Free Stipulation - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS DAVID S. LITMAN and MALIA A. LITMAN, Plaintiffs-Counterdefendants, v. THE UNITED STATES, Defendant-Counterplaintiff.
_________________________________________________________

ROBERT B. DIENER and MICHELLE S. DIENER, Plaintiffs-Counterdefendants, v. THE UNITED STATES, Defendant-Counterplaintiff.
.________________________________________________________

HOTELS.COM, INC. and Subsidiaries (f/k/a HOTEL RESERVATIONS NETWORK, INC.), Plaintiffs, v. THE UNITED STATES, Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. 05-956T

No. 05-971T

No. 06-285T (Judge Christine O.C. Miller)

STIPULATIONS OF FACT AND JOINT EXHIBITS Plaintiffs-Counterdefendants, David S. and Malia A. Litman ("the Litmans"), Robert B. and Michelle S. Diener ("the Dieners"), Plaintiffs, Hotels.com, Inc. and Subsidiaries ("Hotels.com"), and Defendant, the United States ("Defendant"), submit the following Stipulations of Fact and Joint Exhibits: It is hereby stipulated that, for the purpose of this case, the following statements may be accepted as facts and all Joint Exhibits referred to herein and attached hereto may be

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accepted as authentic and are incorporated in this stipulation and made a part hereof, provided, however, that any party has the right to object to the admission of any such facts and Joint Exhibits in evidence only on the grounds of relevancy and materiality. 1. A copy of the April 13, 1999, Asset Purchase Agreement is attached

hereto as Joint Exhibit 1 (LD 002085 - LD 002264). 2. The document attached hereto as Joint Exhibit 2 is "Taxpayer's Copy" of

a Form 1120S for TMF, Inc. for the year 1999 (LD 000996 - LD 001076). Robert Diener, President of TMF, Inc. signed the Form 1120S before it was filed with the IRS. 3. The document attached hereto as Joint Exhibit 3 is a copy of an email

dated January 23, 2000 from David Litman ("Litman") to Brian Lidji ("Lidji"), with subject line of "Fwd: Earnout for equity," (forwarding a January 18, 2000, email from Dara Khosrowshahi ("Khosrowshahi") to Robert Diener ("Diener") on which Litman was cc'd) (LD 002653 LD 002657). 4. Effective February 2, 2000, the Asset Purchase Agreement was amended A conformed copy of the 2000 Amended and Restated Asset

("the 2000 Amendment").

Purchase Agreement is attached hereto as Joint Exhibit 4 (LD 002268 - LD 002372). The parties stipulate that the conformed copy shall be treated as an original and that the conformed signatures shall be considered actual signatures. 5. The document attached hereto as Joint Exhibit 5 is a copy of a Hotel

Reservations Network PowerPoint presentation (DT000442 - DT000467). 6. Attached hereto as Joint Exhibit 6 are materials prepared by Donaldson

Lufkin & Jenrette ("DLJ") regarding the HRN IPO (LD 005829 - LD 006017).

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7.

On February 25, 2000, HRN filed its final Prospectus (which was dated

February 25, 2000) with the Securities and Exchange Commission. A copy of HRN's final Prospectus is attached hereto as Joint Exhibit 7 (HC 00560 - HC 00660). 8. DLJ, Allen & Company Incorporated, Bear, Stearns & Co., Inc., Thomas

Weisel Partners LLC, and DLJdirect Inc. served as the representatives of all of the underwriters for the IPO. Joint Exhibit 8 (HC 002691 - HC 002721) is a copy of the underwriting agreement dated February 25, 2000. Schedule I to Joint Exhibit 8, contains the list of underwriters for the IPO. 9. The IPO price set by the Pricing Committee of HRN's Board of Directors

was $16 per share. A copy of the Consent to Action by the Pricing Committee of the Board of Directors of HRN, Inc., with Exhibit A are attached as Joint Exhibit 9 (HC 003185 HC 003189). 10. February 25, 2000. 11. The closing, high and low price of the HRN stock on February 25th and HRN stock began to trade publicly on the NASDAQ exchange on

March 1st are set forth on Lexis printouts attached hereto as Joint Exhibits 10 and 11 (HC 004010 and HC 004012, respectively) 12. 810,000 shares. 13. Pursuant to a letter dated March 1, 2000, Litman acknowledged receipt of The HRN IPO was oversubscribed. There was an additional allocation of

9,999,900 share of Class A Common Stock of HRN and released HRN from its obligations under the 2000 Amendment. A copy of the Receipt and Release of Claims signed by Litman is attached hereto as Joint Exhibit 12 (LIDJI 02682). The parties stipulate that Litman also

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executed this document on behalf of the TMF Liquidating Trust and that Robert Diener also executed the Receipt and Release of Claims. 14. The document attached hereto as Joint Exhibit 13 (LD 005288 -

LD 005298) is a copy of a letter from Lidji to Litman, Diener, and Andy Pells enclosing a transmittal memorandum from Paul, Weiss, Rifkind, Wharton & Garrison ("Paul Weiss"), copies of HRN stock certificates Nos. 6, 7 and 8 of Hotel Reservations Network, Inc., and receipts for those certificates, dated March 14, 2000. 15. Attached as Joint Exhibit 14 (LD 005272 - LD 005275) is a fax cover

page dated March 1, 2000, from Lidji to Jan Clements- Solomon Smith Barney with an attached letter dated February 24, 2000, from Litman, followed by the fax confirmation page. 16. Attached hereto as Joint Exhibit 15 (LD 005276 - LD 005278) is a fax

cover sheet from Lidji to Mary Reidy dated March 9, 2000, enclosing a Share Instruction Letter re: Stock Certificates for TMF and Andy Pells dated March 7, 2000. 17. Attached hereto is as Joint Exhibit 16 (HC 002041 - HC 002115) is a

copy of HRN's federal income tax return, Form 1120, for the "tax year beginning March 1, 2000, [and] ending December 31, 2000." 18. The document attached hereto as Joint Exhibit 17 (HC 00483 - HC 00543)

is a copy of HRN's 2000 Annual Report on Form 10-K filed with the SEC. 19. The document attached hereto as Joint Exhibit 18 (HC 00544 - HC 00559)

is a copy of HRN's Form 10-Q filed with the SEC for the quarter ended March 31, 2000. 20. The document attached hereto as Joint Exhibit 19 is a copy of the

Form 1041 filed by TMF Liquidating Trust for the year 2000 signed by Robert Diener. The Form 1041 was received by the IRS on May 27, 2001.

