{"id":43180,"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-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-reorganization-expedia-inc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-reorganization-expedia-inc-and.html","title":{"rendered":"Agreement and Plan of Reorganization &#8211; Expedia Inc. and VacationSpot.com Inc."},"content":{"rendered":"<pre>\n                     AGREEMENT AND PLAN OF REORGANIZATION\n\n     AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF January 30, 2000 (this\n\"Agreement\"), by and among Expedia, Inc., a Washington corporation (\"Expedia\"),\nVacationSub, Inc., a Delaware corporation and wholly owned subsidiary of Expedia\n(\"Sub\"), VacationSpot.com, Inc., a Delaware corporation (\"Company\"), and Steven\nD. Murch and Greg Slyngstad, the principal stockholders of Company (the\n\"Principal Stockholders\").\n\n                                    RECITALS\n\n     A.  The Boards of Directors of Company, Expedia and Sub believe it is in\nthe best interests of their respective companies and the stockholders of their\nrespective companies that Company and Sub combine into a single company through\nthe merger of Sub and Company and, in furtherance thereof, have approved such\nmerger.  Pursuant to the Merger, among other things, the Company Common Shares\n(as defined below) shall be converted into Expedia Common Shares (as defined\nbelow), at the rates set forth herein.\n\n     B.  Company, Expedia and Sub desire to make certain representations and\nwarranties and other agreements in connection with the Merger.\n\n     C.  The parties intend, by executing this Agreement, to adopt a plan of\nreorganization within the meaning of Section 368 of the Internal Revenue Code of\n1986, as amended (the \"Code\"), and to cause the Merger to qualify as a\n                       ----                                           \nreorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of\nthe Code.\n\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 Stockholders 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 \"Merger\nDocuments\"), substantially in the form attached as Exhibit 1.1 shall be duly\nprepared, executed and acknowledged by Company and Sub, and thereafter delivered\nto the Secretary of State of Delaware for filing, as provided in the Delaware\nGeneral Corporation Law (the \"DGCL\"), as soon as practicable on or after the\nClosing Date (as defined in Section 1.2). The Merger shall become effective at\nsuch time as the Merger Documents have been filed with the Secretary of State of\nDelaware or at such time thereafter as is provided in the Merger Documents (the\n\"Effective Time\"). Solely for purposes of clarification, Company and the\nPrincipal Stockholders acknowledge and agree that Expedia will have no\nobligation to make any payment or issue any shares under this Agreement until\nthe Merger has been confirmed in writing by the Secretary of State of Delaware.\n\n                                       1\n\n \n     1.2  Closing. The closing of the Merger (the \"Closing\") will take place at\n          ------- \n10:00 a.m., local 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,\nSeattle, Washington, unless another time, date or place is agreed to in writing\nby the parties hereto.\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 Corporation\"), (ii) the Certificate of Incorporation of\nCompany shall be the Certificate of Incorporation of the Surviving Corporation,\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 (as\ndefined in Section 2.1.2 hereto and other than Eligible Appraisal Shares, as\ndefined in Section 1.4.4 below) shall, at the Effective Time, by virtue of the\nMerger, be converted, without any action on the part of the holders thereof,\ninto, and Expedia shall thereupon issue to the holders of Company Common Shares,\na number of shares of Expedia common stock, par value $.01 per share (\"Expedia\nCommon Shares\"), pursuant to an exchange ratio (\"Exchange Ratio\") calculated by:\n(i) dividing the Final Valuation (as defined in Section 1.5) by the number of\nCompany Common Share Equivalents (as defined below) which amount is referred to\nas the \"Per Share Consideration,\" and (ii) dividing the Per Share Consideration\nby the Applicable Price. For purposes of this Agreement, the \"Applicable Price\"\nshall be $42.4187 unless the \"Expedia Average Closing Price,\" which is defined\nas the average closing price as publicly reported for the Nasdaq Stock Market as\nof 4:00 p.m. Eastern Time of Expedia Common Shares over the last five (5)\ntrading days ending the trading day prior to the date hereof:\n\n          .  