{"id":43179,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-reorganization-expedia-inc-an2.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-reorganization-expedia-inc-an2","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-reorganization-expedia-inc-an2.html","title":{"rendered":"Agreement and Plan of Reorganization &#8211; Expedia Inc. and Travelscape.com Inc."},"content":{"rendered":"<pre>\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n\n     AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF January 31, 2000 (this\n\"Agreement\"), by and among Expedia, Inc., a Washington corporation (\"Expedia\"),\nTravel Enterprises, Inc., a wholly owned subsidiary of Expedia and a Delaware\ncorporation (\"Sub\"), Travelscape.com, Inc., a Delaware corporation (\"Company\"),\nand the undersigned security holders of Company (the \"Principal Shareholders\").\n\n                                    RECITALS\n\n     INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and the\nmutual representations, warranties, covenants and agreements contained herein,\nExpedia, Sub, Company, and the Principal Shareholders hereby agree as follows:\n\n                                   ARTICLE I\n                                   THE MERGER\n                                        \n\n     1.1  Effective Time of the Merger. Subject to the provisions of this\n          ----------------------------\nAgreement, Sub will be merged with and into Company (the \"Merger\"). A\nCertificate of Merger and any other required documents (collectively, the\n\"Merger Documents\"), substantially in the forms attached as Exhibit 1.1,\nrespectively, shall be duly prepared, executed, and acknowledged by Company and\nSub, and thereafter delivered to the Secretary of State of Delaware for filing,\nas provided in the Delaware General Corporation Law (the \"DGCL\"), as soon as\npracticable on or after the Closing Date (as defined in Section 1.2). The Merger\nshall become effective at such time as the Merger Documents have been filed with\nthe Secretary of State of Delaware or at such time thereafter as is provided in\nthe Merger Documents (the \"Effective Time\"). Solely for purposes of\nclarification, Company and the Principal Shareholders acknowledge and agree that\nExpedia will have no obligation to make any payment or issue any shares under\nthis Agreement until Expedia has received written confirmation from the\nSecretary of State of Delaware of the effectiveness of the Merger and Expedia\nacknowledges and agrees that Expedia will have no right to the business of the\nCompany until the Principal Shareholders have received written confirmation from\nthe Secretary of the State of Delaware of the effectiveness of the Merger.\n\n     1.2  Closing. The closing of the Merger (the \"Closing\") will take place at\n          -------\n10:00 a.m., Pacific time as soon as practicable (but no more than five (5)\nbusiness days) after satisfaction or waiver of the last to be fulfilled of the\nconditions set forth in Article VI that by their terms are not to occur at the\nClosing (the \"Closing Date\"), at the offices of Preston Gates &amp; Ellis LLP in\nSeattle, Washington, unless another time, date, or place is agreed to in writing\nby the parties hereto. Any party to this Agreement, including such party's\nrepresentative(s), may participate in the Closing telephonically.\n\n     1.3  Effects of the Merger. At the Effective Time, (i) Sub shall be merged\n          ---------------------\nwith and into Company (Company after the Merger is sometimes referred to herein\nas the \"Surviving\n\n                                       1\n\n \nCorporation\"), (ii) the Certificate of Incorporation of Company shall be the\nCertificate of Incorporation of the Surviving Corporation, as duly amended,\n(iii) the Bylaws of Company shall be the Bylaws of the Surviving Corporation\nuntil duly amended, (iv) the directors of Sub shall be the directors of the\nSurviving Corporation, (v) the officers of Sub shall be the officers of the\nSurviving Corporation, (vi) the issued and outstanding capital stock of Sub\nshall become the issued and outstanding capital stock of the Surviving\nCorporation, and (vii) the Merger shall, from and after the Effective Time, have\nall the effects provided by applicable law.\n\n     1.4  Conversion of Company Securities.\n          --------------------------------\n\n          1.4.1  Company Shares.\n                 --------------\n\n          (a)  Each issued and outstanding Company Common Share and each issued\nand outstanding Company Preferred Share (each as defined in Section 2.1.2\nhereto), but excluding any Eligible Dissenting Shares, as defined in Section\n1.10, shall, at the Effective Time, by virtue of the Merger, be converted,\nwithout any action on the part of the holders thereof, into and Expedia shall\nthereupon issue to the holders of the Company Common Shares and the Company\nPreferred Shares a number of Expedia Common Shares (\"Expedia Common Shares\"),\npursuant to an exchange ratio (\"Exchange Ratio\") calculated in accordance with\nthe following and rounded to the nearest ten thousandth:\n\n          (i)  Where the Expedia Closing Price (as defined below) is equal to or\n     less than 40.4126 per share but greater than or equal to 25.4126 per share,\n     the Exchange Ratio shall be equal to the quotient of the Adjusted Company\n     Share Price (as defined in Section 1.5) divided by the Initial Expedia\n     Price (as defined below);\n\n          Solely for purposes of example, where Initial Expedia Price is $35 at\n          signing and the Final Expedia Price is anywhere between $27.51 and\n          $42.49 at Closing and the price per Company Share is not adjusted\n          (i.e. $5.1446), the Exchange Ratio will be equal to $5.1446\/$35, or\n          .1470 Expedia Common Shares per Company Share Equivalent.\n\n          (ii)  Where the Expedia Closing Price is greater than 40.4126, the\n     Exchange Ratio shall be equal to the quotient of the Adjusted Company Share\n     Price divided by 40.4126; and\n\n          Solely for purposes of example, where the Initial Expedia Price is $35\n          at signing and the Final Expedia Price is $50.00 at Closing and the\n          price per Company Share is not adjusted (i.e. $5.1446), the Exchange\n          Ratio will be equal to $5.1446\/$42.50, or .1210 Expedia Common Shares\n          per Company Share Equivalent.\n\n          (iii)  In the event that upon such time as the conditions to closing\n     the Merger set forth in Article VI have been satisfied or waived the\n     Expedia Closing Price is less than 25.4126 but greater than 20.4126, the\n     Board of Directors of the Company shall have the right to terminate this\n     Agreement (such authority having been granted by the holders of Company\n     Shares by approving the Merger in accordance with the DGCL), provided,\n\n                                       2\n\n \n     however, that no such right to terminate shall apply if Expedia shall\n     offer, in its sole discretion, to deliver Expedia Common Shares at an\n     Exchange Ratio equal to the quotient of the Adjusted Company Share Price\n     divided by 25.4126.\n\n          Solely for purposes of example, where the Initial Expedia Price is $35\n          at signing and the Final Expedia Price is $22 at Closing and the price\n          per Company Share is not adjusted (i.e. $5.1446), the Exchange Ratio\n          will be equal to $5.1446\/$27.50, or .1871 Expedia Common Shares per\n          Company Share Equivalent.\n\n          (iv)  In the event that upon such time as the conditions to closing\n     the Merger set forth in Article VI have been satisfied or waived the\n     Expedia Closing Price is less than 20.4126, the Board of Directors of the\n     Company shall have the right to terminate this Agreement (such authority\n     having been granted by the holders of Company Shares by approving the\n     Merger in accordance with the DGCL).\n\n          (b)  Notwithstanding the foregoing, each issued and outstanding\nCompany Common Share, but excluding any Eligible Dissenting Shares, held by\nHolders (as defined in Section 1.4.5) who upon the conversion of Company Shares\ninto Expedia Common Shares set forth in subsection (a), above, would be entitled\nto receive a number of Expedia Common Shares which when multiplied by the\nInitial Expedia Price as of the Effective Time would be equal to $140,000 or\nless, shall at the Effective Time, by virtue of the Merger, and in lieu of the\nconversion set forth in subsection (a), above, be converted, without any action\non the part of the holders thereof, into the right to receive and Expedia shall\npromptly thereafter deliver immediately available funds equal to the Adjusted\nCompany Share Price as of the Effective Time.\n\n          (c)  Schedule 1.4 sets forth as of the date hereof: (i) the Company\nCommon Shares, and all other rights to purchase any securities convertible into\nCompany Common Shares, (ii) the number of Company Common Share Equivalents as of\nsuch date, and (iii) a pro forma computation of the consideration payable per\nCompany Common Share Equivalent, the Exchange Ratio and the Expedia Common\nShares to be issued in accordance with subsection (a), above or cash deliverable\nin accordance with subsection (b), above, as of the Closing using an assumed\nExpedia Closing Price (as defined below) as of such date. Schedule 1.4 shall be\nrevised and updated as of the Closing Date using the actual Expedia Closing\nPrice and reflecting any changes in Company Common Share Equivalents.\n\n          (d)  For purposes of this Agreement, the \"Expedia Closing Price\" shall\nmean the Expedia Average Price (as defined below) as of two (2) trading days\nprior to the date set for Closing in accordance with Section 1.2. For purposes\nof this Agreement, the \"Initial Expedia Price\" shall mean the Expedia Average\nPrice as of two (2) trading days prior to the execution of this Agreement. For\npurposes of this Agreement, \"Expedia Average Price\" shall mean the average price\nas publicly reported for the Nasdaq Stock Market as of 4:00 p.m. Eastern Time of\nExpedia Common Shares over the last five (5) trading days prior to a specified\ndate, rounded to the nearest one hundredth of one cent. For purposes of this\nAgreement, \"Company Common Share Equivalents\" shall mean all Company Common\nShares (as defined in Section 2.1.2) and all other securities convertible into\nand rights to purchase Company Common Shares (in each\n\n                                       3\n\n \ninstance assuming full exercise of the right to convert into or purchase Company\nCommon Shares) outstanding as of immediately prior to the Closing, but excluding\nCompany Common Share Equivalents, if any, which expire on or before the Closing\nDate.\n\n          1.4.2  Company Options.\n                 ---------------\n\n               (a)  Not less than seventeen (17) days prior to the anticipated\nClosing Date, the Company shall provide to each of the holders of then\noutstanding Company Options (as defined in Section 2.1.2) notice that, in\naccordance with the Company Stock Plan (as defined in Section 2.1.2) but subject\nto subsection (b), immediately below, each Company Option shall be accelerated\nand the holders of Company options shall be given the opportunity to exercise\ntheir Company Options for Company Common Shares. Such notice shall provide that\nexercise may be made on a \"net\" basis (meaning that such Company Option shall be\nexercised for the number of Company Common Shares underlying such option minus\nthe quotient of the aggregate exercise price for such Company Options divided by\nAdjusted Company Share Price. Schedule 1.4 has been prepared on the basis that\nassumes that all holders avail themselves of the right to exercise on an net\nbasis. Any unvested Company Options held by persons other than Company employees\nas of the Effective Time shall be canceled as of the Effective Time.\n\n               (b)  Notwithstanding the provisions of subsection (a) immediately\nabove, any and all Company Options held by certain persons who continue as\nemployees of Company or Expedia in senior management positions (\"Senior\nManagers\") or as consultants of Company or Expedia following the Closing shall\nbe converted into a nonqualified stock option (\"Expedia Option\") to purchase\nExpedia Common Shares in accordance with the offer letters or consulting\nagreements of such persons with Expedia.\n\n          1.4.3  Founder Shares. The Expedia Common Shares issuable pursuant to\n                 --------------\nthis Agreement to Thomas Breitling and Timothy Poster (the \"Founders\"), but\nexcluding the 10 percent (10%) of the shares held in escrow pursuant to Section\n1.4.5, will be subject to certain other contractual restrictions set forth in\nthe offer letters between the Founders and Expedia.\n\n          1.4.4  Fractional Securities. No fraction of a Expedia Common Share or\n                 ---------------------\nExpedia Option exercisable for a fraction of a Expedia Common Share will be\nissued in the Merger. In lieu of such issuance, all Expedia Common Shares issued\nto the Company shareholders shall be rounded to the closest whole Expedia Common\nShare, and the number of Expedia Common Shares subject to any Expedia Option\nshall be rounded to the nearest whole number of Expedia Common Shares.\n\n          1.4.5  Escrow Securities. Ten Percent (10%) of the Expedia Common\n                 -----------------\nShares to be issued in the Merger shall be held by the Escrow Agent pursuant to\nthe Escrow Agreement attached as Exhibit 1.4.5 (\"Escrow Agreement\") to secure\nclaims by Expedia for indemnification pursuant to Article VII hereof. For\navoidance of doubt, the ten percent (10%) of Expedia Common Shares to be held in\nescrow shall include Founder Shares and shares received upon exercise vested and\naccelerated Company Options, but shall not include unvested Company Options to\nbe converted upon the Effective Time into Expedia Options, and cash received in\nlieu of Expedia common Shares in accordance with Section 1.4.1(b) shall not be\nsubject to escrow.\n\n                                       4\n\n \nThe Expedia Common Shares to be held on behalf of the holders of Company Common\nShares and Expedia Preferred Shares as of the Effective Time (collectively, the\n\"Holders\") are set forth on Schedule 1.4 on a pro forma basis which shall be\nrevised as of Closing. Execution of the Escrow Agreement by each Holder\nreceiving Expedia Common Shares under Section 1.4.1(a) (or any attorney in fact\nappointed by such Holder) is a condition precedent to receiving the Expedia\nCommon Shares by such Holder.\n\n     1.5  Price Per Company Share. The term \"Adjusted Company Share Price\" shall\n          -----------------------\nmean Five United States Dollars and Fourteen and Fourty Six Hundredths Cents\n(U.S.$5.1446) per Company Share and Company Share Equivalent, provided that, in\nthe event that the Company's Net Liabilities, as defined below, set forth on the\nCompany's Final Pro Forma Closing Balance Sheet (as defined in Section 2.1.6\nhereof) are greater than the amount of Net Liabilities set forth on the balance\nsheet in the Company's Financial Statements (as defined in Section 2.1.6) of\nDecember 31, 1999 (the amount of such difference being hereinafter referred to\nas \"Increased Liabilities\"), then the Adjusted Company Share Price shall be\nequal to the product of $5.1446 multiplied by a fraction, the numerator of which\nis $100,000,000 minus the Increased Liabilities and the denominator of which is\n$100,000,000. For purposes of the foregoing, \"Net Liabilities\" as of December\n31, 1999 shall mean total liabilities, less the sum of (a) deferred revenue,\naccounts payable and accrued expenses up to 70% of previous 90 days gross\nbookings, plus (b) Current assets at December 31, 1999; and \"Net Liabilities\" on\nthe Company's Final Pro Forma Closing Balance Sheet shall mean total\nliabilities, less the sum (a) deferred revenue, accounts payable and accrued\nexpenses up to 70% of previous 90 days gross bookings, plus (b) Adjusted Current\nAssets (as defined below) at the Closing. \"Adjusted Current Assets\" shall be\ncomputed as follows: Current assets plus: (i) capital expenditures of up to\n$166,667 per month made between December 31, 1999 and Closing, (ii) expenses\nincurred that are directly attributable to this transaction up to the amount set\nforth on the estimate delivered under Section 5.4, (iii) security deposits made\nbetween December 31, 1999 and Closing, and (iv) beginning in March 2000, the\nexpected EBITDA loss of $927,226 in March 2000 and $714,362 in April 2000 (for\npurposes of this calculation, the Closing date will be rounded to the nearest\nhalf month). In the event that the certain Engagement Letter between CIBC World\nMarkets and Company dated July 2, 1999, shall not be terminated or released in\nfull to the reasonable satisfaction of Expedia on or prior to Closing, the\nAdjusted Company Share Price shall be further adjusted to be equal to the\nproduct of the Adjusted Company Share Price calculated in accordance with the\nabove multiplied by .9868.\n\n     1.6  Delivery of Certificates or Cash. At or as soon as practicable after\n          --------------------------------\nthe Effective Time, Expedia will send to the holders of Company Shares (i) a\nletter of transmittal in customary form and containing such provisions as\nExpedia may reasonably specify (including a notice of election to opt out of\nregistering for sale Expedia Common Shares subject to registration under Section\n1.9.2), and (ii) instructions for use in effecting the surrender of certificates\nrepresenting Company Shares in exchange for either certificates representing\nExpedia Common Shares or cash in accordance with Section 1.4.1. After the\nEffective Time, and after receiving such letter of transmittal, each Shareholder\nof a certificate or other documentation representing Company Shares, other than\nEligible Dissenting Shares, shall surrender such certificates or other\ndocumentation to Expedia or the exchange agent designated by Expedia and letter\nof transmittal, and those Holders whose Company Shares are converted into\nExpedia Common Shares under\n\n                                       5\n\n \nSection 1.4.1(a) shall in addition deliver duly executed counterparts of the\nInvestment Agreement (as defined in Section 5.1) and Escrow Agreement and such\nother duly executed documentation as may be reasonably required by Expedia or\nthe exchange agent to effect a transfer of such shares. Promptly following such\nsurrender and delivery each Holder shall be entitled to receive either a\ncertificate or other documentation for the applicable number of Expedia Common\nShares calculated pursuant to Section 1.4.1(a), except as provided in Section\n1.4.5, or cash calculated pursuant to Section 1.4.1(b), which shall be delivered\nby check. If any certificate representing Company Shares shall have been lost,\nstolen or destroyed, Expedia may, in its discretion and as a condition precedent\nto the delivery of consideration hereunder, require the owner of such lost,\nstolen or destroyed certificate representing Company Shares to provide an\nappropriate affidavit and indemnity against any claim that may be made against\nExpedia or the Surviving Corporation with respect to such certificate\nrepresenting Company Shares. Execution and delivery of an Escrow Agreement and\nan Investment Agreement shall be a condition precedent to the issuance of the\nExpedia Common Shares to each Holder whose Company Shares are converted into\nExpedia Common Shares under Section 1.4.1(a).\n\n     1.7  Tax-Free Reorganization. The Merger is intended to be a\n          -----------------------\n\"reorganization\" within the meaning of Section 368 of the Internal Revenue Code\nof 1986, as amended (the \"Code\"), and this Agreement is intended to constitute a\n\"plan of reorganization\" within the meaning of the regulations promulgated under\nSection 368 of the Code. Notwithstanding the foregoing, no party shall be\nrelieved of any obligation or denied any right set forth hereunder in the event\nit is determined that the tax consequences differ from those intended or those\ndescribed in the solicitation statement\/private placement memorandum (if any) or\notherwise.\n\n     1.8  No Further Ownership Rights in Company Common Shares or Company\n          ---------------------------------------------------------------\nOptions. All Expedia Common Shares issued on or after the Effective Time upon\n-------\ncancellation of the Company Common Shares or replacement of the Company Options\nin accordance with the terms hereof shall respectively be deemed to have been\ndelivered in full satisfaction of all rights pertaining to the Company Common\nShares or the Company Options. After the Effective Time, there shall be no\ntransfers on the stock transfer books of Company of the Company Common Shares or\nthe Company Options.\n\n     1.9  Regulation D and Registration Statements.\n          ----------------------------------------\n\n          1.9.1  Regulation D Offering. Each holder of Company Shares shall\n                 ---------------------\nexecute such documents as may be reasonably required by Expedia to determine\nsuch holder's qualification as an \"accredited investor,\" as that term is defined\nin Rule 501 of Regulation D under the Securities Act of 1933 (the \"1933 Act\") or\nas a person with the financial sophistication required to be a purchaser\npursuant to Rule 506(b)(2)(ii) of Regulation D. Company agrees, if required\nunder the provisions of Rule 506, to provide, at its sole expense, any\nshareholder reasonably determined by Expedia as not having the requisite\nfinancial sophistication with a purchaser representative who can provide such\nshareholder with the requisite financial sophistication.\n\n          1.9.2  Registration Rights.\n                 -------------------\n\n                                       6\n\n \n               (a)  Expedia shall prepare and file with the Securities and\nExchange Commission registration statements on the form under the 1933 Act that\nExpedia determines to be the least burdensome available (such registration\nstatement and the prospectus included therein being referred to as the\n\"Registration Statement\", regardless of the form actually used) to register for\nresale Expedia Common Shares issued in the Merger to the Company shareholders,\nand their permitted transferees (collectively, the \"New Expedia Shareholders\"),\nand shall use its commercially reasonable efforts to have pursuant to this\nparagraph (a) no more than one such Registration Statement declared effective\nunder the 1933 Act by and kept continuously effective during the following dates\nand upon the following conditions:\n\n               (i)  From May 15, 2000 through June 16, 2000, provided that\nExpedia shall receive a demand for registration as of such dates from holders of\nnot less than twenty five percent (25%) of the Expedia Common Shares issued in\nthe Merger on or prior to April 1, 2000 if the Effective Time has occurred prior\nto April 1, 2000 or April 8, 2000 if the Effective Time has occurred after April\n1, 2000 and on or prior to April 8, 2000.