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21.

On October 15, 2001, the Litmans timely filed their federal income tax

return for the tax year ending December 31, 2000, with the Internal Revenue Service, Austin Service Center, at Austin, Texas (the "Austin Service Center"). A copy of the 2000 Form 1040 is attached hereto as Joint Exhibit 20 (US0007 - US0076). 22. return. 23. On October 15, 2001, the Dieners timely filed their federal income tax The Litmans, who are married, jointly filed their 2000 federal income tax

return for the tax year ending December 31, 2000, with the Internal Revenue Service, Atlanta Service Center, at Atlanta, Georgia (the "Atlanta Service Center"). 2000 Form 1040 is attached hereto as Joint Exhibit 21 (US0451 - US0479). 24. The names and address of the taxpayers shown on the federal income tax A copy of the

return are Robert D. and Michelle S. Diener, 8877 Collins Avenue, PH A, Surfside, Florida 33154. 25. returns. 26. The document attached hereto as Joint Exhibit 22 is a copy of an email The Dieners, who are married, jointly filed their 2000 federal income tax

from Bob Diener to Viren Gandhi (HC 00837). 27. The document attached hereto as Joint Exhibit 23 are copies of documents

faxed by Bob Diener to Jim Horan (LD 005349 - LD 005355). 28. The document attached hereto as Joint Exhibit 24 is a copy of an email

from Bob Diener to Mel Robinson regarding "2000 HRN Tax Return," dated March 19, 2002. (LD 005358). 29. On April 24, 2002, HRN changed its name to Hotels.com.

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30.

Attached as Joint Exhibit 25 is an email string between Greg Porter

(HRN's General Counsel), Mel Robinson (HRN's Chief Financial Officer), and Brian Lidji, with cc's to Bill Severance, Eric DeGraw, Michael Adler, and Viren Gandhi regarding Amended & Restated Purchase Agreement for HRN_v1.DOC (HC 00938 - HC 00939). 31. On October 8, 2004, the Internal Revenue Service (the "IRS"), mailed a

notice of deficiency for the tax year ended December 31, 2000, to the Litmans. The document attached hereto as Joint Exhibit 26 is a copy of the Notice of Deficiency issued to David and Malia Litman (LD 005439 - LD 005459). 32. On October 8, 2004, the Internal Revenue Service (the "IRS"), mailed a

notice of deficiency for the tax year ended December 31, 2000, to the Dieners. The document attached hereto as Joint Exhibit 27 is a copy of the Notice of Deficiency issued to the Dieners (LD 005374 - LD 005394). 33. On February 9, 2005, the IRS assessed additional taxes and penalties in

the amount of $12,664,612.00 and $2,532,922.40, respectively, against the Dieners based on the notice of deficiency issued to them. 34. A Notice of Deficiency was issued to Hotels.com on February 10, 2006.

A copy of the Notice of Deficiency is attached hereto as Joint Exhibit 28 (US 0925 - US 0938). 35. Attached as Joint Exhibits 29 and 30 are Hotels.com's claims for refund

for 2001 and 2002 (HC 001623 - HC 001655) and (HC 001656 - HC 001682), respectively. 36. The document attached hereto as Joint Exhibit 31 is a copy of an email

from Brian Lidji to Robert Diener and David Litman, dated November 7, 1999 (LIJ006671).

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Respectfully submitted, BAKER BOTTS L.L.P. Dated: April 30, 2007

By: s/ John W. Porter __________________ John W. Porter Stephanie Loomis-Price (Of Counsel) J. Graham Kenney (Of Counsel) 3000 One Shell Plaza 910 Louisiana Houston, Texas 77002-4995 (713) 229-1597 (713) 229-2797 (Fax) [email protected] [email protected] [email protected] COUNSEL FOR PLAINTIFFSCOUNTERDEFENDANTS DAVID S. AND MALIA A. LITMAN AND ROBERT B. AND MICHELLE S. DIENER LATHAM & WATKINS L.L.P.

Dated: April 30, 2007

By: /s/Kim Marie K. Boylan______________ Kim Marie K. Boylan Kari M. Larson (Of Counsel) 555 Eleventh Street N.W. Suite 1000 Washington, DC 20004-1304 (202) 637-2235 (202) 637-2201 (Fax) [email protected] [email protected] COUNSEL FOR HOTELS.COM

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UNITED STATES DEPARTMENT OF JUSTICE TAX DIVISION Dated: April 30, 2007 By: /s/Cory A. Johnson___________________ Mr. Cory A. Johnson Eileen J. O'Connor Assistant Attorney General David Gustafson Acting Chief, Court of Federal Claims Sec. By: /s/Steven I. Frahm___________________ Steven I. Frahm (Of Counsel) Asst. Chief, Court of Federal Claims Sec. 555 4th Street N.W. Judiciary Center Building Washington, DC 20530 (202) 307-3046 (202) 514-9440 (Fax) [email protected] eileen.j.o'[email protected] COUNSEL FOR THE UNITED STATES

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