exceeds $53.0234, in which case the Exchange Ratio shall be\n             calculated as follows: (i) by dividing (x) the product obtained by\n             multiplying the Final Valuation by 125% by (y) the number of\n             Company Common Share Equivalents (if this clause applies, such\n             amount shall be referred to as the \"Per Share Consideration\" rather\n             than the amount referenced in the prior sentence or following\n             clause), and (ii) by dividing the Per Share Consideration by the\n             Expedia Average Closing Price; or\n\n          .  is less than $31.8140, in which case the Exchange Ratio shall be\n             calculated as follows: (i) dividing (x) the product obtained by\n             multiplying the Final Valuation by 75% by (y) the number of Company\n             Common Share Equivalents (if this clause \n\n                                       2\n\n \n             applies, such amount shall be referred to as the \"Per Share\n             Consideration\" rather than the amount referenced in the prior\n             sentence or preceding clause) and (ii) dividing the Per Share\n             Consideration by the Expedia Average Closing Price.\n\n                    (b) For purposes of this Agreement, \"Company Common Share\nEquivalents\" shall mean all Company Common Shares (as defined in Section 2.1.2)\nand all other securities convertible into and rights to purchase Company Common\nShares (in each instance assuming full exercise of the right to convert into or\npurchase Company Common Shares) outstanding as of the Closing, but excluding\nCompany Common Share Equivalents, if any, which expire on or before the Closing\nDate. Schedule 1.4 sets forth as of the date hereof: (i) Company Common Shares,\nand all other rights to purchase any securities convertible into Company Common\nShares, (ii) the number of Company Common Share Equivalents as of such date, and\n(iii) a pro forma computation of the Per Share Consideration, the Exchange Ratio\nand the Expedia Common Shares to be issued as of the Closing using an assumed\nExpedia Average Closing Price of $42.4187. Schedule 1.4 shall be revised and\nupdated as of the Closing Date to reflect any changes in Company Common Share\nEquivalents, Final Valuation and Per Share Consideration.\n\n             1.4.2  Replacement of Options.  At the Effective Time, each of the\n                    ----------------------  \nthen outstanding Company Options (as defined in Section 2.1.2) shall by virtue\nof the Merger and at the Effective Time, and without any further action on the\npart of any holder thereof, be replaced by a nonqualified stock option to\npurchase that number of Expedia Common Shares (\"Expedia Option\") determined by\nmultiplying the number of Company Common Shares subject to such Company Option\nat the Effective Time by the Exchange Ratio, at an exercise price per share of\nExpedia Common Shares equal to the exercise price per share of such Company\nOption immediately prior to the Effective Time divided by the Exchange Ratio.\nAny unvested Company Options held by Company employees who do not continue as\nCompany employees or do not become employees of Expedia as of the Effective Time\nshall be canceled in accordance with the terms of the Company's 1999 Stock\nOption Plan (the \"Company Plan\"). Each replacement Expedia Option shall be\nissued pursuant to the Expedia 1999 Employee Stock Option Plan (the \"Stock\nOption Plan\"). The vesting schedule for the replacement Expedia Options for each\nholder of Company Options is set forth on Schedule 1.4 and the form of the\nreplacement Expedia Option is attached as Exhibit 1.4.2. Each recipient of a\nreplacement Expedia Option, including the replacement Expedia Options to be\nissued to the \"Required Employees\" set forth on Schedule 6.2.4, shall be deemed\nto be an \"Optionee\" under the 1999 Plan.\n\n             1.4.3  Restricted Shares.\n                    ----------------- \n\n                    (a)  Two-thirds (2\/3) of the Expedia Common Shares issuable\npursuant to this Agreement to the Principal Stockholders will be subject to\nforfeiture under certain conditions (the \"Restricted Shares\"). Subject to the\nforfeiture provisions set forth in Section 1.4.3(b), one half of the Restricted\nShares shall vest and no longer be subject to such restrictions on the date\nwhich is nine (9) months from the Effective Time and the other half of the\nRestricted Shares shall vest and no longer be subject to such restrictions on\nthe date that is eighteen (18) months from the Effective Time.