\n\n               (ii)  From August 1, 2000 through August 13, 2000, provided that\nExpedia shall receive a demand for registration as of such dates from holders of\nnot less than twenty five percent (25%) of the Expedia Common Shares issued in\nthe Merger after April 8, 2000 and on or prior to July 1, 2000 and, provided\nthat no Registration Statement was made effective pursuant to subsection (i),\nabove, unless such lack of effectiveness resulted from a withdrawal of the\ndemand for such registration or the failure of the holders of Expedia Common\nShares making such demand to provide to Expedia the requisite information for\nsuch filing or through other fault of the holders of Expedia Common Shares.\n\nUpon receipt of a demand under (i) or (ii) above, Expedia shall within five (5)\nbusiness days thereafter deposit with the United States post office or national\ncourier service notice to holders making such demand of Expedia's election\nwhether the Registration Statement to be filed shall be for an underwritten\nsecondary offering, an underwritten primary offering by Expedia in which holders\nissuing such demand shall be permitted to participate, or a secondary offering\nunder Section 415 under the 1933 Act.  An underwritten primary offering by\nExpedia may include an offering of Expedia Common Shares, derivative instruments\nthat are economically substantially equivalent to Expedia Common Shares, or\nsecurities convertible into either Expedia Common Shares or derivative\ninstruments that are economically substantially equivalent to Expedia Common\nShares. Should Expedia elect to undertake any such underwritten primary offering\nafter receiving a demand under subsection (i), Expedia will include in such\nregistration first, the aggregate number of securities to be issued by Expedia,\nand second, as many of the shares of Expedia Common Shares covered by the demand\nmade under (i) as the managing underwriter shall determine is its sole\ndiscretion are permitted by market conditions, provided that in no event shall\nthe shares of such holders included in such demand be less than the greater of\n(A) 15% of the Expedia Common Shares issuable under the Registration Statement\nfor such offering or (B) Expedia Common Shares with a value of $22.5 million at\nthe time of such offering, provided that no more than 750,000 shares shall be\nregistered pursuant to this clause (B). Expedia shall select the managing\nunderwriters for any underwritten offering made pursuant to this subsection in\nits sole discretion.  Each Registration Statement shall list as selling\n\n                                       7\n\n \nshareholders each New Expedia Shareholder still holding Expedia Common Shares\nthat has (A) provided to Expedia the requisite information for such filing and\n(B) requested to be included in such demand on or prior to last date required to\nmake such request.  Notwithstanding the foregoing, if Expedia shall furnish the\nNew Expedia Shareholders entitled to be listed as selling shareholders on a\nRegistration Statement under this subsection a certificate signed by an officer\nof Expedia stating that in the good faith judgment of the Board of Directors of\nExpedia, it would be detrimental to Expedia for such Registration Statement to\nbe filed or made effective, then Expedia shall have the right to defer such\nfiling or the effective date of such Registration Statement until the next date\nupon which Expedia would be obligated to use its commercially reasonable efforts\nto make a Registration Statement effective, provided that Expedia shall not have\nthe right to defer any such filing more than once.\n\n               (b) If at any time after the Effective Time, Expedia proposes to\nregister any Expedia Common Shares, derivative instruments that are economically\nsubstantially equivalent to Expedia Common Shares, or securities convertible\ninto either Expedia Common Shares or derivative instruments that are\neconomically substantially equivalent to Expedia Common Shares under the 1933\nAct on any Registration Statement (other than a registration statement subject\nto Section 1.9.2 (b)) prescribed by the Securities Exchange Commission, which\nregistration shall permit a public secondary offering or distribution (other\nthan any form solely for registration of securities issuable pursuant to\nemployee equity or option ownership plans or as consideration for business\ncombinations), not less than thirty (30) days prior to each such registration,\nExpedia shall give to the New Expedia Shareholders written notice of such\nproposal which shall describe in detail the proposed registration and\ndistribution and, upon the written request of any New Expedia Shareholders given\nwithin fifteen (15) days after the date of any such notice, provided that such\nholders shall have provided to Expedia the requisite information for such\nfiling, proceed to include in such registration such Expedia Common Shares as\nhave been requested by any such holder to be included in such registration.\nExpedia will in each instance use its commercially reasonable efforts to cause\nExpedia Common Shares subject to such request to be registered under the 1933\nAct; provided, that in the event such registration is an underwritten primary\noffering on behalf of Expedia and the managing underwriters advise Expedia in\nwriting that, in their opinion, the number of securities requested to be\nincluded in such registration exceeds the number which can be sold in such\noffering, Expedia will include in such registration (i) first, the aggregate\nnumber of securities to be issued by Expedia, (ii) second, the shares of Expedia\ncommon stock registrable under any demand for registration giving rise to the\nright of registration of New Expedia Shareholders under this subsection (b); and\n(iii) third, Expedia Common Shares requested to be included in such registration\nunder this subsection (b) together with other securities requested to be\nincluded in such registration, such shares to be treated on a pro rata basis.\nExpedia shall select the managing underwriters for any offering made pursuant to\nthis subsection (b) in its sole discretion.\n\n               (c) As soon as practicable after Form S-3 becomes available to\nExpedia, provided that Expedia Common Shares held by New Expedia Shareholders\nremain outstanding at such time, Expedia shall prepare and file with the\nSecurities Exchange Commission a Registration Statement on Form S-3 to register\nfor resale Expedia Common Shares issued in the Merger to the New Expedia\nShareholders. Expedia shall use its commercially\n\n                                       8\n\n \nreasonable efforts to have such Registration Statement declared effective under\nthe 1933 Act as promptly as practicable after such filing. Expedia shall use its\ncommercially reasonable efforts to cause such registration statement to continue\nto be effective and the prospectus contained therein to be updated as reasonably\ndeemed necessary by Expedia to enable the New Expedia Shareholders to resell the\nExpedia Common Shares that were issued in the Merger.\n\n               (d) Expedia shall use its commercially reasonable efforts to\ncause any Registration Statement filed under Sections 1.9.2(a), 1.9.2(b) and\n1.9.2(c) to continue to be effective during the time specified for such and the\nprospectus contained therein to be updated during such time to enable the New\nExpedia Shareholders making a demand for registration under subsection (a) or\nexercising their rights under subsection (b) or entitled to registration under\nsubsection (c) to resell during such time the Expedia Common Shares that were\nissued in the Merger over the Nasdaq Stock Market or such other national market\nas Expedia Common Shares may be traded. Expedia shall also endeavor to take any\naction required to be taken under any applicable state securities laws in\nconnection with the issuance of Expedia Common Shares in the Merger and the\nresale of those shares pursuant to the Registration Statement. Expedia agrees to\nuse its commercially reasonable efforts to cause the Expedia Common Shares\ncovered by the Registration Statement to be registered with or approved by such\nother governmental agencies or authorities as may be necessary to enable the\nholders of such Expedia Common Shares to consummate the disposition of such\nExpedia Common Shares and cause all such Expedia Common Shares to be listed on\neach securities exchange or national quotation system on which Expedia's common\nstock is then listed. Each holder of shares covered by a Registration Statement\nagrees that if (i) Expedia determines that the prospectus in such Registration\nStatement needs to be amended or supplemented to comply with the requirements of\nthe 1933 Act, (ii) a stop order suspending the effectiveness of the registration\nstatement is issued by the Securities Exchange Commission, or (iii) Expedia\nshall, in good faith and for business reasons, enter into negotiations relating\nto or otherwise commence a material business transaction, including, without\nlimitation, the acquisition or divestiture of assets or the offering or sale of\nsecurities, then Expedia shall promptly notify each such holder and each such\nholder shall immediately cease making offers and sales of Expedia Common Shares\nand return all remaining prospectuses to Expedia. Any New Expedia Shareholder\nselling stock registered under the Registration Statement shall indemnify\nExpedia, its officers and directors, each underwriter and selling broker, if\nany, and each person, if any, who controls Expedia, against liability (including\nliability under the 1933 Act and the Securities Exchange Act of 1934 (\"1934\nAct\") arising by reason of any statement contained in the Registration\nStatement, that such New Expedia Shareholder provided to Expedia in writing\nexplicitly for use in the Registration Statement, being false or misleading or\nomitting to state a material fact necessary to be stated in order that the\nstatements made in the Registration Statement, in the circumstances in which\nthey are made, not be misleading; provided, however, that any obligation of any\nNew Expedia Shareholder to provide indemnity hereunder shall not exceed the\nproceeds received by such New Expedia Shareholder from a sale of Expedia Common\nShares under the Registration Statement. Expedia shall indemnify each New\nExpedia Shareholder selling stock registered under the Registration Statement,\nand each underwriter and selling broker, if any, against liability (including\nliability under the 1933 and 1934 Acts) arising by reason of any statement\n(other than a statement provided by such New Expedia Shareholder as described\nabove) in the Registration Statement included therein being false or misleading\nor omitting to state a material fact necessary to be stated in order that the\nstatements made in or incorporated by reference in the Registration Statement,\nin the circumstances in which they are made, not be misleading. Expedia may\nsuspend sales of Expedia Common Shares pursuant to the Registration\n\n                                       9\n\n \nStatement if it determines in good faith that such statements are materially\nmisleading or contain material omissions, provided that Expedia shall (a) make a\ncorrective filing as soon as practicable, (b) use its commercially reasonable\nefforts to cause any amendment to the Registration Statement to be declared\neffective and (c) use its commercially reasonable efforts to cause the\nRegistration Statement to become useable as soon as practicable thereafter.\n\n               (e)  Notwithstanding the foregoing, no holder of Expedia Common\nShares received on account of Company Warrants shall be entitled to have their\nExpedia Common Shares registered under any Registration Statement under this\nSection 1.9.2 unless such holder shall have exercised such Company Warrants in\naccordance with Section 6.2.16. The obligations of Expedia pursuant to this\nSection 1.9.2 shall expire on the earlier of (i) the sale or other disposition\nof all of the Expedia Shares issued in the Merger (excluding any Expedia Shares\nwhich are subject to, or acquired pursuant to the exercise of, Expedia Options\nmore than five (5) weeks after the Effective Time), or (ii) the ability of all\nNew Expedia Shareholders to dispose of all such shares within a single three (3)\nmonth period pursuant to Rule 144 under the 1933 Act provided Rule 144 is\navailable for sales by such New Expedia Shareholders. Expedia shall, at its cost\nand expense, provide the holders of Expedia Common Shares issued pursuant to the\nMerger with copies of prospectuses as such holders may request. Expedia shall\npay all expenses incident to the performance by it of its registration\nobligations under this Section 1.9.2. The Holders selling Expedia Common Shares\npursuant to this Section 1.9.2 shall be responsible for the payment of any\nbrokerage and sales commission, fees and expenses of any counsel retained by\nsuch Holders, and any transfer taxes relating to the sale or disposition of such\nshares.\n\n          1.9.3  S-8 Registration Statement. Expedia shall cause the Expedia\n                 --------------------------\nCommon Shares issuable upon exercise of the replacement Expedia Options to be\nregistered, or to be issued pursuant to a then effective registration statement\non Form S-8 (\"S-8\"), no later than thirty (30) calendar days after the Effective\nTime and shall use its best efforts to maintain the effectiveness of such\nregistration statement or registration statements for so long as such\nreplacement Expedia Options remain outstanding.\n\n     1.10  Appraisal Rights. Notwithstanding any provision of this Agreement to\n           ----------------\nthe contrary, each outstanding share of Company Shares, as defined below, the\nholder of which has demanded and perfected such holder's right to an appraisal\nwith respect to the Merger and to be paid the fair value of such shares in\naccordance with Section 262 et seq. of the DGCL and, as of the Effective Time,\nhas not effectively withdrawn or lost such appraisal rights, shall not be\nconverted into or represent a right to receive the Merger Consideration, but the\nholder thereof shall be entitled only to such rights as are granted by the DGCL\n(\"Eligible Dissenting Shares\"). Company shall give Expedia (i) prompt written\nnotice of any notice of intent to demand appraisal for any Company Shares,\nwithdrawals of such notices, and any other instruments served pursuant to the\nDGCL or any other provisions of Delaware law and received by the Company, and\n(ii) the opportunity to conduct jointly all negotiations and proceedings with\nrespect to such demands for appraisal under the DGCL. Company shall not, except\nwith the prior written consent of Expedia, voluntarily make any payment with\nrespect to any demands for appraisal by holders of Company Shares or offer to\nsettle or settle any such demands.\n\n                                      10\n\n \n                                  ARTICLE II\n                        REPRESENTATIONS AND WARRANTIES\n                                        \n     2.1  Representations and Warranties of Company and Principal Shareholders.\n          --------------------------------------------------------------------\nExcept as disclosed in a document referring specifically to the representations\nand warranties in this Agreement which identifies by section number the section\nand subsection to which such disclosure relates and is delivered by Company to\nExpedia and Sub prior to the execution of this Agreement (the \"Company\nDisclosure Schedule\"), and whether or not the Company Disclosure Schedule is\nreferred to in a specific section or subsection, Company and the Principal\nShareholders, jointly and severally, represent and warrant to Expedia and Sub as\nfollows:\n\n          2.1.1  Organization, Standing and Power. Company is a corporation duly\n                 --------------------------------\norganized and validly existing and in good standing under the laws of the State\nof Delaware, has all requisite power and authority to own, lease and operate its\nproperties and to carry on its businesses as now being conducted, and is duly\nqualified and in good standing to do business in each jurisdiction in which a\nfailure to so qualify would have a material adverse effect on the Business\nCondition (as hereinafter defined) of Company. The Company Disclosure Schedule\nsets forth each jurisdiction in which the Company is so qualified, licensed or\nadmitted to do business. As used in this Agreement, \"Business Condition\" with\nrespect to any entity shall mean the business, financial condition, results of\noperations, assets or Prospects (as defined below) (without giving effect to the\nconsequences of the transactions contemplated by this Agreement) of such entity\nor entities including Subsidiaries taken as a whole. In this Agreement, a\n\"Subsidiary\" of any corporation or other entity means a corporation,\npartnership, limited liability company or other entity of which such corporation\nor entity directly or indirectly owns or controls voting securities or other\ninterests which are sufficient to elect a majority of the Board of Directors or\nother managers of such corporation, partnership, limited liability company or\nother entity and \"Prospects\" shall mean events, conditions, facts or\ndevelopments which are known to Company and which in the reasonable course of\nevents are expected to have a material effect on future operations of the\nbusiness as presently conducted by Company. Company has delivered or made\navailable to Expedia complete and correct copies of the certificate of\nincorporation, bylaws, and\/or other primary charter and organizational documents\n(\"Charter Documents\") of Company, in each case, as amended to the date hereof.\nThe minute books and stock records of Company have been provided or made\navailable to Expedia in their entirety and contain correct and complete records\nof all material proceedings and actions taken at all meetings of, or effected by\nwritten consent of, the shareholders of Company and its Board of Directors, and\nall original issuances and subsequent transfers, repurchases, and cancellations\nof Company Common Shares. The Company Disclosure Schedule contains a complete\nand correct list of the officers and directors of Company since its\nincorporation.\n\n          2.1.2  Capital Structure.\n                 -----------------\n\n               (a)  The authorized capital stock of Company consists of\n50,000,000 shares of Company Common Stock, $0.01 par value, (\"Company Common\nShares\") of which 15,042,500 shares are issued and outstanding, and 5,000,000\nshares of Preferred Stock, $0.01 par value, (\"Company Preferred Shares,\" and\ntogether with the Company Common Shares, the \"Company Shares\") of which\n1,272,569 have been designated as Series A Convertible\n\n                                       11\n\n \nPreferred Stock of which all shares are issued and outstanding. As of the date\nhereof, 3,000,000 Company Common Shares are reserved for issuance upon the\nexercise of outstanding stock options under Company's 1998 Stock Plan (the\n\"Company Stock Plan\"), options for 2,275,000 Company Common Shares have been\ngranted and 725,000 remain outstanding, and options to purchase 1,695,000\nCompany Common Shares have been issued outside of the Company Stock Plan and\nremain outstanding (together with options outstanding under the Company Stock\nPlan, the \"Company Options\") and warrants to purchase 1,003,585 Company Common\nShares (\"Company Warrants\") are outstanding. All Company Warrants shall either\nbe exercised for Company Common Shares (on a net exercise basis) effective as of\nthe Closing Date and be reflected on the Schedule 1.4 as of the Effective Time,\nor at the Effective Time, terminated, provided, however, that the Company\nWarrants held by America West Airlines, Inc., Heidrick &amp; Struggles, Inc. and\nMeristar Hotels &amp; Resorts, Inc. (\"Assumed Warrants\") shall be assumed by Expedia\nand shall be exercisable for the number of Expedia Common Shares equal to the\nnumber of Company Common Shares underlying such Assumed Warrant multiplied by\nthe Exchange Ratio, at an exercise price equal to the exercise price set forth\nin such Assumed Warrant divided by the Exchange Ratio. All Company Options\nshall, in accordance with Section 1.4.2, either be exercised for Company Common\nShares effective two (2) days prior to the Closing Date or at such time be\nterminated, and Company Common Shares issued upon such exercise and such\nterminated Company Options shall be reflected on the Schedule 1.4 as of the\nEffective Time. All Company Common Share Equivalents and other securities\noutstanding as of January 29, 2000 are set forth on Schedule 1.4.\n\n               (b)  All outstanding Company Shares are, and any Company Shares\nissued upon exercise of any Company Options will be, validly issued, fully paid,\nnonassessable and not subject to any preemptive rights, or to any agreement to\nwhich Company is a party or by which Company may be bound. The Company Plan and\nthe Company Options issued thereunder have been duly authorized in accordance\nwith applicable law and are valid and enforceable in accordance with their\nterms. Except for the shares described above issuable pursuant to the exercise\nof Company Options and Company Warrants, there are not any options, warrants,\ncalls, conversion rights, commitments, agreements, contracts, understandings,\nrestrictions, arrangements or rights of any character to which Company is a\nparty or by which Company may be bound obligating Company to issue, deliver or\nsell, or cause to be issued, delivered or sold, additional shares of the capital\nstock of Company, or obligating Company to grant, extend or enter into any such\noption, warrant, call, conversion right, conversion payment, commitment,\nagreement, contract, understanding, restriction, arrangement or right. Company\ndoes not have outstanding any bonds, debentures, notes or other indebtedness the\nholders of which (i) have the right to vote (or convertible or exercisable into\nsecurities having the right to vote) with holders of Company Shares on any\nmatter (\"Company Voting Debt\") or (ii) are or will become entitled to receive\nany payment as a result of the execution of this Agreement or the completion of\nthe transactions contemplated hereby. No liquidation preferences are payable\nwith respect to the capital stock of the Company as a result of the Merger. All\nCompany Common Share Equivalents and other securities outstanding as of the date\nof this Agreement are set forth on Schedule 1.4, and no Company Common Share\nEquivalents are held by Company in its treasury. Other than Company Options\nsubject to vesting as set forth in Schedule 1.4, none of the Company Shares are\nsubject to conditional vesting, forfeiture or other similar restrictions.