EFTA01377984.pdf

IAC controls our company and will have the ability to control the direction of our business. After the completion of this offering. IAC will own all of the shares of our outstanding Class B common stock, representing approximately 86.1% of our outstanding shares of capital stock and approximately 98.4% of the combined voting power of our outstanding capital stock (or approximately 84.4% of our outstanding shares of capital stock and approximately 98.2% of the combined voting power of our outstanding capital stock, if the underwriters exercise in full their option to purchase additional shares of our common stock in this offering). As long as IAC owns shares of our capital stock representing a majority of the combined voting power of our outstanding capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote of any other stockholder. As a result. IAC will have the ability to control significant corporate activities, including: the election of our board of directors and, through our board of directors, decision-making with respect to our business direction and policies, including the appointment and removal of our officers: acquisitions or dispositions of businesses or assets. mergers or other business combinations: issuances of shares of our common stock, Class B common stock, Class C common stock and our capital structure: corporate opportunities that may be suitable for us and IAC. subject to the corporate opportunity provisions in our certificate of incorporation, as described below: our financing activities, including the issuance of additional debt and equity securities, or the incurrence of other indebtedness generally: 26 Table of Contents the payment of dividends: and the number of shares available for issuance under our equity incentive plans for our prospective and existing employees. This voting control will limit the ability of other stockholders to influence corporate matters and, as a result, we may take actions that stockholders other than IAC do not view as beneficial. This voting control may also discourage transactions involving a change of control of our company, including transactions in which you as a holder of our common stock night otherwise receive a premium for your shares. Furthermore, after the expiration of the 180-day lock-up period. IAC generally has the right at any time to sell or otherwise dispose of the shares of our capital stock that it owns, including the ability to transfer a controlling interest in us to a third party, without your approval and without providing for a purchase of your shares. See "Shares eligible for future sale? Even if IAC owns shares of our capital stock representing less than a majority of the combined voting power of our outstanding capital stock, so long as IAC retains shares representing a significant percentage of our combined voting power, IAC will have the ability to substantially influence these significant corporate activities. In addition, pursuant to the investor rights agreement we will enter into with IAC, IAC has the right to maintain its level of ownership in our Company to the extent we issue additional shares of our capital stock in the future and, pursuant to the employee matters agreement we will enter into with IAC, IAC may receive payment for certain compensation expenses through receipt of additional shares of our stock. For a more complete summary of our agreements with IAC, see "Certain relationships and related party transactions" Until such time as IAC no longer controls or has the ability to substantially influence us. we will continue to face the risks described in this "Risk factors" section relating to IAC's control of us and the potential conflicts of interest between IAC and us. Our certificate of incorporation could prevent us from benefiting from corporate opportunities that might otherwise have been available to us. Our certificate of incorporation will include a "corporate opportunity" provision in which we renounce any interests or expectancy in corporate opportunities which become known to (I) any of our directors or officers who are also officers, directors, employees or other affiliates of IAC or its affiliates (except that we and our subsidiaries shall not be deemed affiliates of IAC or its affiliates for the purposes of the provision) or (ii) IAC itself, and which relate to the business of IAC or may constitute a corporate opportunity for both IAC and us. Generally, neither IAC nor our officers or directors who are also officers or directors of IAC or its affiliates will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such person pursues or acquires any corporate opportunity for the account of IAC or its affiliates, directs or transfers such corporate opportunity to IAC or its affiliates, or does not communicate information regarding such corporate opportunity to us. The corporate opportunity provision may exacerbate conflicts of interest between IAC and us because the provision effectively permits one of our directors or officers who also serves as an officer or director of !AC to choose to direct a corporate opportunity to IAC instead of to us. 27 Table of Contents lAts interests may conflict with our Interests and the interests of our stockholders. Conflicts of interest between IAC and us could be resolved In a manner unfavorable to us and our public stockholders. Various conflicts of interest between us and IAC could arise. Five of our eight directors are current members of the board of directors or executive officers of IAC. Ownership interests of directors or officers of IAC in our stock and ownership interests of our directors and officers in the stock of IAC, or a person's service as either a director or officer of both companies, could create or appear to create potential conflicts of interest when those directors and officers are faced with decisions relating to our company. These decisions could include. hap:viva& iio:.6sw An:lints attar daW15751SATXXM 0474691500643r 3222645Rn-IalfintiI 1,9,2013 911:17 Ahfl CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075144 CONFIDENTIAL SONY GM_00221328 EFTA01377984