\n\n                                       3\n\n \n                 (b)  Each of the Principal Stockholders shall agree not to\nsell, assign, transfer, pledge, hypothecate, or otherwise dispose of, by\noperation of law or otherwise, their Restricted Shares except as permitted by\nthis Agreement. The Restricted Shares owned by each Principal Stockholder will\nvest so long as such Principal Stockholder has not terminated his employment\nwith Expedia for \"Good Reason\" or his employment has been terminated by Expedia\nfor \"Cause.\" If employment is terminated for Good Reason or without Cause, all\nof the Restricted Shares shall vest and no longer be subject to such\nrestrictions. For purposes of the foregoing, \"Cause\" shall mean termination\nresulting from a good faith determination by the board of directors of Expedia\nthat there has been: (i) a repeated failure or refusal to follow the policies\nand directives of Expedia and failure to remedy performance within a reasonable\ntime after written notice; (ii) a willful breach of the duties of the employee's\nposition and failure to remedy performance within a reasonable time after\nwritten notice; or (iii) any act by the employee involving disloyalty to\nExpedia, embezzlement, theft, material dishonesty, or a conviction of or plea of\nnolo contendere to a crime involving moral turpitude or a felony. For purposes\nof this Agreement, \"Good Reason\" shall mean termination resulting from (w)\ndeath, (x) Permanent Disability, (y) Expedia's breach of an employment agreement\nof the Principal Stockholder, or (z) the relocation of Expedia's principal\nexecutive offices outside of the Pacific Northwest. In the event that Expedia\ndetermines that there is a basis for termination for Cause, Expedia shall give\nwritten notice to the Principal Stockholder of the basis for such conclusion and\nsuch Principal Stockholder shall be given a ten (10) day period commencing on\nthe receipt of such notice to take corrective action to cure or correct the\noffending act or behavior; provided that no cure period shall be allowed on the\nconviction or plea of nolo condendere to a crime involving moral turpitude or a\nfelony. \"Permanent Disability\" shall mean a physical or mental condition whereby\nthe Principal Stockholder is unable to perform the customary duties of the\nPrincipal Stockholder's position on a basis satisfactory to Expedia for a\ncontinuous period of six (6) months or longer.\n\n          1.4.4  Appraisal Rights. Any holder of Company Shares that are \n                 ----------------   \noutstanding on the record date for the determination of the Principal\nStockholders entitled to vote for or against the Merger who did not vote such\nshares in favor of the Merger, or sign and deliver a written consent thereto\nwith respect to such shares (the Company Shares then outstanding that are not\nthus voted or as to which such consents are not signed and delivered are\nreferred to as \"Eligible Appraisal Shares\"), will be entitled to exercise\nappraisal rights pursuant to Section 262 of the DGCL (\"Section 262 \") with\nrespect to such Eligible Appraisal Shares, provided that such stockholder meets\nall the requirements of Section 262 with respect to such shares.\n\n          1.4.5  Fractional Securities. No fraction of an Expedia Common Share \n                 ---------------------     \nor Expedia 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\nissued to Company stockholders shall be rounded to the closest whole Expedia\nCommon Share, and the number of Expedia Common Shares subject to any Expedia\nOption shall be rounded to the nearest whole number of Expedia Common Shares.\n\n          1.4.6  Escrow Securities. Expedia Common Shares to be issued in the \n                 -----------------      \nMerger having a value equal to ten percent (10%) of the Final Valuation,\n(including ten percent (10%) of \n\n                                       4\n\n \nthe Restricted Shares) shall be held by the Custodian pursuant to the Escrow\nAgreement attached as Exhibit 1.4.6 (\"Escrow Agreement\") to secure claims by\nExpedia for indemnification pursuant to Article VII hereof. The Expedia Common\nShares to be held on behalf of the holders of Company Common Shares (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 the Company\nStockholders is a condition precedent to receiving the Expedia Common Shares.