\n\n                                       12\n\n \n          2.1.3  Authority. The execution, delivery, and performance of this\n                 ---------\nAgreement by Company (including but not limited to the execution, delivery, and\nperformance of the agreements and transactions contemplated by this Agreement)\nhas been duly authorized by all necessary action of the Board of Directors of\nCompany. Certified copies of the resolutions adopted by the Board of Directors\nof Company approving this Agreement and the Merger have been provided to\nExpedia. Each of Company and the Principal Shareholders has duly and validly\nexecuted and delivered this Agreement and each of the agreements contemplated\nhereby, and this Agreement and each of the agreements contemplated hereby\nconstitutes a valid, binding, and enforceable obligation of Company and each of\nthe Principal Shareholders, as applicable, in accordance with its terms.\n\n          2.1.4  Compliance with Laws and Other Instruments. Company holds, and\n                 ------------------------------------------\nat all times has held, all licenses, permits, and authorizations from all\nGovernmental Entities, (as defined below) necessary for the lawful conduct of\nits business pursuant to all applicable statutes, laws, ordinances, rules, and\nregulations of all such authorities having jurisdiction over it or any part of\nits operations, excepting, however, when such failure to hold would not have a\nmaterial adverse effect on Company's Business Condition. There are no violations\nor claimed violations known by Company or any Principal Shareholder of any such\nlicense, permit, or authorization or any such statute, law, ordinance, rule or\nregulation. Neither the execution and delivery of this Agreement by Company and\nany Principal Shareholder nor the performance by Company and the Principal\nShareholders of their obligations under this Agreement will, in any material\nrespect, violate any provision of laws or will conflict with, result in the\nmaterial breach of any of the terms or conditions of, constitute a material\nbreach of any of the terms or conditions of, constitute a material default\nunder, permit any party to accelerate any right under, renegotiate, or\nterminate, require consent, approval, or waiver by any party under, or result in\nthe creation of any lien, charge, encumbrance, or restriction upon any of the\nproperties, assets, or Company Common Shares pursuant to, any of the Charter\nDocuments or any agreement (including, without limitation, government\ncontracts), indenture, mortgage, franchise, license, permit, lease or other\ninstrument of any kind to which Company is a party or by which Company or any of\nits assets is bound or affected. No consent, approval, order or authorization of\nor registration, declaration or filing with or exemption by or notice to\n(collectively \"Consents\"), any court, administrative agency, commission or other\ngovernmental authority or instrumentality, whether domestic or foreign (each a\n\"Governmental Entity\") or other third-party is required by or with respect to\nCompany in connection with the execution and delivery of this Agreement by\nCompany or the consummation by Company of the transactions contemplated hereby,\nexcept for (i) the filing of a premerger notification report and all other\nrequired documents by Expedia and Company, and the expiration of all applicable\nwaiting periods, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,\nas amended (the \"HSR Act\") and (ii) the filing of the appropriate Merger\nDocuments with the Secretary of State of Delaware and except for such other\nConsents, which if not obtained or made would not have a material adverse effect\non Company's Business Condition.\n\n          2.1.5  Technology and Intellectual Property Rights.\n                 -------------------------------------------\n\n               (a) The \"Company Intellectual Property\" consists of the\nfollowing:\n\n                                       13\n\n \n               (i)  all patents, trademarks, trade names, service marks, mask\nworks, domain names, copyrights and any renewal rights, applications and\nregistrations for any of the foregoing, and all trade dress, net lists,\nschematics, technology, manufacturing processes, customer and supplier lists,\ntrade secrets, know-how, moral rights, computer software programs or\napplications (in both source and object code form) owned by Company;\n\n               (ii)  all goodwill associated with trademarks, trade names\nservice marks and trade dress owned by Company;\n\n               (iii)  all software and firmware listings, and updated software\nsource code, and complete system build software and instructions related to all\nsoftware described in the Company Disclosure Schedule pursuant to Section\n2.1.5(b) hereof owned by Company;\n\n               (iv)  all documents, records and files relating to design, end\nuser documentation, manufacturing, quality control, sales, marketing or customer\nsupport for all intellectual property described herein owned by Company;\n\n               (v)  all other tangible or intangible proprietary information and\nmaterials owned by Company; and\n\n               (vi)  all license and other rights in any third party product,\nintellectual property, proprietary or personal rights, documentation, or\ntangible or intangible property, including without limitation the types of\nintellectual property and tangible and intangible proprietary information\ndescribed in (i) through (v) above;\n\nthat are being, and\/or have been, used, or are currently under development for\nuse, in the business of Company as it has been, is currently or is currently\nanticipated to be (up to the Closing), conducted. Company Intellectual Property\ndescribed in clauses (i) to (v) above is referred to herein as \"Company Owned\nIntellectual Property\" and Company Intellectual Property described in clause\n(vi) above is referred to herein as \"Company Licensed Intellectual Property.\"\nUnless otherwise noted, all references to \"Company Intellectual Property\" shall\nrefer to both Company Owned Intellectual Property and Company Licensed\nIntellectual Property.\n\n               (b)  The Company Disclosure Schedule lists: (i) all patents,\nregistered copyrights, mask works, trademarks, service marks, domain names,\ntrade dress, any renewal rights for any of the foregoing, and any applications\nand registrations for any of the foregoing, that are included in the Company\nOwned Intellectual Property; (ii) all hardware products and tools, software\nproducts and tools, and services that are currently published, offered, or under\ndevelopment by Company; (iii) all licenses, sublicenses and other agreements to\nwhich Company is a party and pursuant to which any end user or other third party\nis authorized to have access to or use the Company Intellectual Property or\nexercise any other right with regard thereto; (iv) all Company Licensed\nIntellectual Property (other than license agreements for standard \"shrink\nwrapped, off the shelf,\" commercially available, third party products used by\nthe Company); and (v) any obligations of exclusivity, noncompetition,\nnonsolicitation, first refusal or first\n\n                                       14\n\n \nnegotiation to which Company is subject under any agreement concerning Company\nIntellectual Property that does not fall within the ambit of (iii) or (iv)\nabove. The disclosures described in (iii), (iv), and (v) hereof include the\nnames and dates of the relevant agreements, as well as the identities of the\nparties to the relevant agreements.\n\n               (c)  The Company Intellectual Property consists solely of items\nand rights which are either: (i) owned by Company by assignment or otherwise;\n(ii) in the public domain; or (iii) rightfully used and authorized for use by\nCompany and its successors pursuant to a valid license or other agreement.\nCompany has all rights in the Company Intellectual Property necessary to carry\nout Company's current and anticipated future (up to the Closing) activities and\nhas or had all rights in the Company Intellectual Property reasonably necessary\nto carry out Company's former activities, including without limitation, and\nsolely to the extent necessary to carry out such activities, rights to make,\nuse, exclude others from using, reproduce, modify, adapt, create derivative\nworks based on, translate, distribute (directly and indirectly), disclose,\ntransmit, display and perform publicly, license, rent, lease, assign, and sell\nthe Company Intellectual Property in all geographic locations and fields of use,\nand to sublicense any or all such rights to third parties, including the right\nto grant further sublicenses. All software and firmware listings that are part\nof the Company Owned Intellectual Property are adequately commented in\naccordance with generally accepted standard industry practices.\n\n               (d)  Company is not, nor as a result of the execution or delivery\nof this Agreement and all other agreements contemplated hereby, or performance\nof Company's obligations hereunder or thereunder, will Company be, in violation\nof any license, sublicense, or other agreement relating to the Company\nIntellectual Property to which Company is a party or otherwise bound. Except as\nspecifically described in the Company Disclosure Schedule, Company is not\nobligated to provide any consideration (whether financial or otherwise) to any\nthird party, nor is any third party otherwise entitled to any consideration,\nwith respect to any exercise of rights by Company or its successors or licensees\nin the Company Intellectual Property.\n\n               (e)  The use, reproduction, modification, distribution,\nlicensing, sublicensing, sale, or any other exercise of rights in any Company\nOwned Intellectual Property or any other authorized exercise of rights in or to\nthe Company Owned Intellectual Property by Company or its successors or\nlicensees does not infringe any copyright, patent, trade secret, trademark,\nservice mark, trade name, firm name, logo, trade dress, mask work, moral right,\nother intellectual property right, right of privacy, right of publicity, or\nright in personal or other data of any person. Further, to the knowledge of\nCompany and the Principal Shareholders, the use, reproduction, modification,\ndistribution, licensing, sublicensing, sale, or any other exercise of rights in\nany Company Licensed Intellectual Property or any other authorized exercise of\nrights in or to the Company Licensed Intellectual Property by Company or its\nlicensees does not infringe any copyright, patent, trade secret, trademark,\nservice mark, trade name, firm name, logo, trade dress, mask work, moral right,\nother intellectual property right, right of privacy, right of publicity or right\nin personal or other data of any person. No claims (i) challenging the validity,\neffectiveness, or ownership by Company of any of the Company Intellectual\nProperty, or (ii) to the effect that the use, reproduction, modification,\nmanufacturing, distribution, licensing, sublicensing, sale, or any other\nexercise of rights in any Company Intellectual Property\n\n                                       15\n\n \nby Company or its successors or licensees infringes, or will infringe on, any\nintellectual property or other proprietary or personal right of any person, have\nbeen asserted or, to the knowledge of Company and the Principal Shareholders,\nare threatened by any person nor, to the knowledge of Company and the Principal\nShareholders, are there any valid grounds for any bona fide claim of any such\nkind. All granted or issued patents and all registered mask works, domain names,\nand trademarks listed on the Company Disclosure Schedule and all copyright\nregistrations held by Company are valid, enforceable and subsisting. To the\nknowledge of Company and the Principal Shareholders, there is no unauthorized\nuse, infringement, or misappropriation of any of the Company Owned Intellectual\nProperty by any employee, or former employee, or other third party.\n\n               (f)  No parties other than Company possess any current or\ncontingent rights to any source code that is part of the Company Owned\nIntellectual Property (including, without limitation, through any escrow\naccount).\n\n               (g)  The Company Disclosure Schedule lists all parties who have\ncreated any portion of, or otherwise have any rights in or to, the Company Owned\nIntellectual Property other than employees of Company whose work product was\ncreated by them within the scope of their employment by Company and constitutes\nworks made for hire owned by Company. Company has secured from all parties who\nare not employees and who have created any material portion of, or otherwise\nhave any rights in or to, the Company Owned Intellectual Property valid and\nenforceable written assignments or licenses of any such work or other rights to\nCompany and has provided true and complete copies of such assignments or\nlicenses to Expedia.\n\n               (h)  The Company Disclosure Schedule includes a true and complete\nlist of support and maintenance agreements relating to Company Owned\nIntellectual Property or to which Company is a party as to Company Licensed\nIntellectual Property, including the identity of the parties and the respective\ndates of such agreements.\n\n               (i)  Company has obtained legally binding written agreements from\nall employees and third parties with whom Company has shared confidential\nproprietary information (i) of Company or (ii) received from others which\nCompany is obligated to treat as confidential, which agreements require such\nemployees and third parties to keep such information confidential.\n\n               (j)  Company has obtained any and all necessary consents from\nconsumers with regard to the Company's collection and dissemination of personal\nconsumer information in accordance with Company's privacy policy as published on\nits website. Company's practices regarding the collection and use of consumer\npersonal information are in accordance with Company's privacy policy as\npublished on its website.\n\n               (k)  The Company Owned Intellectual Property is, and any products\nmanufactured and commercially released by Company or currently under\ndevelopment, are fully Year 2000 Compliant in all material respects and will not\ncease to be fully Year 2000 Compliant in any material respect at any time during\nor after the calendar year AD 2000. To the knowledge\n\n                                       16\n\n \nof Company and the Principal Shareholders, the Company Licensed Intellectual\nProperty is fully Year 2000 Compliant in all material respects and will not\ncease to be fully Year 2000 Compliant in any material respect at any time prior\nto, during or after the calendar year 2000. Schedule 2.1.5(k) sets forth the\ntests, inquiries and other activities undertaken by Company up to Closing, with\nrespect to the Year 2000 Compliant nature of any and all Company Intellectual\nProperty. For the purposes of this Agreement, \"Year 2000 Compliant\" means that\nneither the performance nor the functionality of any Company Intellectual\nProperty is or will be materially affected by dates prior to, during or after\nthe calendar year AD 2000 and in particular (but without limitation):\n\n               (i)  such Company Intellectual Property accurately receives,\nprovides and processes, and will accurately receive, provide and process,\ndate\/time data (including calculating, comparing and sequencing) from, into and\nbetween the twentieth and twenty-first centuries, including without limitation\ncalendar years 1999 and 2000;\n\n               (ii)  such Company Intellectual Property will not malfunction,\ncease to function, provide invalid or incorrect results or cause any\ninterruption in the operation of the business of Company as a result of any\ndate\/time data;\n\n               (iii)  date-based functionality of such Company Intellectual\nProperty behaves and will continue to behave consistently for dates prior to,\nduring and after the calendar year 2000;\n\n               (iv)  in all interfaces and data storage of such Company\nIntellectual Property, the century in any date is and will be specified either\nexplicitly or by unambiguous algorithms or inferencing rules; and\n\n               (v)  the calendar year 2000 is and will be recognized as a leap\nyear by such Company Intellectual Property.\n\n          2.1.6  Financial Statements. Company has delivered to Expedia its\n                 --------------------\naudited financial statements as of December 31, 1998, its reviewed financial\nstatements for the quarter ending March 31, 1999 and its internally prepared\nfinancial statements for the quarters ending June 30, 1999, September 30, 1999\nand December 31, 1999, and at Closing the Company shall deliver its audited\nfinancial statements as of December 31, 1999, each of which financial statements\ninclude balance sheets and statements of income and cash flow as of the date of\nsuch (such financial statements are collectively referred to as the \"Financial\nStatements\"). The Financial Statements: (i) are in accordance with the books and\nrecords of Company, (ii) present fairly, in all material respects, the financial\nposition of Company as of the dates indicated and the results of its operations\nfor each of the periods indicated, and (iii) have been prepared in accordance\nwith generally accepted accounting principles consistently applied except as\ndescribed in the Company Disclosure Schedule, subject to ordinary year-end\nadjustments and notes. There are no material off-balance sheet liabilities,\nclaims or obligations of any nature, whether accrued, absolute, contingent,\nanticipated, or otherwise, whether due or to become due, that are not shown or\nprovided for either in the Financial Statements or the Company Disclosure\nSchedule. The liabilities of Company were incurred in the ordinary course of\nCompany's\n\n                                       17\n\n \nbusiness. The \"Pro Forma Closing Balance Sheet\" attached as Schedule 2.1.6 sets\nforth, based on reasonable assumptions relating to the operation of the business\nconducted by Company, the balance sheet as of the estimated Closing Date. A\n\"Final Pro Forma Closing Balance Sheet\" will be prepared and delivered in\naccordance with Section 6.2.12, and when so delivered, shall be (i) in\naccordance with the books and records of Company and on a basis consistent with\nthe Financial Statements and Pro Forma Closing Balance Sheet, (ii) present\nfairly, in all material respects, the financial position of Company as of the\nClosing Date and the results of its operations for the Closing Date, and (iii)\nhave been prepared in accordance with generally accepted accounting principles\nconsistently applied.\n\n          2.1.7  Taxes.\n                 -----\n\n               (a)  Company has timely filed (or caused to be filed) all\nfederal, state, local and foreign tax returns, reports, elections and\ninformation statements (\"Returns\") required to be filed by it, which Returns are\ntrue, correct and complete in all respects, and paid all taxes required to be\npaid as shown on such Returns. All taxes required to be paid in respect of the\nperiods covered by such Returns (\"Return Periods\") on or prior to Closing have\neither been paid or fully accrued on the books of Company. Company has fully\naccrued all unpaid taxes in respect of all periods prior to Closing on the Pro\nForma Closing Balance Sheet. Company has not taken any position on any tax\nreturn or filing which is or would be subject to penalties under Section 6662 of\nthe Code. Company has not requested or been granted any extension of time to\nfile any Return. There is no difference between the amounts of the book basis\nand the tax basis of any asset of Company that is not reflected in an\nappropriate accrual of deferred tax liability on the books of Company or fully\nreflected in the Financial Statements. All material elections with respect to\ntaxes made by or with respect to the Company are set forth on Company Disclosure\nSchedule. Company has provided Expedia true and correct copies of all Returns,\nall correspondence with any taxing authority, all Return work papers, any tax\nplanning memoranda prepared for the Company and other tax data (except for\nmemoranda and other tax data as to which the Company has asserted or reasonably\ncould assert is privileged under applicable law).\n\n               (b)  No deficiencies or adjustments for any tax have been\nclaimed, proposed or assessed or threatened. Company Disclosure Schedule\naccurately sets forth the years for which Company's federal and state income tax\nreturns, respectively, have been audited and any years which are the subject of\na pending audit by the Internal Revenue Service (\"IRS\") and the applicable state\ntaxing agencies. Company is not subject to any pending or threatened tax audit\nor examination. Company Financial Statements contain adequate accruals for all\nunpaid taxes. Company has not entered into any agreements, waivers or other\narrangements in respect of the statute of limitations in respect of its taxes or\ntax returns. Company Disclosure Schedule sets forth as of December 31, 1998 (i)\nthe tax basis of the Company in its assets, (ii) the current and accumulated\nearnings and profits of the Company, (iii) the amount of any net operating loss\ncarryover, net capital loss carryover, unused investment credit or other credit\ncarryover and charitable contribution carryover of the Company, (iv) the amount\nof any deferred gain or loss allocable to the Company or excess loss account of\nthe Company, and (v) a list of all partnerships, limited liability companies or\nother legal business entities (within the meaning of Treas. Reg. Section\n701.7701-3) in which the Company has an interest.\n\n                                       18\n\n \n               (c)  For the purposes of this Agreement, the terms \"tax\" and\n\"taxes\" shall include all federal, state, local and foreign taxes, assessments,\nduties, tariffs, registration fees, and other governmental charges including\nwithout limitation all income, franchise, property, production, sales, use,\npayroll, license, windfall profits, severance, withholding, excise, gross\nreceipts, amounts collected by the Company as taxes and other taxes, as well as\nany interest, additions or penalties relating thereto and any interest in\nrespect of such additions or penalties.\n\n               (d)  There are no liens for taxes upon the assets of Company\nexcept for taxes that are not yet payable. Company has withheld all taxes\nrequired to be withheld in respect of wages, salaries and other payments to all\nemployees, officers and directors and any taxes required to be withheld from any\nother person and has timely paid all such amounts withheld to the proper taxing\nauthority.