EFTA01377986.pdf

such a transaction. This intention may cause IAC to not support transactions we wish to pursue that involve issuing shares of our common stock, including for capital raising purposes, as consideration for an acquisition or as equity incentives to our employees. The inability to pursue such transactions, if it occurs. may adversely affect our company. See "—IAC controls our company and will have the ability to control the direction of our business" and "—IAC's 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." Our agreements with IAC will require us to Indemnify SAC for certain tax liabilities and may limit our ability to engage in desirable strategic or capital raising transactions, Including following any distribution by IAC of our capital stock to its stockholders. In connection with this offering, we will enter into a tax sharing agreement with IAC. Under the tax sharing agreement. we generally will be responsible and will be required to indemnify IAC for (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or one of its subsidiaries that 29 Table of Contents includes us or any of our subsidiaries to the extent attributable to us or any of our subsidiaries, as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any consolidated, combined, unitary or separate tax retums of us or any of our subsidiaries. To the extent IAC failed to pay taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or one of its subsidiaries that includes us or any of our subsidiaries, the relevant taxing authority could seek to collect such taxes (including taxes for which IAC is responsible under the tax sharing agreement) from us or our subsidiaries. Under the tax sharing agreement, we generally will be responsible for any taxes and related amounts imposed on IAC or us that arise from the failure of a future spin-off of IAC's retained interest in us to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Section 368(a)(1)(D) and/or Section 355 of the Internal Revenue Code of 1986. as amended, or the Code. to the extent that the failure to so qualify is attributable to (I) a breath of the relevant representations and covenants made by us in the tax sharing agreement or any representation letter provided in support of any tax opinion or ruling obtained by IAC with respect to the U.S. federal income tax treatment of such spin-off, or (ii) an acquisition of our equity securities. To preserve the tax-free treatment of any potential future spin-off by IAC of its interest in us, and in addition to our indemnity obligation descnbed above, the tax shanng agreement will restrict us, for the two-year period following any such spin-off, except in specific circumstances, from: (a) entenng into any transaction pursuant to which all or a portion of shares of our stock would be acquired, whether by merger or otherwise, (ii) issuing equity securities beyond certain thresholds, (iii) repurchasing our shares other than in certain open-market transactions. (iv) ceasing to actively conduct our businesses or (v) taking or failing to take any other action that prevents the distribution and related transactions from qualifying as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Section 368(a)(1)(D) andior Section 355 of the Code. The indemnity obligations and other limitations could have an adverse effect on our business. financial condition and results of operations. For a more complete description of the tax sharing agreement, see "Certain relationships and related party transactions—Post offering relationship with IAC—Tax sharing agreement." Future sales or distributions of our shares by SAC could depress our common stock price. After this offering, and subject to the lock-up period described below, IAC will have the right to sell or distribute to its stockholders all or a portion of our Class B common stock that it holds. Although as of the date of this prospectus IAC has advised us that it does not have any present intention or plans to undertake such a sale or distribution, sales by IAC in the public market or distributions to its stockholders of substantial amounts of our stock in the form of common stock or Class B common stock, or the filing by IAC of a registration statement relating to a substantial amount of our stock, could depress the price of our common stock. In addition. IAC will have the right, subject to certain conditions, to require us to file registration statements covering the sale of its shares or to include its shares in other registration statements that we may file. In the event IAC exercises its registration rights and sells all or a portion of its shares of our capital stock, the price of our common stock could decline. See "Shares eligible for future sale—Registration rights." 30 Table of Content The services that IAC will provide to us following the Minal public offering may not be sufficient to meet our needs, which may result in Increased costs and otherwise adversely affect our business. Prior to completion of this offering. IAC has provided to us significant corporate and shared services related to corporate functions such as executive oversight. risk management. information technology, accounting. audit. legal. investor relations, tax, treasury and other services. Following this offering, we expect IAC to continue to provide many of these services for a fee provided in the services agreement described in "Certain relationships and related party transactions." IAC will not be obligated to provide these services in a manner that differs from the nature of the service today, and thus we may not be able to modify these services in a manner desirable to us as a stand-alone public company. Further, if we no longer receive these services from IAC, we may not be able to perform these services ourselves, or to find appropriate third-party arrangements at a reasonable cost, and the cost may be higher than that charged by IAC. Risks related to our Indebtedness Our Indebtedness may affect our ability to operate our business, which could have a material adverse effect on our financial condition and results of operations. We and our subsidiaries may Incur additional indebtedness, Including secured Indebtedness. On a pro forma basis giving effect to the acquisition of PlentyOfFish, the issuance of the Match Notes, the Term Loan Facility, this offering and the related http-lvdvmsec.gov:An:lives Aatz1575189,00010474691500643112226458"-la.limil I I .9"2013 911:17 Ahfl CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075146 CONFIDENTIAL SONY GM_00221330 EFTA01377986