\n\n          1.4.7  Adjustments. The Exchange Ratio shall be adjusted to reflect\n                 -----------                                                    \nfully the effect of any stock split, reverse split, stock dividend (including\nany dividend or distribution of securities convertible into Expedia Common Stock\nor Company Capital Stock), reorganization, recapitalization or other like change\nwith respect to Expedia Common Stock or Company Capital Stock occurring after\nthe date of this Agreement and prior to the Effective Time.\n\n     1.5  Final Valuation. The term \"Final Valuation\" of Company shall mean\n          ---------------          \n$108,174,482 plus an amount equal to the maximum aggregate proceeds with respect\nto the exercise of all Company Options that are assumed by Expedia as of the\nClosing minus the amount, if any, by which Company's cash as set forth on\nCompany's Final Pro Forma Closing Balance Sheet (as defined in Section 2.1.6\nhereof) is less than the following: $8.8 million minus the product of $25,000\ntimes the number of days which elapse between January 31, 2000 and the Closing\nDate. In addition, the Final Valuation shall be further reduced by the amount,\nif any, by which current accounts receivable are less than the sum of Company's\ntotal liabilities (excluding amounts payable under Company's office lease) as of\nthe Closing Date. For purposes of the foregoing, \"current accounts receivable\"\nshall mean those accounts receivable, which as of the Closing are fewer than\nsixty (60) days old, excluding any other receivables as to which Company has\nreason to suspect that collection is unlikely. The Final Valuation reflects an\ninitial valuation of $115,000,000 adjusted to reflect the ownership of Expedia\nor Microsoft (as defined in Section 6.1.3) in Company which shall be cancelled\nprior to the Closing. The Final Valuation will be adjusted prior to Closing to\nreflect any changes to the capitalization of Company between the date hereof and\nthe Closing.\n\n     1.6  Delivery of Certificates.  After the Effective Time, each holder of a\n          ------------------------            \ncertificate or other documentation representing Company Common Shares shall\nsurrender such certificates or other documentation to Expedia or the exchange\nagent designated by Expedia, together with duly executed counterparts of the\nInvestment Agreement (as defined in Section 5.1) (by those holders of Company\nCommon Shares) and Escrow Agreement and such other duly executed documentation\nas may be reasonably required by Expedia or the exchange agent to effect a\ntransfer of such shares, and upon such surrender each Company stockholder shall\nbe entitled to receive a certificate or other documentation for the applicable\nnumber of Expedia Common Shares calculated pursuant to Section 1.4, except as\nprovided in Section 1.4.4. Execution and delivery of an Escrow Agreement and an\nInvestment Agreement shall be a condition precedent to the issuance of the\nExpedia Common Shares to each Holder.\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.\n\n                                       5\n\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 be deemed to have been delivered in\nfull satisfaction of all rights pertaining to the Company Common Shares or\nCompany Options. After the Effective Time, there shall be no transfers on the\nstock transfer books of Company of the Company Common Shares or 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\nstockholder reasonably determined by Expedia as not having the requisite\nfinancial sophistication with a purchaser representative who can provide such\nstockholder with the requisite financial sophistication.\n\n          1.9.2  Registration Rights.\n                 ------------------- \n\n          (a)  Expedia shall prepare and file with the Securities and Exchange\n     Commission registration statements on the form under the 1933 Act that\n     Expedia determines to be the least burdensome available (such registration\n     statement and the prospectus included therein being referred to as the\n     \"Registration Statement\", regardless of the form actually used) to register\n     for resale Expedia Common Shares issued in the Merger to the Company\n     shareholders, and their permitted transferees (collectively, the \"New\n     Expedia Shareholders\"), and shall use its commercially reasonable efforts\n     to have no more than one such Registration Statement declared effective\n     under the 1933 Act by and kept continuously effective during the following\n     dates and upon the following conditions:\n\n               (i)  From May 15, 2000 through June 16, 2000, provided that \n                                                             --------      \n     Expedia shall receive a demand for registration as of such dates from\n     holders of not less than twenty five percent (25%) of the Expedia Common\n     Shares issued in the Merger on or prior to April 1, 2000 if the Effective\n     Time has occurred prior to April 1, 2000 or April 8, 2000 if the Effective\n     Time has occurred after April 1, 2000 and on or prior to April 8, 2000.