\n\n               (e)  No consent or agreement has been made under Section 341(f)\nof the Code, by or on behalf of Company or any predecessor thereof. Company is\nnot and has not been a party to any tax sharing or tax allocation agreement. No\nitem of income or gain reported by the Company for financial accounting purposes\nin any pre-closing period is required to be included in taxable income in any\npost-closing period. Company has never been a member of any affiliated group of\ncorporations within the meaning of Section 1504 of the Code other than a group\nthe common parent of which was the Company. Company has not participated in, or\ncooperated with, an international boycott within the meaning of Section 999 of\nthe Code. Company is not required to include in income any adjustment pursuant\nto Section 481(a) of the Code (or similar provisions of other law or\nregulations) in its current or in any future taxable period, by reason of a\nchange in accounting method; nor does Company have any knowledge that the IRS\n(or other taxing authority) has proposed, or is considering, any such change in\naccounting method. Company is not a party to any agreement, contract, or\narrangement that would result in the payment of any \"excess parachute payment\"\nwithin the meaning of Section 280G of the Code or any similar provision of\nforeign, state or local law (\"Excess Parachute Payment\"). Company does not have\nand has not had a \"permanent establishment\" (as defined in any applicable income\ntax treaty) in any country other than the United States. Company and the\nPrincipal Shareholders will take all action required by Section 280G of the Code\nand the Regulations thereunder necessary to ensure that no payment in connection\nwith the Merger constitutes an Excess Parachute Payment. Company has made no\nelection under Section 197 of the Code. There are no outstanding rulings or\nrequests for rulings from any taxing authority with respect to Company.\n\n               (f)  The use of any net operating loss carryover, net capital\nloss carryover, unused investment credit or other credit carryover of Company is\nnot subject to any limitation pursuant to Section 382 of the Code or otherwise\n(except as such limitation may be imposed as a result of the transactions\ncontemplated under this Agreement). Company is not and has never been a real\nproperty holding corporation within the meaning of Section 897 of the Code. None\nof the assets of Company is property that is required to be treated as owned by\nany other person pursuant to the \"safe harbor lease\" provisions of former\nSection 168(f)(8) of the Code and in effect immediately prior to the enactment\nof the Tax Reform Act of 1986 and none of the assets of Company is \"tax exempt\nuse property\" within the meaning of Section 168(h) of the Code. None of the\nassets of Company secures any debt the interest on which is tax exempt under\n\n                                       19\n\n \nSection 103 of the Code. Company is liable for no taxes of any person other than\nthe Company and its Subsidiaries under the provisions of Treas. Reg. Section\n1.1502-6(a).\n\n          2.1.8  Absence of Certain Changes and Events. Since September 30,\n                 -------------------------------------\n1999, there has not been:\n\n               (a)  Any transaction involving more than $20,000 entered into by\nCompany other than in the ordinary course of business; any change (or any\ndevelopment or combination of developments of which Company or the Principal\nShareholders has knowledge which is reasonably likely to result in such a\nchange) in Company's Business Condition, other than changes in the ordinary\ncourse of business which in the aggregate have not been materially adverse to\nCompany's Business Condition; or, without limiting the foregoing, any loss of or\ndamage to any of the properties of Company due to fire or other casualty, or any\nother loss, whether or not insured, amounting to more than $20,000 in the\naggregate;\n\n               (b)  Any declaration, payment, or setting aside of any dividend\nor other distribution to or for the holders of any Company Common Shares;\n\n               (c)  Any termination, modification, or rescission of, or waiver\nby Company of rights under, any existing contract having or likely to have a\nmaterial adverse effect on Company's Business Condition or any other contract or\narrangement with an Internet portal or distributor;\n\n               (d)  Any discharge or satisfaction by Company of any lien or\nencumbrance, or any payment of any obligation or liability (absolute or\ncontingent) other than current liabilities shown on the balance sheet included\nin the Financial Statements as of September 30, 1999 and current liabilities\nincurred since September 30, 1999 in the ordinary course of business; or\n\n               (e)  Any mortgage, pledge, imposition of any security interest,\nclaim, encumbrance, or other restriction on any of the assets, tangible or\nintangible, of Company.\n\n          2.1.9  Accounts Receivable. All of the accounts receivable shown on\n                 -------------------\nthe Pro Forma Closing Balance Sheet and the Final Pro Forma Closing Balance\nSheet have been collected or are good and collectible in the aggregate recorded\namounts thereof (less the allowance for doubtful accounts also appearing in such\nPro Forma Closing Balance Sheet and Final Pro Forma Closing Balance Sheet\nbalance sheet and net of returns and payment discounts allowable by Company's\npolicies) and can reasonably be anticipated to be paid in full without outside\ncollection efforts within sixty (60) days of the due date, subject to no\ncounterclaims or setoffs.\n\n          2.1.10  Leases in Effect. All real property leases and subleases as to\n                  ----------------\nwhich Company is a party and any amendments or modifications thereof are listed\non the Company Disclosure Schedule (each a \"Lease\" and collectively, the\n\"Leases\") and are valid, in full force and effect, enforceable, and there are no\nexisting defaults, and Company has not received or given notice of default or\nclaimed default with respect to any Lease, nor is there any event that\n\n                                       20\n\n \nwith notice or lapse of time, or both, would constitute a default thereunder.\nThe Company does not own and has never owned any interest in real property other\nthan leasehold interests.\n\n          2.1.11  Personal Property. Company has good and marketable title, free\n                  -----------------\nand clear of all title defects, security interests, pledges, options, claims,\nliens, encumbrances, and restrictions of any nature whatsoever (including,\nwithout limitation, leases, chattel mortgages, conditional sale contracts,\npurchase money security interests, collateral security arrangements, and other\ntitle or interest-retaining agreements) to all inventory, receivables,\nfurniture, machinery, equipment, and other personal property, tangible or\notherwise, reflected on the December 31, 1999 balance sheet included in the\nFinancial Statements or used in Company's business as of the date of such\nbalance sheet even if not reflected thereon, except for acquisitions and\ndispositions in the ordinary course of business. The Company Disclosure Schedule\nlists (i) all computer equipment and (ii) all other personal property having a\nbook value of $10,000 or more, which are used by Company in the conduct of its\nbusiness, and all such equipment and property are in good operating condition\nand repair, reasonable wear and tear excepted.\n\n          2.1.12  Certain Transactions. None of the employees, directors,\n                  --------------------\nofficers, or shareholders of Company, or any member of any of their families (as\ndefined below), is presently a party to, or was a party to during the year\npreceding the date of this Agreement, any transaction with Company, including,\nwithout limitation, any contract, agreement, or other arrangement (i) providing\nfor the furnishing of services to or by, (ii) providing for rental of real or\npersonal property to or from, or (iii) otherwise requiring payments to or from,\nany such person or any corporation, partnership, trust, or other entity in which\nany such person has or had a 5%-or-more interest (as a shareholder, partner,\nbeneficiary, or otherwise) or is or was a director, officer, employee, or\ntrustee other than for services rendered by a shareholder as an employee of\nCompany. None of Company's employees, officers or directors has any material\ninterest in any property, real or personal, tangible or intangible, including\ninventions, copyrights, trademarks or trade names, used in or pertaining to the\nbusiness of Company, or any supplier, distributor or customer of Company, except\nfor the normal rights of a shareholder, and except for rights under existing\nemployee benefit plans and employment agreements copies of which have been\nprovided to Expedia. For purposes of this Agreement \"families\" shall include all\nindividuals who by reason of ancestry, adoption or marriage have a common parent\nor grandparent.\n\n          2.1.13  Litigation and Other Proceedings. Neither Company nor any of\n                  --------------------------------\nits officers, directors, or employees is a party to any pending or, to the\nknowledge of Company and the Principal Shareholders, threatened action, suit,\nlabor dispute (including any union representation proceeding), proceeding,\ninvestigation, or discrimination claim in or by any court or governmental board,\ncommission, agency, department, or officer, or any arbitrator, arising from the\nactions or omissions of Company or, in the case of an individual, from acts in\nhis or her capacity as an officer, director, or employee of Company which\nindividually or in the aggregate would be materially adverse to Company. Company\nis not subject to any order, writ, judgment, decree, or injunction that has a\nmaterial adverse effect on Company's Business Condition.\n\n          2.1.14  No Defaults. Company is not, nor has Company received notice\n                  -----------\nthat it would be with the passage of time, in default or violation of any term,\ncondition or provision of (i) the Charter Documents of Company; (ii) any\njudgment, decree or order applicable to\n\n                                       21\n\n \nCompany; or (iii) any loan or credit agreement, note, bond, mortgage, indenture,\ncontract, agreement, lease, license or other instrument to which Company is now\na party or by which it or any of its properties or assets may be bound, except\nfor defaults and violations which, individually or in the aggregate, would not\nhave a material adverse effect on the Business Condition of Company.\n\n          2.1.15  Major Contracts. Company is not a party to or subject to:\n                  ---------------\n\n               (a)  Any union contract, or any employment contract or\narrangement providing for future compensation, written or oral, with any\nofficer, consultant, director or employee;\n\n               (b)  Any plan or contract or arrangement, written or oral,\nproviding for bonuses, pensions, deferred compensation, retirement payments,\nprofit-sharing, or the like;\n\n               (c)  Any joint venture contract or arrangement or any other\nagreement which has involved or is expected to involve a sharing of profits;\n\n               (d)  Any OEM agreement, distribution agreement, volume purchase\nagreement, corporate end user sales or service agreement or manufacturing\nagreement in which the amount involved exceeds annually, or is expected to\nexceed in the aggregate during any twelve (12) month period $20,000 or pursuant\nto which Company has granted or received manufacturing rights, most favored\nnation pricing provisions or exclusive marketing, reproduction, publishing or\ndistribution rights related to any product, group of products or territory;\n\n               (e)  Any lease for real or personal property in which the amount\nof payments which Company is required to make on an annual basis exceeds\n$20,000;\n\n               (f)  Any material agreement, license, franchise, permit,\nindenture or authorization which has not been terminated or performed in its\nentirety and not renewed which may be, by its terms, terminated, impaired or\nadversely affected by reason of the execution of this Agreement, the Closing of\nthe Merger, or the consummation of the transactions contemplated hereby or\nthereby;\n\n               (g)  Any instrument evidencing or related in any way to\nindebtedness incurred in the acquisition of companies or other entities or\nindebtedness for borrowed money by way of direct loan, sale of debt securities,\npurchase money obligation, conditional sale, guarantee, or otherwise which\nindividually is in the amount of $20,000 or more;\n\n               (h)  Any material license agreement, either as licensor or\nlicensee (excluding nonexclusive hardware and software licenses granted to\ndistributors or end-users in the ordinary course of business consistent with\nprior practice); or\n\n               (i)  Any contract containing covenants purporting to limit\nCompany's freedom to compete in any line of business in any geographic area.\n\n                                       22\n\n \n     All contracts, arrangements, plans, agreements, leases, licenses,\nfranchises, permits, indentures, authorizations, instruments and other\ncommitments which are required to be listed in the Company Disclosure Schedule\npursuant to this Section 2.1.15 are valid and in full force and effect and\nCompany has not, nor, to the best knowledge of Company, has any other party\nthereto, breached any material provisions of, or entered into default in any\nmaterial respect under the terms thereof.\n\n          2.1.16  Material Relations. To Company and the Principal Shareholders'\n                  ------------------\nknowledge, none of the parties to any of the major contracts identified in the\nCompany Disclosure Schedule pursuant to Section 2.1.15, if any, have terminated,\nor in any way expressed an intent to materially reduce or terminate the amount\nof its business with Company in the future.\n\n          2.1.17  Insurance and Banking Facilities. The Company Disclosure\n                  --------------------------------\nSchedule contains a complete and correct list of (i) all contracts of insurance\nor indemnity of Company in force at the date of this Agreement (including name\nof insurer or indemnitor, agent, annual premium, coverage, deductible amounts,\nand expiration date) and (ii) the names and locations of all banks in which\nCompany has accounts or safe deposit boxes, the designation of each such account\nand safe deposit box, and the names of all persons authorized to draw on or have\naccess to each such account and safe deposit box. All premiums and other\npayments due from Company with respect to any such contracts of insurance or\nindemnity have been paid, and Company does not know of any fact, act, or failure\nto act which has or might cause any such contract to be canceled or terminated.\nAll material known claims for insurance or indemnity have been presented.\n\n          2.1.18  Employees. Company does not have any written contract of\n                  ---------\nemployment or other employment agreement with any of its employees that is not\nterminable at will by Company. Company is not a party to any pending, or to\nCompany's knowledge, threatened, labor dispute. Company has complied in all\nmaterial respects with all applicable federal, state, and local laws,\nordinances, rules and regulations and requirements relating to the employment of\nlabor, including but not limited to the provisions thereof relating to wages,\nhours, collective bargaining, payment of social security, unemployment and\nwithholding taxes, and ensuring equality of opportunity for employment and\nadvancement of minorities and women. There are no claims pending, or threatened\nto be brought, in any court or administrative agency by any former or current\nCompany employees for compensation, pending severance benefits, vacation time,\nvacation pay or pension benefits, or any other claim pending from any current or\nformer employee or any other person arising out of Company's status as employer,\nwhether in the form of claims for employment discrimination, harassment, unfair\nlabor practices, grievances, wrongful discharge or otherwise.\n\n          2.1.19  Employee Benefit Plans. Each employee benefit plan (\"Plan\")\n                  ----------------------\ncovering active, former, or retired employees of Company is listed in the\nCompany Disclosure Schedule. Company has made available to Expedia a copy of\neach Plan, and where applicable, any related trust agreement, annuity, or\ninsurance contract. No annual reports (Form 5500) have been required to be filed\nwith the Internal Revenue Service. To the extent applicable, each Plan\n\n                                       23\n\n \ncomplies, in all material respects, with the requirements of the Employee\nRetirement Income Security Act of 1974 as amended (\"ERISA\"), and the Code, and\nany Plan intended to be qualified under Section 401(a) of the Code has been\ndetermined by the Internal Revenue Service to be so qualified and has remained\ntax-qualified to this date and its related trust is tax-exempt and has been so\nsince its creation. No Plan is covered by Title IV of ERISA or Section 412 of\nthe Code. No \"prohibited transaction\", as defined in ERISA Section 406 or Code\nSection 4975 has occurred with respect to any Plan. Each Plan has been\nmaintained and administered in compliance with its terms and with the\nrequirements prescribed by any and all statutes, orders, rules and regulations,\nincluding but not limited to ERISA and the Code, which are applicable to such\nPlans. There are no pending or anticipated claims against or otherwise involving\nany of the Plans and no suit, action, or other litigation (excluding claims for\nbenefits incurred in the ordinary course of Plan activities) has been brought\nagainst or with respect to any Plan. All contributions, reserves, or premium\npayments to the Plan, accrued to the date hereof have been made or provided for.\nCompany has not incurred any liability under Subtitle C or D of Title IV of\nERISA with respect to any \"single-employer plan,\" within the meaning of Section\n4001(a)(15) of ERISA, currently or formerly maintained by Company, or any entity\nwhich is considered one employer with Company under Section 4001 of ERISA.\nCompany has not incurred any withdrawal liability under Subtitle E of Title IV\nof ERISA with respect to any \"multi-employer plan.\" within the meaning of\nSection 4001(a)(3) of ERISA. There are no restrictions on the rights of Company\nto amend or terminate any Plan without incurring any liability thereunder.\nCompany has not engaged in or is a successor or parent corporation to an entity\nthat has engaged in a transaction described in ERISA Section 4069. There have\nbeen no amendments to, written interpretation of, or announcement (whether or\nnot written) by Company relating to, or change in employee participation or\ncoverage under, any Plan. Neither Company nor any of its ERISA affiliates have\nany current or projected liability in respect of post-employment or post-\nretirement welfare benefits for retired or former employees of Company other\nthan health care continuation benefits required to be provided under applicable\nlaw. No tax under Section 4980B of the Code has been incurred in respect of any\nPlan that is a group health plan, as defined in Section 5000(b)(1) of the Code.\nExcept as disclosed on the Company Disclosure Schedule, Company has administered\nthe executive compensation Plans, if any, in a manner which will not result in a\ncompensation charge against earnings or the loss of deductions for federal and\nstate income tax purposes.\n\n          2.1.20  Certain Agreements. Except as contemplated by this Agreement,\n                  ------------------\nneither the execution and delivery of this Agreement, nor the consummation of\nthe transactions contemplated hereby will: (i) result in any payment by Company\n(including, without limitation, severance, unemployment compensation, parachute\npayment, bonus or otherwise) becoming due to any director, employee or\nindependent contractor of Company under any Plan, agreement or otherwise, (ii)\nmaterially increase any benefits otherwise payable under any Plan or agreement,\nor (iii) result in the acceleration of the time of payment or vesting of any\nsuch benefits.\n\n          2.1.21  Guarantees and Suretyships. Company has no powers of attorney\n                  --------------------------\noutstanding (other than those issued in the ordinary course of business with\nrespect to tax matters), and Company has no obligations or liabilities (absolute\nor contingent) as guarantor, surety, cosigner, endorser, co-maker, indemnitor,\nor otherwise respecting the obligations or\n\n                                       24\n\n \nliabilities of any person, corporation, partnership, joint venture, association,\norganization, or other entity.\n\n          2.1.22  Brokers and Finders. Neither Company nor the Principal\n                  -------------------\nShareholders has retained any broker, finder, or investment banker in connection\nwith this Agreement or any of the transactions contemplated by this Agreement,\nnor does or will Company owe any fee or other amount to any broker, finder, or\ninvestment banker in connection with this Agreement or the transactions\ncontemplated by this Agreement.\n\n          2.1.23  Certain Payments. Neither Company nor the Principal\n                  ----------------\nShareholders acting on behalf of Company, nor to the best knowledge of Company\nand the Principal Shareholders, any person or other entity acting on behalf of\nCompany has, directly or indirectly, on behalf of or with respect to Company:\n(i) made an unreported political contribution, (ii) made or received any payment\nwhich was not legal to make or receive, (iii) engaged in any transaction or made\nor received any payment which was not properly recorded on the books of Company,\n(iv) created or used any \"off-book\" bank or cash account or \"slush fund,\" or (v)\nengaged in any conduct constituting a violation of the Foreign Corrupt Practices\nAct of 1977.