separation Agreement pursuant to which the Parties (as defined below) have set out the terms on which, and the conditions subject to which, they wish to implement the Separation (as defined in the Separation Agreement) (such agreement, as amended, restated or modified from time to time, the “Separation Agreement”).

 

WHEREAS, in connection therewith, IAC and Expedia have agreed to enter into this Agreement to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, pension and benefit plans, programs and arrangements and certain employment matters.

 

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

 

EXCERPTS ON THIS PAGE:

10-Q (2 sections)
Nov 14, 2005
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