\n\n               (ii) From August 1, 2000 through August 13, 2000, provided that \n                                                                 ---------\n     Expedia shall receive a demand for registration as of such dates from\n     holders of not less than twenty five percent (25%) of the Expedia Common\n     Shares issued in the Merger after April 8, 2000 and on or prior to July 1,\n     2000 and, provided that no Registration Statement was made effective\n               --------\n     pursuant to subsection (i), above, unless such lack of effectiveness\n     resulted from a withdrawal of the demand for such registration or the\n     failure of the holders of Expedia Common Shares making such demand to\n     provide to Expedia the \n\n                                       6\n\n \n     requisite information for such filing or through other fault of the holders\n     of Expedia Common Shares.\n\n  Upon receipt of a demand under (i) or (ii) above, Expedia shall within five\n  (5) business days thereafter deposit with the United States post office or\n  national courier service notice to holders making such demand of Expedia's\n  election whether the Registration Statement to be filed shall be for an\n  underwritten secondary offering, an underwritten primary offering by Expedia\n  in which holders issuing such demand shall be permitted to participate, or a\n  secondary offering under Section 415 under the 1933 Act.  An underwritten\n  primary offering by Expedia may include an offering of Expedia Common Shares,\n  derivative instruments that are economically substantially equivalent to\n  Expedia Common Shares, or securities convertible into either Expedia Common\n  Shares or derivative instruments that are economically substantially\n  equivalent to Expedia Common Shares.  Should Expedia elect to undertake any\n  such underwritten primary offering after receiving a demand under subsection\n  (i) or (ii), Expedia will include in such registration first, the aggregate\n  number of securities to be issued by Expedia, and second, as many of the\n  shares of Expedia Common Shares covered by the demand made under (i) as the\n  managing underwriter shall determine is its sole discretion are permitted by\n  market conditions, provided that in no event shall the shares of such holders\n  included in such demand be less than the greater of (A) 15% of the Expedia\n  Common Shares issuable in the Merger or (B) Expedia Common Shares with a value\n  of $22.5 million at the time of such offering, provided that no more than\n                                                 --------                  \n  750,000 shares shall be registered pursuant to this clause (B).  Expedia shall\n  select the managing underwriters for any underwritten offering made pursuant\n  to this subsection in its sole discretion.  Each Registration Statement shall\n  list as selling shareholders each New Expedia Shareholder still holding\n  Expedia Common Shares that has (A) provided to Expedia the requisite\n  information for such filing and (B) requested to be included in such demand on\n  or prior to last date required to make such demand.  Notwithstanding the\n  foregoing, if Expedia shall furnish the New Expedia Shareholders entitled to\n  be listed as selling shareholders on a Registration Statement under this\n  subsection a certificate signed by an officer of Expedia stating that in the\n  good faith judgment of the Board of Directors of Expedia, it would be\n  detrimental to Expedia for such Registration Statement to be filed or made\n  effective, then Expedia shall have the right to defer such filing or the\n  effective date of such Registration Statement until the next date upon which\n  Expedia would be obligated to use its commercially reasonable efforts to make\n  a Registration Statement effective, provided that Expedia shall not have the\n                                      --------                                \n  right to defer 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(a) 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\n\n                                       