\n\n          2.1.24  Environmental Matters. To the best knowledge of Company and\n                  ---------------------\nthe Principal Shareholders:\n\n               (a)  There has not been a discharge or release on any real\nproperty owned or leased by Company (the \"Real Property\") of any Hazardous\nMaterial (as defined below) in violation of any federal, state or local statute,\nregulation, rule or order applicable to health, safety and the environment,\nincluding without limitation, contamination of soil, groundwater or the\nenvironment, generation, handling, storage, transportation or disposal of\nHazardous Materials or exposure to Hazardous Materials (\"Environmental Laws\"),\nexcept for those that would not, individually or in the aggregate have a\nmaterial adverse effect on Company;\n\n               (b)  No Hazardous Material has been used by Company in the\noperation of Company's business in amounts that would violate any Environmental\nLaws;\n\n               (c)  Company has not received from any Governmental Entity or\nthird party any request for information, notice of claim, demand letter, or\nother notification, notice or information that Company is or may be potentially\nsubject to or responsible for any investigation or clean-up or other remediation\nof Hazardous Material present on any Real Property;\n\n               (d)  There have been no environmental investigations, studies,\naudits, tests, reviews, or other analyses, the purpose of which was to discover,\nidentify, or otherwise characterize the condition of the soil, groundwater, air,\nor presence of asbestos at any of the Real Property sites;\n\n               (e)  There is no asbestos present in any Real Property owned or\noperated by Company, and no asbestos has been removed from any Real Property\nwhile such Real Property was owned or operated by Company; and\n\n                                      25\n\n \n               (f)  There are no underground storage tanks on, in or under any\nof the Real Property and no underground storage tanks have been closed or\nremoved from any Real Property which are or have been in the ownership of\nCompany.\n\n     \"Hazardous Material\" means any substance (i) that is a \"hazardous waste\" or\n\"hazardous substance\" under any federal, state or local statute, regulation,\nrule, or order, (ii) that is toxic, explosive, corrosive, flammable, infectious,\nradioactive, or otherwise hazardous and is regulated by any Governmental Entity,\n(iii) the presence of which on any of the Real Property causes or threatens to\ncause a nuisance on any of the Real Property or to adjacent properties or poses\nor threatens to pose a hazard to the health or safety of persons on or about any\nof the Real Property, or (iv) the presence of which on adjacent properties could\nconstitute a trespass by Company or the then current owner(s) of any of the Real\nProperty.\n\n          2.1.25  Business Relations. The Company Disclosure Schedule sets forth\n                  ------------------\nall suppliers of Company representing five percent (5%) or more of Company's\ncosts or revenues for the eleven (11) months ended November 30, 1999 and their\nhas been no material change in such suppliers since that date. No material\ncustomer or supplier or co-party to any Internet distribution or portal\nagreement of Company has threatened to cease to do business with Company,\nwhether as a result of a transaction such as set forth herein or otherwise.\nSince December 31, 1998, the Company has not experienced any material\ndifficulties either in obtaining suppliers or Internet distributors or in its\nmaterial relationships with current suppliers or Internet distributors necessary\nfor the operation of its business as presently conducted, and to Company's\nknowledge no such material difficulties are anticipated, pending or threatened,\nwhether in connection with the operation of the Company's business as presently\nconducted or its business Prospects. Company is not required to provide any\nbonding or other security for any of its suppliers.\n\n          2.1.26  Disclosure. Neither the representations or warranties made by\n                  ----------\nCompany or the Principal Shareholders in this Agreement, nor the final Company\nDisclosure Schedule or any other certificate executed and delivered by Company\nor the Principal Shareholders pursuant to this Agreement, when taken together,\ncontains any untrue statement of a material fact, or omits to state a material\nfact necessary to make the statements or facts contained herein or therein not\nmisleading in light of the circumstances under which they were furnished.\n\n          2.1.27  Real Property. All Real Property of the Company is listed on\n                  -------------\nthe Company Disclosure Schedule. No other real property has been owned, leased\nor licensed by Company. The Company has good and marketable title, free and\nclear of all material title defects, security interests, pledges, options,\nclaims, liens, encumbrances and restrictions (including without limitation,\nmortgages and deeds of trust), in fee simple absolute with respect to the\nportion of Real Property identified on the Company Disclosure Schedule as being\nowned, and as a leasehold estate with respect to the portion of Real Property\nidentified on the Company Disclosure Schedule as being leased. The Real Property\nis in good operating condition (normal wear and tear excepted) and is suitable\nfor the uses in which it is currently being employed and is free from any known\nmaterial defect. The use and operation of the Real Property is in full\ncompliance with applicable material provisions of building and fire codes and\nzoning and land\n\n                                      26\n\n \nuse laws. All certificates of occupancy and other building permits are in full\nforce and effect, without default by or notice of default to the Company. All\nwater, sewer, gas, electric, electronic communications and drainage facilities\nand all other utilities required by law, statute, rule or regulation or by the\nCompany's use and operation of the Real Property are installed on the Real\nProperty and are adequate to service the Real Property under its current use.\nThe Company has all material easements and rights of way necessary for the\noperation of the Company's business as presently conducted. There are no\ncondemnation proceedings pending, or to the knowledge of Company, threatened in\nrespect of the Real Property. The Company has no contractual obligation to\npurchase, sell, offer a right of first refusal or a right of first offer with\nrespect to any real property. The Company has granted no option to purchase real\nproperty. There are no leases, subleases, licenses, occupancy agreements or\nother agreements, oral or written, under the Company is the lessor of any\nportion of the Real Property or sublessor under any lease.\n\n          2.1.28  Reliance. The foregoing representations and warranties are\n                  --------\nmade by Company and the Principal Shareholders with the knowledge and\nexpectation that Expedia and Sub are placing reliance thereon.\n\n     2.2  Representations and Warranties of Expedia and Sub. Except as disclosed\n          -------------------------------------------------\nin a document referring specifically to the representations and warranties in\nthis Agreement which identifies by section number the section and subsection to\nwhich such disclosure relates and is delivered by Expedia to Company prior to\nthe execution of this Agreement (the \"Expedia Disclosure Schedule\"), Expedia and\nSub represent and warrant to Company as follows:\n\n          2.2.1  Organization, Standing and Power. Expedia is a corporation duly\n                 --------------------------------\norganized and validly existing under the laws of Washington, and Sub is a\ncorporation duly organized and validly existing under the laws of Delaware, and\neach has all requisite power and authority to own, lease and operate its\nproperties and to carry on its businesses as now being conducted, and is duly\nqualified and in good standing to do business in each jurisdiction in which a\nfailure to so qualify would have a material adverse effect on the Business\nCondition of Expedia.\n\n          2.2.2  Authority. The execution, delivery, and performance of this\n                 ---------\nAgreement by Expedia and Sub has been duly authorized by all necessary corporate\naction of Expedia and Sub. Each of Expedia and Sub has duly and validly executed\nand delivered this Agreement, and this Agreement constitutes a valid, binding,\nand enforceable obligation of each of Expedia and Sub in accordance with its\nterms.\n\n          2.2.3  Compliance with Laws and Other Instruments. Neither the\n                 ------------------------------------------\nexecution and delivery of this Agreement by Expedia or Sub nor the performance\nby Expedia or Sub of its obligations under this Agreement will violate any\nmaterial provision of law or will conflict with, result in the breach of any of\nthe terms and conditions of, constitute a default under, permit any party to\naccelerate any right under, renegotiate or terminate, require consent, approval,\nor waiver by any party under, or result in the creation of any lien, charge, or\nencumbrance upon any of the properties, assets, or shares of capital stock of\nExpedia pursuant to any charter document of Expedia or Sub or any agreement,\nindenture, mortgage, franchise, license, permit, lease, or other instrument of\nany kind to which Expedia is a party or by which Expedia or any of its assets\nare\n   \n                                      27\n\n \nbound or affected. No Consent is required by or with respect to Expedia or Sub\nin connection with the execution and delivery of this Agreement by Expedia or\nSub or the consummation by Expedia or Sub of the transactions contemplated\nhereby or thereby, except for the filing of the Merger Documents with the\nSecretary of State of Delaware and such other consents, authorizations, filings,\napprovals and registrations which if not obtained or made would not have a\nmaterial adverse effect on Expedia's Business Condition.\n\n          2.2.4  Financial Statements and SEC Documents. Expedia has made\n                 --------------------------------------\navailable to Company complete and accurate copies, as amended or supplemented,\nof its (a) Form S-1 Registration Statement under the 1933 Act, as amended on\nOctober 26, 1999 and November 8, 1999 and the prospectus dated November 9, 1999\ncontained in the Form S-1 Registration Statement and (b) all other reports filed\nby Expedia pursuant to Section 13 of the 1934 Act with the SEC since November 9,\n1999 (such reports are collectively referred to herein as the \"SEC Documents\").\nThe SEC Documents constitute all of the documents required to be filed by\nExpedia under Section 13 of the 1934 Act with the SEC since November 9, 1999 and\nwere prepared in accordance with the requirements of the 1934 Act. The SEC\nDocuments (including without limitation all information and filings incorporated\ntherein by reference) are, as of the time filed, accurate and complete and\ncontain and will contain no material misstatement and do not omit to state any\nfact necessary to make the statements therein not misleading.\n\n          2.2.5  Capital Shares. The Expedia Common Shares issuable in the\n                 --------------\nMerger are duly authorized and reserved for issuance and, when issued in\naccordance with the terms of this Agreement and the Merger Documents will be\nvalidly issued, fully paid, nonassessable and not subject to any preemptive\nrights. Except as set forth in Schedule 2.2.5, attached hereto, the authorized,\nissued and outstanding capital shares of Expedia are as set forth in the SEC\nDocuments as of the dates of the financial statements or other information\nincluded in the SEC Documents.\n\n          2.2.6  Disclosure. Neither the representations or warranties made by\n                 ----------\nExpedia or Sub in this Agreement, nor the final Expedia Disclosure Schedule or\nany other certificate executed and delivered by Expedia pursuant to this\nAgreement, when taken together, contains any untrue statement of a material\nfact, or omits to state a material fact necessary to make the statements or\nfacts contained herein or therein not misleading in light of the circumstances\nunder which they were furnished.\n\n          2.2.7  Intellectual Property Rights. Except as otherwise described in\n                 ----------------------------\nExpedia's Securities and Exchange Commission filings: (a) Expedia owns or\npossesses adequate rights to use all trade secrets, know-how, trademarks,\nservice marks, trade names and copyrights which are necessary to conduct its\nbusinesses as currently conducted, (b) Expedia does not expect the expiration of\nany patents, patent rights, trade secrets, trademarks, service marks, trade\nnames or copyrights which would result in a material adverse effect on Expedia,\n(c) Expedia has not received any notice of, and has no knowledge of, any\ninfringement of or conflict with asserted rights of Expedia by others with\nrespect to any patent, patent rights, inventions, trade secrets, know-how,\ntrademarks, service marks, trade names or copyrights which would result in a\nmaterial adverse effect on Expedia, and (d) Expedia has not received any notice\nof, and has no knowledge of, any infringement of or conflict with asserted\nrights of others with respect to any patent, patent rights, inventions, trade\nsecrets, know-how, trademarks, service marks, trade\n\n                                      28\n\n \nnames or copyrights which, singly or in the aggregate, if the subject of an\nunfavorable decision, ruling or finding, would reasonably be expected to have a\nmaterial adverse effect on Expedia. Except as otherwise disclosed in Expedia's\nSecurities and Exchange Commission filings, to the knowledge of Expedia there is\nno claim being made against Expedia regarding patents, patent rights or\nlicenses, inventions, collaborative research, trade secrets, know-how, trade\nmarks, service marks, trade names or copyrights. Except as otherwise disclosed\nin Expedia's Securities and Exchange Commission filings, to its knowledge,\nExpedia does not in the current conduct of its business nor as or currently\nproposed to be conducted within the next eleven (11) months following execution\nof the Agreement infringe any patent of any third party, or any discovery,\ninvention, product or process which is the subject of a patent applications\nfiled by a third party, known to Expedia, which such infringement is reasonably\nlikely to result in a material adverse effect on Expedia. As used in this\nSection only, references to the \"knowledge\" of expectations of Expedia shall\nmean only the actual knowledge and expectations of the officers of Expedia.\n\n          2.2.8  Reliance. The foregoing representations and warranties are made\n                 --------\nby Expedia and Sub with the knowledge and expectation that Company is and the\nPrincipal Shareholders are placing reliance thereon.\n\n          2.2.9  Tax Matters. Prior to the Merger, Expedia will be in control of\n                 -----------\nSub within the meaning of Section 368(c)(1) of the Code. Expedia has no plan or\nintention to reacquire any of the Expedia Common Shares issued in connection\nwith the Merger. Expedia has no plan or intention to liquidate the Surviving\nCorporation, to merge the Surviving Corporation with or into another corporation\nother than Expedia, to sell or otherwise dispose of the capital stock of the\nSurviving Corporation, except for transfers of shares of the Surviving\nCorporation to corporations controlled by Expedia or to cause the Surviving\nCorporation to sell or otherwise dispose of any assets, except for dispositions\nmade in the ordinary course of business, transfers of assets to a corporation\ncontrolled by the Surviving Corporation and transfers the result of which shall\nnot affect the treatment of the Merger under Section 368 of the Code. The\nSurviving Corporation will continue the historic business of the Company or use\na significant portion of the Company's historic business assets in a business.\n\n                                  ARTICLE III\n                             COVENANTS OF COMPANY\n                                        \n     During the period from the date of this Agreement (except as otherwise\nindicated) and continuing until the earlier of the termination of this Agreement\nor the Effective Time (or later where so indicated), each of Company and the\nPrincipal Shareholders, jointly and severally, agree (except as expressly\ncontemplated by this Agreement, as specifically permitted by, or as set forth\nin, the Company Disclosure Schedule or otherwise permitted by Expedia's prior\nwritten consent):\n\n     3.1  Conduct of Business.\n          -------------------\n\n          3.1.1  Ordinary Course. Company shall carry on its business in the\n                 ---------------\nusual, regular and ordinary course in substantially the same manner as\nheretofore conducted and, to the extent consistent with such business, use all\nreasonable efforts consistent with past practice and\n\n                                       29\n\n \npolicies to preserve intact its present business organizations, keep available\nthe services of its present officers, consultants, and employees and preserve\nits relationships with customers, suppliers, distributors and others having\nbusiness dealings with it. Company shall promptly notify Expedia of any event or\noccurrence or emergency which is not in the ordinary course of business of\nCompany and which is material and adverse to Company's Business Condition. The\nforegoing notwithstanding, Company shall not, except as approved in writing by\nExpedia:\n\n               (a)  enter into any commitment or transaction (i) to be performed\nover a period longer than six months in duration, or (ii) to purchase assets or\nservices (other than raw materials, supplies, or cash equivalents) for a\npurchase price in excess of $20,000;\n\n               (b)  grant any bonus, severance, or termination pay to any\nofficer, director, independent contractor or employee of Company;\n\n               (c)  except for agreements (i) involving expenditures by Company\nor financial exposure of Company reasonably understood to amount in the\naggregate to less than $50,000, (ii) which are terminable in accordance with\ntheir terms on not less than ninety (90) days notice, or (iii) hotel revenue\nsharing agreements providing for not more than ten percent (10%) of applicable\nhotel revenues to be directed to the other party thereto, enter into or amend\nany agreements (A) pursuant to which any other party is granted marketing,\npublishing or distribution rights of any type or scope with respect to any\nhardware or software or Internet content products of Company, or (B) related to\nInternet advertising or provision of Internet travel services or related\nInternet content with any owner or operator of internet sites other than\nExpedia;\n\n               (d)  except in the ordinary course of business and consistent\nwith prior practice, enter into or terminate or fail to exercise any right to\nextend or renew any contracts, arrangements, plans, agreements, leases,\nlicenses, franchises, permits, indentures, authorizations, instruments or\ncommitments, or amend or otherwise change the terms thereof;\n\n               (e)  commence a lawsuit other than: (i) for the routine\ncollection of bills, (ii) in such cases where Company in good faith determines\nthat failure to commence suit would result in a material impairment of a\nvaluable aspect of Company's business, provided Company consults with Expedia\nprior to filing such suit, or (iii) for a breach of this Agreement;\n\n               (f)  materially modify existing discounts or other terms and\nconditions with dealers, distributors and other resellers of Company's products;\n\n               (g)  materially modify the terms and conditions of existing\nstrategic partnering agreements or enter into new strategic partnering\nagreements; or\n\n               (h)  accelerate the vesting or otherwise modify any restricted\nstock option, warrant, or other outstanding rights or other securities.\n\n          3.1.2  Dividends, Issuance of or Changes in Securities. Company shall\n                 -----------------------------------------------\nnot: (i) declare or pay any dividends on or make other distributions to its\nstockholders (whether in cash, shares or property), (ii) issue, deliver, sell,\nor authorize, propose or agree to, or commit to\n\n                                       30\n\n \nthe issuance, delivery, or sale of any shares of its capital stock of any class,\nany Company Voting Debt or any securities convertible into its capital stock,\nany options, warrants, calls, conversion rights, commitments, agreements,\ncontracts, understandings, restrictions, arrangements or rights of any character\nobligating Company to issue any such shares, Company Voting Debt or other\nconvertible securities, (iii) split, combine or reclassify any of its capital\nstock or issue or authorize the issuance of any other securities in respect of,\nin lieu of or in substitution for shares of capital stock of Company, (iv)\nrepurchase or otherwise acquire, directly or indirectly, any shares of its\ncapital stock, or (v) propose any of the foregoing.\n\n          3.1.3  Governing Documents. Company shall not amend its Charter\n                 -------------------\nDocuments.\n\n          3.1.4  No Acquisitions. Company shall not acquire or agree to acquire\n                 ---------------\nby merging or consolidating with, or by purchasing a substantial portion of the\nassets of, or by any other manner, any business or any corporation, partnership,\nassociation or other business organization or division thereof or otherwise\nacquire or agree to make any such acquisition.\n\n          3.1.5  No Dispositions. Company shall not sell, lease, license,\n                 ---------------\ntransfer, mortgage, encumber or otherwise dispose of any of its assets or\ncancel, release, or assign any indebtedness or claim, except in the ordinary\ncourse of business consistent with prior practice.\n\n          3.1.6  Indebtedness. Company shall not incur any indebtedness for\n                 ------------\nborrowed money by way of direct loan, sale of debt securities, purchase money\nobligation, conditional sale, guarantee, or otherwise.\n\n          3.1.7  Compensation. Company shall not adopt or amend any Plan or pay\n                 ------------\nany pension or retirement allowance not required by any existing Plan. Company\nshall not enter into or modify or accelerate the disposition of benefits under\nany employment contracts, increase the salaries, wage rates or fringe benefits\nof its officers, directors or employees or pay bonuses or other remuneration\nexcept for current salaries and other remuneration for which Company is\nobligated pursuant to a written agreement a copy of which has been provided to\nExpedia.\n\n          3.1.8  Claims. Company shall not settle any claim, action or\n                 ------\nproceeding, except in the ordinary course of business consistent with past\npractice.\n\n     3.2  Access to Properties and Records. Throughout the period between the\n          --------------------------------\ndate of this Agreement and the Closing, Company shall give Expedia and its\nrepresentatives full access, upon reasonable notice and during reasonable\nbusiness hours but in such a manner as not unduly to disrupt the business of\nCompany, to its premises, properties, contracts, commitments, books, records,\nand affairs, and shall provide Expedia with such financial, technical, and\noperating data and other information pertaining to its business as Expedia may\nrequest, provided that such information is reasonably related to Expedia's\nplanning of post-Merger integration of the Company into its business and,\nprovided further that the Company shall have no obligation to provide access to\ninformation reasonably deemed by Company to be proprietary, including its source\ncode. With Company's prior consent, which shall not be unreasonably withheld,\nExpedia shall be entitled to make appropriate inquiries of third parties in the\ncourse of its investigation.\n\n                                       31\n\n \n     3.3  Breach of Representations and Warranties. Except as expressly\n          ----------------------------------------\npermitted by this Agreement, neither Company nor any Principal Shareholder will\ntake any action that would cause or constitute a breach of any of the\nrepresentations and warranties set forth in Section 2.1 or that would cause any\nof such representations and warranties to be inaccurate in any material respect.\nIn the event of, and promptly after becoming aware of, the occurrence of or the\npending or threatened occurrence of any event that would cause or constitute\nsuch a breach or inaccuracy, Company or the Principal Shareholders will give\ndetailed notice thereof to Expedia and will use their best efforts to prevent or\npromptly remedy such breach or inaccuracy.\n\n     3.4  Consents. Company will promptly apply for or otherwise seek, and use\n          --------\nits commercially reasonable efforts to obtain, all consents and approvals, and\nmake all filings, required with respect to the consummation of the Merger,\nincluding without limitation, compliance with and consents and approvals under\nthe HSR Act.\n\n     3.5  Tax Returns. Company shall promptly provide Expedia with copies of all\n          -----------\ntax returns, reports and information statements that have been filed or are\nfiled prior to the Closing Date.\n\n     3.6  Shareholder Approval. Each of the Principal Shareholders agrees to\n          --------------------\nvote all of such Shareholder's Company Shares, to the extent allowed by the\nCompany's Charter Documents or applicable law, for the approval of this\nAgreement and the appropriate Merger Documents as required by the DGCL by\nwritten consent solicited by Company for such purpose or at a special meeting of\nPrincipal Shareholders called for such purpose.\n\n     3.7  Preparation of Disclosure and Solicitation Materials. As promptly as\n          ----------------------------------------------------\npracticable after the execution of this Agreement, Company will promptly submit\nto its shareholders, information and documents relating to Company, its business\nor operations, Expedia, its business or operations, the terms of the Merger and\nthis Agreement, and the material facts concerning all payments which in the\nabsence of shareholder approval would be \"Parachute Payments\" as defined in Code\nSection 280G(b)(2), in form and substance reasonably satisfactory to Expedia and\nits counsel, to satisfy all requirements of applicable state and federal\nsecurities laws, the DGCL and Code Section 280G(b)(5)(B) and the regulations\nthereunder. Company will not provide or publish to its Shareholders any material\nconcerning it or its affiliates that violates the DGCL, the 1933 Act or the 1934\nAct with respect to the transactions contemplated hereby.\n\n     3.8  Exclusivity; Acquisition Proposals. Unless and until this Agreement\n          ----------------------------------\nshall have been terminated by either party pursuant to Article VIII hereof and\nthereafter subject to Section 8.5, neither Company nor any of the Principal\nShareholders shall (and each shall use its best efforts to ensure that none of\nits officers, directors, agents, representatives or affiliates) take or cause or\npermit any person to take, directly or indirectly, any of the following actions\nwith any party other than Expedia and its designees: (i) solicit, encourage,\ninitiate or participate in any negotiations, inquiries or discussions with\nrespect to any offer or proposal to acquire all or any significant part of its\nbusiness, assets or capital shares whether by merger, consolidation, other\nbusiness combination, purchase of assets, tender or exchange offer or otherwise\n(each of the\n\n                                       32\n\n \nforegoing, an \"Acquisition Transaction\"), (ii) disclose, in connection with an\nAcquisition Transaction, any information not customarily disclosed to any person\nother than Expedia or its representatives concerning Company's business or\nproperties or afford to any person other than Expedia or its representatives or\nentity access to its properties, books or records, except in the ordinary course\nof business and as required by law or pursuant to a governmental request for\ninformation (and then only after giving prior notice to Expedia), (iii) enter\ninto or execute any agreement relating to an Acquisition Transaction, or (iv)\nmake or authorize any public statement, recommendation or solicitation in\nsupport of any Acquisition Transaction or any offer or proposal relating to an\nAcquisition Transaction other than with respect to the Merger. In addition, if\nCompany is contacted by any third party expressing interest in an Acquisition\nTransaction, Company will promptly notify Expedia in writing of such contact.\n\n     3.9  Employees. Prior to Closing, Company agrees to terminate such\n          ---------\nemployees as Expedia may designate in writing at least two (2) business days\nprior to Closing and use its best efforts to obtain releases from such employees\nsubstantially in the form attached hereto as Exhibit 3.9. Company shall pay all\nseverance expenses, if any, associated with termination of such employees.\nExpedia shall consult with the Principal Shareholders prior to determining which\nemployees, if any, shall be terminated.\n\n     3.10  Notice of Events. Throughout the period between the date of this\n           ----------------\nAgreement and the Closing, Company shall promptly advise Expedia of any and all\nmaterial events and developments concerning its financial position, results of\noperations, assets, liabilities, or business or any of the items or matters\nconcerning Company covered by the representations, warranties, and covenants of\nCompany and the Principal Shareholders contained in this Agreement. During such\nperiod Company shall promptly provide notice to Expedia as soon as practicable\nafter receiving notice of or becoming aware of the expiration or termination or\nany event which with the passage of time is reasonably expected to result in\nexpiration or termination of any contracts, arrangements, plans and agreements\n(a) pursuant to which any other party is granted marketing, publishing or\ndistribution rights of any type or scope with respect to any hardware or\nsoftware or Internet content products of Company, (b) related to Internet\nadvertising or provision of Internet travel services or related Internet content\nwith any owner or operator of internet sites other than Expedia or (c) pursuant\nto which any other party is granted rights to share revenues from hotel and air\ntravel bookings. The Disclosure Schedule identifies all such contracts,\narrangements, plans and agreements which by their terms will expire or are\nreasonably expected to be terminated prior to the \"outside date\" provided for in\nSection 8.4 and which were not terminable at will or set to expire in less than\nninety (90) days at the time in which entered.\n\n     3.11  Best Efforts. Company and the Principal Shareholders will use their\n           ------------\nbest efforts to effectuate the transactions contemplated hereby and to fulfill\nand cause to be fulfilled the conditions to Closing under this Agreement.\n\n                                  ARTICLE IV\n                             COVENANTS OF EXPEDIA\n                                        \n     During the period from the date of this Agreement and continuing until the\nearlier of the termination of this Agreement or the Effective Time (or later\nwhere so indicated), Expedia\n\n                                       33\n\n \nagrees (except as expressly contemplated by this Agreement or with Company's\nprior written consent) that either it or Sub will take or cause the following\nactions to be taken:\n\n     4.1  Breach of Representations and Warranties. Neither Expedia nor Sub will\n          ----------------------------------------\ntake any action which would cause or constitute a breach of any of the\nrepresentations and warranties set forth in Section 2.2 or which would cause any\nof such representations and warranties to be inaccurate in any material respect.\nIn the event of, and promptly after becoming aware of, the occurrence of or the\npending or threatened occurrence of any event which would cause or constitute\nsuch a breach or inaccuracy, Expedia will give detailed notice thereof to\nCompany and will use its best efforts to prevent or promptly remedy such breach\nor inaccuracy.\n\n     4.2  Conduct of Business by Expedia Pending the Merger. Expedia shall\n          -------------------------------------------------\npromptly notify Company of any event or occurrence that is material and adverse\nto the Business Condition of Expedia; provided, however; that the disclosure of\nsuch event or occurrence in a Expedia SEC Document shall satisfy such\nrequirement so long as such Expedia SEC Document is filed within a reasonable\nperiod of time after Expedia becomes aware of such event or occurrence and in\nany event prior to the Effective Time. In the event Expedia shall agree to\nacquire by merging or consolidating with, by purchasing an equity interest in,\nor a portion of the assets of, or by any other manner, any business or any\ncorporation, partnership, association or other business organization or division\nthereof and any such business or assets to be acquired includes products that\ncould reasonably be considered to be competitive with the Company's business\ngenerally related to the development and sale of travel services over the\nInternet (a \"Competitive Business\"), Expedia shall either (i) delay any filings\nrequired to be made by Expedia under the HSR Act with respect to such\nacquisition until the applicable waiting period with respect to the Merger under\nthe HSR Act shall have expired or have been earlier terminated or (ii) agree\nwith the applicable Governmental Entity to hold separate such Competitive\nBusiness or take similar actions that would cause such Governmental Entity to\npermit promptly the expiration or termination of the waiting period under the\nHSR Act with respect to the Merger.\n\n     4.3  1934 Act Materials. Expedia shall provide Company and its shareholders\n          ------------------\nwith the information relating to Expedia as required by Rule 502(b) of\nRegulation D of the 1933 Act.\n\n     4.4  Consents. Expedia will promptly apply for or otherwise seek, and use\n          --------\nits best efforts to obtain, all consents and approvals, and make filings,\nrequired with respect to the consummation of the Merger.\n\n     4.5  Best Efforts. Each of Expedia and Sub will use its best efforts to\n          ------------\neffectuate the transactions contemplated hereby and to fulfill and cause to be\nfulfilled the conditions to Closing under this Agreement.\n\n                                   ARTICLE V\n                             ADDITIONAL AGREEMENTS\n\n     In addition to the foregoing, Expedia, Sub, Company and the Principal\nShareholders each agree to take the following actions after the execution of\nthis Agreement.\n\n                                       34\n\n \n     5.1  Investment Agreements. All resale of Expedia Common Shares by the New\n          ---------------------\nExpedia Shareholders shall be subject to the restrictions imposed by the\ninvestment agreements in the form attached as Exhibit 5.1 (including the\nrestriction set forth in Sections 1.9 and 5.7), which shall be entered into by\neach New Expedia Shareholder and Expedia (the \"Investment Agreements\"). Expedia\nshall be entitled to place appropriate legends on the certificate evidencing any\nExpedia Common Shares to be received by New Expedia Shareholders pursuant to the\nterms of this Agreement and to issue appropriate stop transfer instructions to\nthe transfer agent for Expedia Common Shares consistent with the terms of the\nInvestment Agreements.\n\n     5.2  Legal Conditions to the Merger. Each of Expedia and Company will take\n          ------------------------------\nall reasonable actions necessary to comply promptly with all legal requirements\nwhich may be imposed on it with respect to the Merger. Each of Expedia, Company\nand the Principal Shareholders will take all reasonable actions to obtain (and\nto cooperate with the other parties in obtaining) any Consent required to be\nobtained or made by Company or Expedia in connection with the Merger, or the\ntaking of any action contemplated thereby or by this Agreement, including,\nwithout limitation, compliance with and consents and approvals required under\nthe HSR Act.\n\n     5.3  Employee Benefits. Certain employees of Company will be offered the\n          -----------------\nopportunity to continue employment with Company and\/or commence an employment\nrelationship with Expedia, provided, however, that nothing contained herein or\nin the offer letters shall be considered as requiring Company or Expedia to\ncontinue any specific plan or benefit, or to confer upon any employee,\nbeneficiary, dependent, legal representative or collective bargaining agent of\nsuch employee any right or remedy of any nature or kind whatsoever under or by\nreason of this Agreement, including without limitation any right to employment\nor to continued employment for any specified period, at any specified location\nor under any specified job category, except as specifically provided for in an\noffer letter or other agreement of employment. It is specifically understood\nthat continued employment with Company or employment with Expedia is not offered\nor implied for any other employees of Company and any continuation of employment\nwith Company after the Closing shall be at will.\n\n     5.4  Expenses. If the Merger is not consummated, all fees, costs and other\n          --------\nexpenses incurred in connection with this Agreement and the transactions\ncontemplated hereby and thereby shall be paid by the party incurring such\nexpense. Provided that Company shall have provided to Expedia prior to the\nexecution of this Agreement a reasonable estimate of all such expenses of\nCompany, Expedia agrees to pay or cause to be paid all such fees, costs and\nexpenses provided that such do not materially differ from such estimate, and, in\nany event, such expenses shall be accrued on the Final Pro Forma Closing Balance\nSheet (but in no event shall such accrual affect the calculation of the Adjusted\nCompany Share Price under Section 1.5).\n\n     5.5  Additional Agreements. In case at any time after the Effective Time\n          ---------------------\nany further action is reasonably necessary or desirable to carry out the\npurposes of this Agreement or to vest the Surviving Corporation with full title\nto all properties, assets, rights, approvals, immunities and franchises of\nCompany, the proper officers and directors of each corporation which is a party\nto this Agreement shall take all such necessary action.\n\n                                       35\n\n \n     5.6  Public Announcements. Neither Expedia, Company nor the Principal\n          --------------------\nShareholders shall disseminate any press release or other announcement\nconcerning this Agreement or the transactions contemplated herein to any third\nparty (except to the directors, officers and employees of the parties to this\nAgreement whose direct involvement is necessary for the consummation of the\ntransactions contemplated under this Agreement, to the attorneys and accountants\nof the parties hereto, or except as Expedia determines in good faith to be\nrequired by the federal securities laws after consultation with Company and its\ncounsel) without the prior written consent of each of the other parties hereto.\nIt is anticipated that Expedia will issue a press release shortly following the\nexecution of this Agreement which shall be made available to Company and its\ncounsel for review and consultation.\n\n     5.7  Lock-Up. Other than sales under an effective Registration Statement\n          -------\nunder Section 1.9.2, during the period beginning on the Effective Date and\ncontinuing to and including the date One Hundred Fifty (150) days thereafter, in\naddition to any other restrictions on sale of Expedia Common Shares issuable in\nthe Merger applicable to any New Expedia Shareholder, no New Expedia Shareholder\nshall offer, sell, contract to sell or otherwise dispose of any shares of\nExpedia Common Shares received by such shareholder in the Merger. Nothing in\nthis Section shall restrict the ability of a New Expedia Shareholder to pledge\nshares pursuant to margin loans.\n\n     5.8  Tax Matters. Company shall properly and timely file all Returns with\n          -----------\nrespect to the Company required to be filed prior to the Closing Date as well as\na 1999 Return signed by KPMG Peat Marwick LLP and shall pay all taxes required\nto be paid prior to the Closing Date, including amounts due under such 1999\nReturn, taking into account any applicable extensions. Company shall (i) notify\nExpedia promptly if it receives notice of any tax audit, the assessment of any\ntax, the assertion of any tax lien, or any request, notice or demand for taxes\nby any taxing authority, (ii) provide Expedia a description of any such matter\nin reasonable detail (including a copy of any written materials received from\nthe taxing authority), and (iii) take no action with respect to such matter\nwithout the consent of Expedia. Neither the Principal Shareholders nor the\nCompany shall (i) make or revoke any tax election which may affect the Company,\n(ii) execute any waiver of restrictions on assessment of any tax, or (iii) enter\ninto any agreement or settlement with respect to any tax without the approval of\nExpedia, which shall not be unreasonably withheld. The Principal Shareholders\nshall arrange to have all Returns of the Company with respect to periods ending\non or prior to the Closing Date prepared and filed at the Company's expense, and\nsigned by a current officer of the Company. Any Returns referred to in this\nSection shall be prepared on a basis consistent with past practice and shall be\nsubject to the approval of Expedia, which approval shall occur timely and which\nshall not be unreasonably withheld. The Principal Shareholders, Expedia and the\nCompany shall cooperate in good faith in the preparation of such Returns, any\nreturns required to be filed by the Principal Shareholders for period prior to\nthe Effective Time, and in any tax audit or examination of the Company or the\nPrincipal Shareholders and shall retain and make available to any other party\nany documentation which is necessary or required for the preparation of such\nReturns, the Principal Shareholders returns or in connection with any such audit\nor examination.\n\n     5.9  HSR Act Filings.\n          ---------------\n\n          5.9.1  Filings and Cooperation. Each of Expedia and Company shall take\n                 -----------------------\nall reasonable steps (i) to make or cause to be made with fifteen (15) days of\nthe execution of this\n\n                                       36\n\n \nAgreement the filings required of such party or any of its affiliates or\nSubsidiaries under the HSR Act with respect to the Merger and the other\ntransactions provided for in this Agreement, (ii) to comply in a timely manner\nwith any request under the HSR Act for additional information, documents, or\nother material received by such party or any of its affiliates or Subsidiaries\nfrom the Federal Trade Commission or the Department of Justice or other\nGovernmental Entity in respect of such filings, the Merger, or such other\ntransactions, and (iii) to cooperate with the other party in connection with any\nsuch filing and in connection with resolving any investigation or other inquiry\nof any such agency or other Governmental Entity under any Antitrust Laws (as\ndefined in Section 5.9.2) with respect to any such filing, the Merger, or any\nsuch other transaction. Each party shall promptly inform the other party of any\nmaterial communication with, and any proposed understanding, undertaking, or\nagreement with, any Governmental Entity regarding any such filings, the Merger,\nor any such other transactions. Neither party shall participate in any meeting\nwith any Governmental Entity in respect of any such filings, investigation, or\nother inquiry without giving the other party notice of the meeting and, to the\nextent permitted by such Governmental Entity, the opportunity to attend and\nparticipate.\n\n          5.9.2  Objections. Each of Expedia and Company shall take all\n                 ----------\nreasonable steps to resolve such objections, if any, as may be asserted by any\nGovernmental Entity with respect to the Merger or any other transactions\nprovided for in this Agreement under the HSR Act, the Sherman Act, as amended,\nthe Clayton Act, as amended, the Federal Trade Commission Act, as amended, and\nany other federal, state or foreign statutes, rules, regulations, orders, or\ndecrees that are designed to prohibit, restrict or regulate actions having the\npurpose or effect of monopolization or restraint of trade (collectively,\n\"Antitrust Laws\"). In connection therewith, if any administrative or judicial\naction or proceeding is instituted (or threatened to be instituted) challenging\nthe Merger as violative of any Antitrust Law, and, if by mutual agreement,\nExpedia and Company decide that litigation is in their best interests, each of\nExpedia and Company shall cooperate vigorously to contest and resist any such\naction or proceeding and to have vacated, lifted, reversed, or overturned any\ndecree, judgment, injunction, or other order, whether temporary, preliminary, or\npermanent (each an \"Order\"), that is in effect and that prohibits, prevents, or\nrestricts consummation of the Merger. Each of Expedia and Company shall take\nsuch reasonable action as may be required to cause the expiration of the notice\nperiods under the HSR Act or other Antitrust Laws with respect to the Merger and\nsuch other transactions as promptly as possible after the execution of this\nAgreement. Notwithstanding anything to the contrary in this Section 5.9.2 or in\nSection 5.9.1, (y) neither Expedia nor any of its Subsidiaries shall be required\nto divest any of their respective businesses, product lines, or assets, or to\ntake or agree to take any other action or agree to any limitation that would\nhave a material adverse effect on the drawing and diagramming software business\nof Expedia combined with the Surviving Corporation after Closing, and (z)\nneither Company nor its Subsidiaries shall be required to divest any of their\nrespective businesses, product lines, or assets, or to take or agree to take any\nother action or agree to any limitation that would have a material adverse\neffect on the Business Condition of Company. \n\n          5.9.3 Rights. Nothing contained in this Section 5.9 shall be construed\n                ------\nto prevent any party from exercising its right to terminate pursuant to Section\n8.4 hereof.