7\n\n \nrequest of any New Expedia Shareholders given within fifteen (15) days after the\ndate of any such notice, provided that such holders shall have provided to\n                         --------\nExpedia the requisite information for such filing, proceed to include in such\nregistration such Expedia Common Shares as have been requested by any such\nholder to be included in such registration. Expedia will in each instance use\nits commercially reasonable efforts to cause Expedia Common Shares subject to\nsuch request to be registered under the 1933 Act; provided, that in the event\n                                                  --------\nsuch registration is an underwritten primary offering on behalf of Expedia and\nthe managing underwriters advise Expedia in writing that, in their opinion, the\nnumber of securities requested to be included in such registration exceeds the\nnumber which can be sold in such offering, Expedia will include in such\nregistration (i) first, the aggregate number of securities to be issued by\nExpedia, (ii) second, the shares of Expedia common stock registrable under any\ndemand for registration giving rise to the right of registration of New Expedia\nShareholders under this subsection (b); and (iii) third, Expedia Common Shares\nrequested to be included in such registration under this subsection (b) together\nwith other securities requested to be included in such registration, such shares\nto be treated on a pro rata basis. Expedia shall select the managing\nunderwriters for any offering made pursuant to this subsection (b) in its sole\ndiscretion.\n\n     (c)  As soon as practicable after Form S-3 becomes available to Expedia,\nprovided that Expedia Common Shares held by New Expedia Shareholders remain\n--------                                                                   \noutstanding at such time, Expedia shall prepare and file with the Securities\nExchange Commission a Registration Statement on Form S-3 to register for resale\nExpedia Common Shares issued in the Merger to the New Expedia Shareholders.\nExpedia shall use its commercially reasonable efforts to have such Registration\nStatement declared effective under the 1933 Act as promptly as practicable after\nsuch filing.  Expedia shall use its commercially reasonable efforts to cause\nsuch registration statement to continue to be effective and the prospectus\ncontained therein to be updated as reasonably deemed necessary by Expedia to\nenable the New Expedia Shareholders to resell the Expedia Common Shares that\nwere issued in the Merger.\n\n     (d)  Expedia shall use its commercially reasonable efforts to cause any\nRegistration Statement filed under Sections 1.9.2(a), 1.9.2(b) and 1.9.2(c) to\ncontinue to be effective during the time specified for such and the prospectus\ncontained therein to be updated during such time to enable the New Expedia\nShareholders making a demand for registration under subsection (a) or exercising\ntheir rights under subsection (b) or entitled to registration under subsection\n(c) to resell during such time the Expedia Common Shares that were issued in the\nMerger over the Nasdaq Stock Market or such other national market as Expedia\nCommon Shares may be traded. Expedia shall also endeavor to take any action\nrequired to be taken under any applicable state securities laws in connection\nwith the issuance of Expedia Common Shares in the Merger and the resale of those\nshares pursuant to the Registration Statement. Expedia agrees to use its\ncommercially reasonable efforts to cause the Expedia Common Shares covered by\nthe Registration Statement to be registered with or approved by such other\ngovernmental agencies or authorities as may be necessary to enable the holders\nof such Expedia Common Shares to consummate the disposition of such Expedia\nCommon Shares and cause all such Expedia Common Shares to be listed on each\nsecurities exchange or national quotation system on which Expedia's common stock\nis then listed. Each holder of shares covered by a Registration Statement agrees\nthat if (i) Expedia determines that the prospectus in such  \n\n                                       8\n\n \nRegistration Statement needs to be amended or supplemented to comply with the\nrequirements of the 1933 Act, (ii) a stop order suspending the effectiveness of\nthe registration statement is issued by the Securities Exchange Commission, or\n(iii) Expedia shall, in good faith and for business reasons, enter into\nnegotiations relating to or otherwise commence a material business transaction,\nincluding, without