\n\n          5.10 Founders' Loans. Upon the Effective Time, Expedia shall forgive\n               ---------------\noutstanding loans from the Company to the Founders not in excess of $270,000.\n\n                                      37\n\n \n                                  ARTICLE VI\n                             CONDITIONS PRECEDENT\n                                        \n\n     6.1  Conditions to Each Party's Obligation to Effect the Merger. The\n          ----------------------------------------------------------\nrespective obligation of each party to effect the Merger shall be subject to the\nsatisfaction prior to the Closing Date of the following conditions:\n\n          6.1.1  Governmental Approvals. Other than the filing of the Merger\n                 ----------------------\nDocuments with the Secretary of State of Delaware, all Consents legally required\nfor the consummation of the Merger and the transactions contemplated by this\nAgreement, including any consents and approvals under the HSR Act, shall have\nbeen filed, occurred, or been obtained, other than such Consents, for which the\nfailure to obtain would have no material adverse effect on the consummation of\nthe Merger or the other transactions contemplated hereby or on the Business\nCondition of Expedia or Company.\n\n          6.1.2  No Restraints. No statute, rule, regulation, executive order,\n                 -------------\ndecree or injunction shall have been enacted, entered, promulgated or enforced\nby any United States court or Governmental Entity of competent jurisdiction\nwhich enjoins or prohibits the consummation of the Merger.\n\n     6.2  Conditions of Obligations of Expedia and Sub. The obligations of\n          --------------------------------------------\nExpedia and Sub to effect the Merger are subject to the satisfaction of the\nfollowing conditions unless waived by Expedia and Sub:\n\n          6.2.1  Representations and Warranties of Company and the Principal\n                 -----------------------------------------------------------\nShareholders. The representations and warranties of Company and the Principal\n------------\nShareholders set forth in this Agreement shall be true and correct in all\nmaterial respects as of the date of this Agreement and as of the Closing Date as\nthough made on and as of the Closing Date, except: (i) as otherwise contemplated\nby this Agreement, or (ii) in respects that will not have a material adverse\neffect on Company's Business Condition on either a stand alone or a pro forma\nbasis. Expedia shall have received a certificate signed by each of Timothy M.\nPoster, Stephen L. Cavallaro and Thomas C. Breitling (or any successor thereof\nat Company), individually as shareholders and as officers of Company, to such\neffect on the Closing Date.\n\n          6.2.2  Performance of Obligations of Company and the Principal\n                 -------------------------------------------------------\nShareholders. Company and the Principal Shareholders shall have performed in all\n------------\nmaterial respects all agreements and covenants required to be performed by them\nunder this Agreement prior to the Closing Date, and Expedia shall have received\na certificate signed by each of Timothy M. Poster, Stephen L. Cavallaro and\nThomas C. Breitling (or any successor thereof at Company), individually as\nshareholders and as officers of Company, to such effect on the Closing Date.\n\n          6.2.3  Investment and Escrow Agreements. Expedia shall have received\n                 --------------------------------\nEscrow Agreements from each holder of Company Shares that are convertible into\nExpedia Common Shares and each holder of Company Options and Investment\nAgreements from each\n\n                                      38\n\n \nholder of Company Shares that are convertible into Expedia Common Shares, in\neach case duly executed by such holder or such holder's attorney in fact.\n\n          6.2.4  Offer Letters for Required Employees. As of the Closing, four\n                 ------------------------------------\nof the five the employees of Company listed on Schedule 6.2.4 and not less than\neighty percent (80%) of the other employees of Company (exclusive of non-\nsupervisory and non-management call center employees) offered employment with\nExpedia on terms substantially similar to their employment with Company (the\n\"Required Employees\") shall have (a) signed, and not taken any action or\nexpressed any intent to terminate or modify, an offer letter accepting\nemployment with Company or Expedia together with any such other agreements as\nare customarily executed by new employees of Expedia or its Subsidiaries or\nother affiliates in form and content satisfactory to Expedia and (b) repaid to\nCompany all loans to (other than loans to be forgiven pursuant to Section 5.10)\nand other amounts outstanding from such Required Employees.\n\n          6.2.5  Noncompetition Agreements. Each of the persons set forth in\n                 -------------------------\nSchedule 6.2.5 shall have executed a two year Noncompetition Agreement\nsubstantially in the form attached as Exhibit 6.2.5 and not taken any action or\nexpressed any intent to terminate or modify such agreements.\n\n          6.2.6  Legal Action. There shall not be overtly threatened or pending\n                 ------------\nany action, proceeding or other application before any court or Governmental\nEntity brought by any person or Governmental Entity: (i) challenging or seeking\nto restrain or prohibit the consummation of the transactions contemplated by\nthis Agreement, or seeking to obtain any damages caused by such transactions\nwhich if successful would have a material adverse effect on the viability of\nsuch transactions; or (ii) seeking to prohibit or impose any limitations on\nExpedia's ownership or operation of all or any portion of Company's business or\nassets, or to compel Expedia to dispose of or hold separate all or any portion\nof its or Company's business or assets as a result of the transactions\ncontemplated by the Agreement which if successful would have a material adverse\neffect on the viability of such transactions.\n\n          6.2.7  Opinion of Counsel. Expedia shall have received an opinion\n                 ------------------\ndated as of the Closing Date of the Morgan Lewis and Bockius, counsel to\nCompany, substantially in the form attached as Exhibit 6.2.7.\n\n          6.2.8  Consents. Expedia shall have received duly executed copies of\n                 --------\nall third-party consents, approvals, assignments, waivers, authorizations or\nother certificates contemplated by this Agreement or the Company Disclosure\nSchedule or reasonably deemed necessary by Expedia's legal counsel to provide\nfor the continuation in full force and effect of any and all contracts and\nleases of Company and for Expedia to consummate the transactions contemplated\nhereby in form and substance reasonably satisfactory to Expedia, except for such\nthereof the absence of which shall not have a material adverse effect on\nCompany's Business Condition or the benefits of the transactions provided for in\nthis Agreement.\n\n          6.2.9  Termination of Rights and Certain Securities. Any registration\n                 --------------------------------------------\nrights, rights of refusal, rights to any liquidation preference, or redemption\nrights relating to any security of Company shall have been terminated or waived\nin writing as of the Closing. Except as set\n\n                                      39\n\n \nforth in Schedule 1.4, no warrants, options, convertible securities or other\nrights to purchase or acquire any securities of Company shall be outstanding.\n\n          6.2.10  Assignments of Personal Rights to Company Intellectual\n                  ------------------------------------------------------\nProperty. The Principal Shareholders, employees, and independent contractors\n--------\n(including former independent contractors) of Company shall have executed such\nassignments and other documentation as may be reasonably requested by Expedia to\neffectively transfer or confirm the transfer of all right, title and interest to\nthe Company Intellectual Property to Company and\/or Expedia as its successor.\n\n          6.2.11  No Casualty. There shall not have been any damage, destruction\n                  -----------\nor loss, whether or not covered by insurance, materially and adversely affecting\nthe proprietary software, documentation or other Company Intellectual Property\nwhere there are no undamaged duplicate copies of such proprietary software,\ndocumentation or other Company Intellectual Property in the possession of\nCompany.\n\n          6.2.12  Company Financial Statements and Pro Forma Closing Balance\n                  ----------------------------------------------------------\nSheet. Company shall have provided Expedia with audited financial statements of\n-----\nCompany as of December 31, 1999 and the Final Pro Forma Closing Balance Sheet\n(as defined in Section 2.1.6) which shall have been prepared in good faith, in a\nform reasonably satisfactory to Expedia. The Final Pro Forma Balance Sheet shall\nnot reflect a material adverse change in Company from the Pro Forma Balance\nSheet attached as Schedule 2.1.6.\n\n          6.2.13  Shareholder Approvals; Dissenting Shares. This Agreement and\n                  ----------------------------------------\nthe Merger shall have been approved by not less than the number of shareholders\nrequired to approve the Merger under the DGCL, any Parachute Payments shall have\nbeen approved by not less than seventy five percent (75%) of the voting power of\nthe outstanding Company Shares held by persons not receiving Parachute Payments\nthat are the subject of such vote, and all persons who are \"disqualified\npersons\" as defined in Section 280G of the Code and the regulations thereunder\nshall have acknowledged in writing that their receipt of any Parachute Payment\nis subject to the approval of shareholders set forth in Section 280G of the Code\nand the regulations thereunder, and holders of not more than five percent (5%)\nof the voting power of outstanding Company Shares shall not have perfected\nappraisal rights under the DGCL.\n\n          6.2.14  Accredited Investors. No more than thirty-five (35) of the\n                  --------------------\npersons that will become New Expedia Shareholders following the Closing shall\nnot be \"accredited investors\" as defined under Regulation D of the 1933 Act, and\nExpedia shall have received a certificate signed by an officer of the Company to\nthat effect that is reasonably satisfactory to Expedia.\n\n          6.2.15  Waiver or Termination of Certain Rights. Meristar Hotels and\n                  ---------------------------------------\nPrime Hospitality shall have executed waivers in form and substance reasonably\nsatisfactory to Expedia of their right to terminate their respective agreements\nwith Company dated June 22, 1999 and June 24, 1999 upon a \"change in control\"\nand upon the Company's failure to make a public offering of its common stock\nwithin six months of the date of such agreements; and each employee of Company\nwith an employment agreement with Company shall have terminated such employment\nagreement (provided that no such waiver shall affect Stephen Cavallaro's right\n\n                                      40\n\n \nto receive severance under Section 3 of his employment agreement six months from\nClosing as set forth in his Consulting Agreement with Expedia).\n\n          6.2.16  Exercise of Warrants. Holders of Company Warrants (other than\n                  --------------------\nAssumed Warrants) representing not more than one percent (1%) of the Company's\nfully diluted Common Shares shall not have exercised their Warrants (on a net\nexercise basis) for Company Shares as of the Closing Date (or waived their right\nto have such Company Warrants assumed by a party acquiring the Company by\nmerger).\n\n          6.2.17  1999 Tax Return. The 1999 Return of the Company signed by KPMG\n                  ---------------\nPeat Marwick LLP shall have been filed by the Company.\n\n          6.2.18  Conveyance of Real Property. Expedia shall have received\n                  ---------------------------\ndocumentation, reasonably satisfactory to Expedia, that title to the real\nproperty currently used by the Company in the conduct of its Business but owned\nby Timothy Poster, if any, has been conveyed to the Company in fee simple\nabsolute, free and clear of any mortgages, liens and deeds of trust (other than\nmortgages, liens and deeds of trust securing indebtedness of the Company set\nforth in the Financial Statements and the Final Pro Forma Closing Balance\nSheet).\n\n     6.3  Conditions of Obligation of Company. The obligation of Company and the\n          -----------------------------------\nPrincipal Shareholders to effect the Merger is subject to the satisfaction of\nthe following conditions unless waived by Company and the Principal\nShareholders:\n\n          6.3.1  Representations and Warranties of Expedia and Sub. The\n                 -------------------------------------------------\nrepresentations and warranties of Expedia and Sub set forth in this Agreement\nshall be true and correct in all material respects as of the date of this\nAgreement and as of the Closing Date as though made on and as of the Closing\nDate, except as otherwise contemplated by this Agreement, and Company shall have\nreceived a certificate signed on behalf of Expedia by an officer of Expedia to\nsuch effect.\n\n          6.3.2  Performance of Obligations of Expedia and Sub. Expedia and Sub\n                 ---------------------------------------------\nshall have performed in all material respects all agreements and covenants\nrequired to be performed by them under this Agreement prior to the Closing Date,\nand Company shall have received a certificate signed on behalf of Expedia by an\nofficer of Expedia to such effect.\n\n          6.3.3  Opinion of Expedia's Counsel. Company and the Principal\n                 ----------------------------\nShareholders have received an opinion dated the Closing Date of Preston Gates &amp; Ellis llp, counsel to Expedia, substantially in the form attached as Exhibit\n6.3.3.\n\n                                      41\n\n \n                                  ARTICLE VII\n                                INDEMNIFICATION\n                                        \n\n     7.1  Indemnification Relating to Agreement. The Holders (other than the\n          -------------------------------------\nPrincipal Shareholders), by reason of the approval by the Holders of the Merger\nand\/or each Holder's acceptance of the consideration provided for in Section 1.4\nand by the execution of the Escrow Agreement pursuant to Section 1.4.4 which is\na condition to receiving such consideration, severally but not jointly, and the\nPrincipal Shareholders, jointly and severally, shall, agree to defend,\nindemnify, and hold Expedia harmless from and against, and to reimburse Expedia\nwith respect to, any and all losses, damages, liabilities, claims, judgments,\nsettlements, fines, costs, and expenses (including attorneys' fees)\n(\"Indemnifiable Amounts\") of every nature whatsoever incurred by Expedia by\nreason of or arising out of or in connection with (i) any breach, or any claim\n(including claims by parties other than Expedia) that if true, would constitute\na breach, by Company or the Principal Shareholders of any representation or\nwarranty of Company or the Principal Shareholders contained in this Agreement or\nin any certificate or other document delivered to Expedia pursuant to the\nprovisions of this Agreement, (ii) the failure, partial or total, of Company or\nthe Principal Shareholders to perform any agreement or covenant required by this\nAgreement to be performed by it or them, (iii) any action or omission by\nCompany, the Principal Shareholders, their affiliates, agents or representatives\nrelating to this Agreement, and (iv) any federal or state tax liability, or\nasserted liability of the Company relating to any period of time prior to and\nthrough the Closing which is not disclosed in the Financial Statements or the\nFinal Pro Forma Closing Balance Sheet, and in each case without giving effect to\nany \"materiality\" limitations or references to \"material adverse effect\" set\nforth therein. The obligations of any Holder to indemnify Expedia shall be\ndetermined without regard to any right to indemnification to which any Holder\nmay have in his or her capacity as an officer, director, employee, agent or any\nother capacity of Company and no Holder shall be entitled to any indemnification\nfrom Company or the Surviving Corporation for amounts paid hereunder. There\nshall be no right of contribution from Company or any successor to Company.\n\n     7.2  Claims for Indemnification. With respect to any claims or demands by\n          --------------------------\nthird parties, other than claims or demands covered by Section 7.3, whenever\nExpedia shall have received a written notice that such a claim or demand has\nbeen asserted or threatened, or whenever Expedia shall seek indemnification\npursuant to this Article VII, Expedia shall notify the \"Holders' Representative\"\n(as designated in the Escrow Agreement) of such claim or demand and of the facts\nwithin Expedia's knowledge that relate thereto within a reasonable time after\nreceiving such written notice. The Holders' Representative shall then have the\nright to contest, negotiate or settle any such claim or demand through counsel\nof his own selection, satisfactory to Expedia and solely at the Holders' own\ncost, risk, and expense. Notwithstanding the preceding sentence, the Holders\nshall not settle, compromise, or offer to settle or compromise any such claim or\ndemand without the prior written consent of Expedia, which consent shall not be\nunreasonably withheld. By way of illustration and not limitation it is\nunderstood that Expedia may object to a settlement or compromise which includes\nany provision which in its reasonable judgment may have an adverse impact on or\nestablish an adverse precedent for the Business Condition of Expedia or any of\nits Subsidiaries. Expedia shall not have the right to object to a settlement\nwhich consists solely of the payment of a monetary damage amount and which is\nsubject to full indemnification under this Agreement. If the Holders'\nRepresentative fails to give\n\n                                       42\n\n \nwritten notice to Expedia of his intention to contest or settle any such claim\nor demand within twenty (20) calendar days after Expedia has notified the\nHolders' Representative that any such claim or demand has been made in writing\nand received by Expedia, or if any such notice is given but any such claim or\ndemand is not promptly contested by the Holders' Representative, Expedia shall\nhave the right to satisfy and discharge the same by payment, compromise, or\notherwise, in accordance with the procedures set forth in the Escrow Agreement.\nExpedia may also, if it so elects and entirely within its own discretion, defend\nany such claim or demand if the Holders' Representative fails to give notice of\nhis intention to contest or settle any such claim or demand, in which event\nExpedia and its affiliates shall be entitled to indemnification to the full\nextent of the Total Escrow (as defined in the Escrow Agreement ) for any and all\ncosts, losses, liabilities, and expenses whatsoever, including without\nlimitation reasonable attorneys' and other professional fees, that Expedia may\nsustain, suffer, incur, or become subject to as a result of Expedia's decision\nto defend any such claim or demand.\n\n     7.3  Tax Contests. Notwithstanding any of the foregoing, the Holders shall\n          ------------\nhave no right to control any federal or state income tax audit, and Expedia\nshall have the sole right to conduct any tax audit or other tax contest relating\nto the Expedia tax return, subject to the provisions of this paragraph.\nNotwithstanding the foregoing, in the event of any audit of the reorganization\nof the Company effected January 21, 1999, Expedia shall have no right to control\nsuch audit, and the Principal Shareholders shall have the sole right to conduct\nany tax audit or other tax contest relating to such, subject to the provisions\nof this paragraph. The party controlling the response to an audit under this\nparagraph shall (A) consult with the other parties with respect to the\nresolution of any issue that would affect such other parties in that or any\nother taxable year, and (B) not settle any such issue, or file any amended\nReturn relating to such issue, without the consent of the other parties, which\nconsent shall not unreasonably be withheld. Where consent to a settlement is\nwithheld by another party pursuant to clause (B) of the preceding sentence, such\nother party may continue or initiate any further proceedings at its own expense,\nprovided, that the liability of the first party, after giving effect to this\nAgreement, shall not exceed the liability that would have resulted from the\nsettlement or amended return. In the event any Indemnifiable Amounts arise out\nof such tax audits, the party controlling such audit will notify the other party\nand the Holders' Representative and allow him to comment on any written\nsubmissions relating to any Indemnifiable Amounts.\n\n     7.4  Limitations. The representations, warranties, covenants and agreements\n          -----------\nof Company and the Principal Shareholders set forth in this Agreement shall\nsurvive the Closing and the consummation of the transactions contemplated by\nthis Agreement and shall continue until September 30, 2001 (the \"Termination\nDate\"), at which time all representations and warranties shall expire, provided,\nhowever, that the obligation to indemnify Expedia for breaches of the\nrepresentations, warranties and covenants in Sections 2.1.7 and 5.8 relating to\ntaxes (as defined in Section 2.1.7) shall continue until thirty (30) days after\nthe expiration of all statutes of limitations applicable to such taxes.\nNotwithstanding any other provision in this Article VII, Indemnifiable Amounts\nto be paid by the Holders and Principal Shareholders shall be satisfied solely\nby the securities deposited into escrow pursuant to Section 1.4.5, provided that\n(i) the representations, warranties and covenants in Sections 2.1.7 and 5.8\nrelating to taxes, other than taxes arising out of the Company's reorganization\nin January 1999, if any, and (ii) obligations of the Principal Shareholders for\nIndemnifiable Amounts arising out of willful misstatements,\n\n                                       43\n\n \nwillful omissions or fraud of Company or the Principal Shareholders shall not be\nsubject to such limitation.\n\n     7.5  Binding Effect. The indemnification obligations of the Holders\n          --------------\ncontained in this Article VII are an integral part of this Agreement and Merger\nin the absence of which Expedia would not have entered into this Agreement.\n\n     7.6  Other Remedies. Nothing contained in this Article VII shall be in lieu\n          --------------\nof, or constitute a waiver of, any remedies at law or in equity that Expedia may\notherwise have against the Holders or Principal Shareholders for wrongful action\nby such persons, including without limitation claims arising out of willful\nmisstatements, willful omissions or fraud of Company or the Principal\nShareholders.\n\n     7.7  Tax Consequences. As stated in Section 1.7, it is the intent of the\n          ----------------\nparties that the Merger is intended to be a \"reorganization\" within the meaning\nof Section 368 of the Code; however, except as otherwise provided in Section\n7.8, no party or its counsel shall have any obligation, of indemnification or\notherwise, in the event it is determined that the tax consequences differ from\nthose intended or those described in the solicitation statement\/private\nplacement memorandum or otherwise.\n\n     7.8  Indemnity by Expedia. Expedia agrees to defend, indemnify, and hold\n          --------------------\nthe Holders harmless from and against, and to reimburse Holders with respect to,\nany and all losses, damages, liabilities, claims, judgments, settlements, fines,\ncosts, and expenses incurred by Holders by reason of or arising out of or in\nconnection with any breach of its representation and warranty in Section 2.2.9.\n\n\n                                  ARTICLE VIII\n                                  TERMINATION\n                                        \n     8.1  Mutual Agreement. This Agreement may be terminated at any time prior\n          ----------------\nto the Effective Time by the written consent of Expedia and Company.\n\n     8.2  Termination by Expedia. This Agreement may be terminated by Expedia\n          ----------------------\nalone, by means of written notice to Company, if there has been a material\nbreach by Company or any of the Principal Shareholders of any representation,\nwarranty, covenant or agreement set forth in the Agreement or other ancillary\nagreements, which breach has not been cured within ten (10) business days\nfollowing receipt by Company of notice of such breach.\n\n     8.3  Termination by Company. This Agreement may be terminated by Company\n          ----------------------\nalone, by means of written notice to Expedia, as set forth in Section\n1.4.1(a)(iii) or (iv) or if there has been a material breach by Expedia of any\nrepresentation, warranty, covenant or agreement set forth in the Agreement or\nother ancillary agreements, which breach has not been cured within (10) ten\nbusiness days following receipt by Expedia of notice of such breach.\n\n                                       44\n\n \n     8.4  Outside Date. This Agreement may be terminated by Expedia alone or by\n          ------------\nCompany alone by means of written notice if the Effective Time does not occur on\nor prior to May 15, 2000.\n\n     8.5  Effect of Termination. In the event of termination of this Agreement\n          ---------------------\nby either Company or Expedia as provided in this Article, this Agreement shall\nforthwith become void and have no effect, and there shall be no liability or\nobligation on the part of Expedia, Company, Sub or their respective officers or\ndirectors or the Principal Shareholders, except that (i) the provisions of\nSections 5.4, 5.6, 9.2, 9.11, and any other confidentiality agreement between\nthe parties shall survive any such termination and abandonment, and (ii) no\nparty shall be released or relieved from any liability arising from the willful\nbreach by such party of any of its representations, warranties, covenants or\nagreements as set forth in this Agreement.\n\n\n                                   ARTICLE IX\n                                 MISCELLANEOUS\n                                        \n     9.1  Entire Agreement. This Agreement, including the exhibits and schedules\n          ----------------\ndelivered pursuant to this Agreement, any confidentiality agreement between the\nparties and any other agreement between the parties of equal date herewith,\ncontain all of the terms and conditions agreed upon by the parties relating to\nthe subject matter of this Agreement and supersede all prior agreements,\nnegotiations, correspondence, undertakings, and communications of the parties,\nwhether oral or written, respecting that subject matter.\n\n     9.2  Governing Law. Other than corporate matters with respect to the Merger\n          -------------\nwhich shall be governed by Delaware laws, as applicable, this Agreement shall be\ngoverned by, and construed in accordance with, the laws of the State of\nWashington as applied to agreements entered into and entirely to be performed\nwithin that state, without regard to the conflict of laws provisions thereof.\nCompany, the Principal Shareholders and the Holders' Representative consent to\njurisdiction and venue in King County, Washington.\n\n     9.3  Notices. All notices, requests, demands or other communications which\n          -------\nare required or may be given pursuant to the terms of this Agreement shall be in\nwriting and shall be deemed to have been duly given: (i) on the date of delivery\nif personally delivered by hand, (ii) upon the third day after such notice is\n(a) deposited in the United States mail, if mailed by registered or certified\nmail, postage prepaid, return receipt requested, or (b) sent by a nationally\nrecognized overnight express courier, or (iii) by facsimile upon written\nconfirmation (other than the automatic confirmation that is received from the\nrecipient's facsimile machine) of receipt by the recipient of such notice:\n\n                                       45\n\n \n     If to Expedia or Sub:               Expedia, Inc.\n     --------------------                13810 SE Eastgate Way, Suite 400\n                                         Bellevue, WA  98008\n                                         Attention:  Mark S. Britton, Vice \n                                         President and General Counsel\n                                         Telephone No.: (425) 564-7332\n                                         Facsimile No.: (425) 564-7240\n\n     With a copy to:                     Preston Gates &amp; Ellis LLP\n     --------------                      Suite 5000\n                                         701 Fifth Avenue\n                                         Seattle, WA 98104-7078\n                                         Attention:  Richard B. Dodd\n                                         Telephone No.:  (206) 623-7580\n                                         Facsimile No.: (206) 623-7022\n\n     If to Company:                      Travelscape.com, Inc.\n     -------------                       8951 W. Sahara Ave.\n                                         Las Vegas, Nevada  89117\n                                         Telephone No.:  (702) 938-2100\n                                         Facsimile No.:  (702) 735-4320\n\n     With a copy to:                     Morgan, Lewis &amp; Bockius LLP\n     --------------                      300 S. Grand Avenue, 22nd Floor\n                                         Los Angeles, CA  90071\n                                         Attention: Peter P. Wallace\n                                         Telephone No. (213) 612-2532\n                                         Facsimile No: (213) 612-2554\n\n     If to Holders'                      Tim Poster\n     --------------                      Travelscape.com, Inc.\n     Representative:                     8951 West Sahara Avenue\n     --------------                      Las Vegas, NV  89117\n                                         Telephone No.: (702) 938-2100\n                                         Facsimile No.: (702) 735-4320\n\n     Such addresses may be changed, from time to time, by means of a notice\ngiven in the manner provided in this Section 9.3.\n\n     9.4  Severability. If any provision of this Agreement is held to be\n          ------------\nunenforceable for any reason, it shall be modified rather than voided, if\npossible, in order to achieve the intent of the parties to this Agreement to the\nextent possible. In any event, all other provisions of this Agreement shall be\ndeemed valid and enforceable to the full extent. If it is ever held that any\ncovenant hereunder is too broad to permit enforcement of such covenant to its\nfullest extent, each party agrees that a court of competent jurisdiction may\nenforce such covenant to the maximum\n\n                                       46\n\n \nextent permitted by law, and each party hereby consents and agrees that such\nscope may be judicially modified accordingly in any proceeding brought to\nenforce such covenant.\n\n     9.5  Survival of Representations and Warranties. All representations and\n          ------------------------------------------\nwarranties contained in this Agreement, including the exhibits and schedules\ndelivered pursuant to this Agreement, shall survive the Effective Time; provided\nthat such survival is subject to termination in accordance with Section 7.4.\n\n     9.6  Assignment. No party to this Agreement may assign, by operation of law\n          ----------\nor otherwise, all or any portion of its rights, obligations, or liabilities\nunder this Agreement without the prior written consent of the other party to\nthis Agreement, which consent may be withheld in the absolute discretion of the\nparty asked to grant such consent. Any attempted assignment in violation of this\nSection 9.6 shall be voidable and shall entitle the other party to this\nAgreement to terminate this Agreement at its option in addition to any and all\nother remedies that may be available to such party at law or in equity. Subject\nto the preceding sentence, this Agreement will be binding upon, inure to the\nbenefit of and be enforceable by the parties and their respective successors and\nassigns.\n\n     9.7  Counterparts. This Agreement may be executed in two or more partially\n          ------------\nor fully executed counterparts each of which shall be deemed an original and\nshall bind the signatory, but all of which together shall constitute but one and\nthe same instrument. The execution and delivery of a Signature Page - Agreement\nand Plan of Reorganization in the form annexed to this Agreement by any party\nhereto who shall have been furnished the final form of this Agreement shall\nconstitute the execution and delivery of this Agreement by such party.\n\n     9.8  Amendment. This Agreement may not be amended except by an instrument\n          ---------\nin writing signed on behalf of each of the parties hereto.\n\n     9.9  Extension, Waiver. At any time prior to the Effective Time, any party\n          -----------------\nhereto may, to the extent legally allowed: (i) extend the time for the\nperformance of any of the obligations or other acts of the other party hereto,\n(ii) waive any inaccuracies in the representations and warranties made to such\nparty contained herein or in any document delivered pursuant hereto, and (iii)\nwaive compliance with any of the agreements, covenants or conditions for the\nbenefit of such party contained herein. Any agreement on the part of a party\nhereto to any such extension or waiver shall be valid only if set forth in an\ninstrument in writing signed on behalf of such party.\n\n     9.10  Interpretation. When a reference is made in this Agreement to\n           --------------\nSections, Exhibits or Schedules, such reference shall be to a Section, Exhibit\nor Schedule to this Agreement unless otherwise indicated. The words \"include,\"\n\"includes,\" and \"including\" when used therein shall be deemed in each case to be\nfollowed by the words \"without limitation.\" The table of contents, index to\ndefined terms, references to sections of the Company Disclosure Schedule or\nExpedia Disclosure Schedule, and headings contained in this Agreement are for\nreference purposes only and shall not affect in any way the meaning or\ninterpretation of this Agreement. The phrase \"made available\" in this Agreement\nshall mean that the information referred to has been made available, if\nrequested, by the party to whom such information is to be\n\n                                       47\n\n \nmade available. The phrase \"the date of this Agreement\", \"the date hereof\" and\nterms of similar import, unless the context otherwise requires, shall be deemed\nto refer to January 30, 2000.\n\n     9.11  Confidentiality. Company and the Principal Shareholders agree to keep\n           ---------------\nconfidential and not to disclose the terms and conditions of this Agreement\nspecifically including, without limitation, the price payable per share of\nCompany Common Stock Equivalents, the aggregate consideration payable hereunder\nand number of Expedia Common Shares to be issued and to advise all Company\nofficers, directors, stockholders and employees (and counsel to Company and its\nstockholders) of this obligation and to indemnify and hold Expedia harmless from\nany breach of this agreement in accordance with the provisions of Article VII.\n\n     9.12  Arbitration. The parties shall endeavor to resolve all disputes by\n           -----------\nagreement and to that end shall each provide the other with sufficient\ndescriptions and information regarding its position to permit informed\nassessments and decisions. Any disagreement, claim, demand, controversy, or\ndispute which arises after the Closing in any way relating to this Agreement and\nthe performance or alleged breach by the parties, whether involving questions of\nlaw or fact or both and regardless of the nature thereof or the remedy therefor,\nwhich is not settled by agreement of the parties shall be resolved pursuant to\nthe arbitration provisions in Section 2.3.3 of the Escrow Agreement.\n\n                                       48\n\n \n             SIGNATURE PAGE - AGREEMENT AND PLAN OF REORGANIZATION\n                                        \n\n     IN WITNESS WHEREOF, Expedia, Sub, Company and the Principal Shareholders\nhave executed this Agreement as of the date first written above.\n\nEXPEDIA, INC.                                    TRAVELSCAPE.COM, INC.\n \n \nBy \/s\/ Richard N. Barton                         By \/s\/ Stephen L. Cavallaro\n   ---------------------------                      ----------------------------\nName: Richard N. Barton                          Name: Stephen L. Cavallaro\nTitle: CEO                                       Title: President and CEO\n\n\n\nTRAVEL ENTERPRISES, INC.\n\n\nBy \/s\/ Mark Britton\n   ---------------------------\nName: Mark Britton\nTitle: Secretary\n\n\n\nPRINCIPAL SHAREHOLDERS:\n\n\n\/s\/ Thomas Breitling\n------------------------------\nThomas Breitling\n\n\/s\/ Timothy Poster\n------------------------------\nTimothy Poster\n\n                                        \n\n                                       49\n\n\n      First Amendment to Travelscape Agreement and Plan of Reorganization\n\n            FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION\n\nTHIS AMENDMENT TO THE AGREEMENT AND PLAN OF REORGANIZATION (the \"Amendment\") is\ndated as of  March 13, 2000, and is entered into by and among EXPEDIA, INC., a\nWashington corporation (\"Expedia), TRAVEL ENTERPRISES, INC., a Delaware\ncorporation (\"Sub\"), TRAVELSCAPE.COM, INC., a Delaware corporation (\"Company\"),\nand PRINCIPAL SHAREHOLDERS OF TRAVELSCAPE.COM, INC. (\"Principal Shareholders\")\nwith reference to the following facts:\n\n                                   RECITALS\n                                   --------\n\nA.   On January 31, 2000, the parties entered into an Agreement and Plan of\nReorganization (the \"Reorganization Agreement\");\n\nB.   Section 9.8 provides that the Reorganization Agreement may be amended by an\nagreement in writing signed on behalf of Expedia, Sub, Company, and Principal\nShareholders;\n\nC.   The parties now desire to amend the Reorganization Agreement, as more\nparticularly set forth below:\n\n                                   AGREEMENT\n                                   ---------\n\nNOW, THEREFORE, in consideration of the foregoing recitals of facts, and other\ngood and valuable consideration, the receipt and adequacy of which are hereby\nacknowledged, the parties hereto agree as follows:\n\n     1.   Section 1.4.5 of the Reorganization Agreement is amended as follows.\n          The following shall be added at the end of the first sentence:\n          \"provided, that no Expedia Common Shares issuable to the holders of\n           ---------                                                         \n          Company Preferred Shares shall be subject to such escrow\".  The second\n          sentence shall be amended to add the words \"Company Preferred Shares\"\n          immediately following the words \"but shall not include ...\"\n\n     2.   Except as amended by this Amendment, the Agreement of Reorganization\n          shall otherwise remain in full force and effect.\n\n     3.   The interpretation and construction of this Amendment, and all matters\n          relating hereto, shall be governed by the laws of the State of\n          Washington applicable to agreements executed and to be performed\n          solely within such State.\n\n     4.   This Amendment may be executed in one or more counterparts all of\n          which taken together shall constitute one instrument.\n\n                           [Signature Page follows]\n\n                                       1\n\n \nIN WITNESS WHEREOF, the parties hereto have fixed their signatures as of the\ndate first written above.\n\n\nEXPEDIA, INC.                           TRAVELSCAPE.COM, INC.\n\n\nBy: \/s\/ Richard N. Barton               By: \/s\/ Stephen L. Cavallaro\n   ---------------------------             ------------------------------\nName: Richard N. Barton                 Name: Stephen L. Cavallaro\nTitle: CEO                              Title: President and CEO\n\n\nTRAVEL ENTERPRISES, INC.\n\nBy: \/s\/ Mark Britton\n   ---------------------------\nName: Mark Britton\nTitle: Secretary\n\n\nPRINCIPAL SHAREHOLDERS\n\n\n\/s\/ Thomas Breitling\n------------------------------\nThomas Breitling\n\n\n\/s\/ Timothy Poster\n------------------------------\nTimothy Poster\n\n                                       2\n\n \n     Second Amendment to Travelscape Agreement and Plan of Reorganization\n\n           SECOND AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION\n\nTHIS SECOND AMENDMENT TO THE AGREEMENT AND PLAN OF REORGANIZATION (the\n\"Amendment\") is dated as of March 15, 2000, and is entered into by and among\nEXPEDIA, INC., a Washington corporation (\"Expedia), TRAVEL ENTERPRISES, INC., a\nDelaware corporation (\"Sub\"), TRAVELSCAPE.COM, INC., a Delaware corporation\n(\"Company\"), and PRINCIPAL SHAREHOLDERS OF TRAVELSCAPE.COM, INC. (\"Principal\nShareholders\") with reference to the following facts:\n\n                                   RECITALS\n                                   --------\n\nA.   On January 31, 2000, the parties entered into an Agreement and Plan of\nReorganization (the \"Reorganization Agreement\");\n\nB.   Section 9.8 provides that the Reorganization Agreement may be amended by an\nagreement in writing signed on behalf of Expedia, Sub, Company, and Principal\nShareholders\n\nC    The Reorganization Agreement has been amended once in the First Amendment\nto the Agreement and Plan of Reorganization dated March 13, 2000 (the \"First\nAmendment\");\n\nD.   The parties now desire to further amend the Reorganization Agreement, as\nmore particularly set forth below:\n\n                                   AGREEMENT\n                                   ---------\n\nNOW, THEREFORE, in consideration of the foregoing recitals of facts, and other\ngood and valuable consideration, the receipt and adequacy of which are hereby\nacknowledged, the parties hereto agree as follows:\n\n     1.   Section 1.5 of the Reorganization Agreement is amended such that the\n          number \".9868\" in the last sentence of Section 1.5 shall be amended to\n          read \".9956\".\n     2.   Except as amended by this Amendment and the First Amendment, the\n          Agreement of Reorganization shall otherwise remain in full force and\n          effect.\n\n     5.   The interpretation and construction of this Amendment, and all matters\n          relating hereto, shall be governed by the laws of the State of\n          Washington applicable to agreements executed and to be performed\n          solely within such State.\n\n     6.   This Amendment may be executed in one or more counterparts all of\n          which taken together shall constitute one instrument.\n\n                           [Signature Page follows]\n\n                                       1\n\n \nIN WITNESS WHEREOF, the parties hereto have fixed their signatures as of the\ndate first written above.\n\n\nEXPEDIA, INC.                           TRAVELSCAPE.COM, INC.\n\n\nBy:  \/s\/ Richard N. Barton              By: \/s\/ Stephen L. Cavallaro\n     --------------------------             -----------------------------\nName: Richard N. Barton                 Name: Stephen L. Cavallaro\nTitle: CEO                              Title: President and CEO\n\n\nTRAVEL ENTERPRISES, INC.\n\nBy: \/s\/ Mark Britton\n    ---------------------------\nName: Mark Britton\nTitle: Secretary\n\n\nPRINCIPAL SHAREHOLDERS\n\n\n\/s\/ Thomas Breitling\n-------------------------------\nThomas Breitling\n\n\n\/s\/ Timothy Poster\n-------------------------------\nTimothy Poster\n\n                                       2\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7491],"corporate_contracts_industries":[9525],"corporate_contracts_types":[9622,9626],"class_list":["post-43179","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-expedia-inc","corporate_contracts_industries-transportation__services","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43179"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43179"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43179"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}