limitation, the acquisition or divestiture of assets or the\noffering or sale of securities, then Expedia shall promptly notify each such\nholder and each such holder shall immediately cease making offers and sales of\nExpedia Common Shares and return all remaining prospectuses to Expedia. Any New\nExpedia Shareholder selling stock registered under the Registration Statement\nshall indemnify Expedia, its officers and directors, each underwriter and\nselling broker, if any, and each person, if any, who controls Expedia, against\nliability (including liability under the 1933 Act and the Securities Exchange\nAct of 1934 (\"1934 Act\") arising by reason of any statement contained in the\nRegistration Statement, that such New Expedia Shareholder provided to Expedia in\nwriting explicitly for use in the Registration Statement, being false or\nmisleading or omitting to state a material fact necessary to be stated in order\nthat the statements made in the Registration Statement, in the circumstances in\nwhich they are made, not be misleading; provided, however, that any obligation\nof any New Expedia Shareholder to provide indemnity hereunder shall not exceed\nthe proceeds received by such New Expedia Shareholder from a sale of Expedia\nCommon Shares 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 Statement if\nit determines in good faith that such statements are materially misleading or\ncontain material omissions, provided that Expedia shall (x) make a corrective\nfiling as soon as practicable, (y) use its commercially reasonable efforts to\ncause any amendment to the Registration Statement to be declared effective and\n(z) use its commercially reasonable efforts to cause the Registration Statement\nto become useable as soon as practicable thereafter.\n\n     1.9.3  Option Registration Statement. For those Company employees who are\n            -----------------------------                                       \nemployed by Expedia after the Effective Time, Expedia shall cause the Expedia\nCommon Shares issuable upon exercise of the Expedia Options to be registered\nunder the 1933 Act no later than thirty (30) calendar days after the Effective\nTime and shall use its best efforts to maintain the effectiveness of the\napplicable registration statement or registration statements for so long as such\nreplacement Expedia Options remain outstanding.\n\n     1.10   Delivery of Certificates.  At or as soon as practicable after the\n            ------------------------                                           \nEffective Time, Expedia or its transfer agent will send to the holders of\nCompany Shares (i) a letter of transmittal in customary form and containing such\nprovisions as Expedia may reasonably specify, and (ii) instructions for use in\neffecting the surrender of certificates representing Company Shares in exchange\nfor certificates representing Expedia Common Shares.  After the Effective Time,\nand after receiving such letter of transmittal, each stockholder of a\ncertificate or other documentation representing Company Shares or Company\nOptions, other than Eligible Appraisal Shares, shall surrender such certificates\nor other documentation to Expedia or the exchange agent designated \n\n                                       9\n\n \nby Expedia and letter of transmittal and such other duly executed documentation\nas may be reasonably required by Expedia or the exchange agent to effect a\ntransfer of such shares or options, and upon such surrender each stockholder\nshall be entitled to receive a certificate or other documentation for the\napplicable number of Expedia Common Shares or Expedia Options calculated\npursuant to Section 1.4, except as provided in Section 1.4.6. Execution and\ndelivery of an Investment Agreement and Escrow Agreement shall be a condition\nprecedent to the issuance of the Expedia Common Shares to each Company\nstockholder. If any certificate representing Company Shares shall have been\nlost, stolen or destroyed, Expedia may, in its discretion and as a condition\nprecedent to the issuance of any certificate representing Expedia Common Shares,\nrequire the owner of such lost, stolen or destroyed certificate representing\nCompany Shares to provide an appropriate affidavit and indemnity against any\nclaim that may be made against Expedia or the Surviving Corporation with respect\nto such certificate representing Company Shares. If any documentation\nrepresenting Company Options shall have been lost, stolen or destroyed, Expedia\nmay, in its discretion and as a condition precedent to the issuance of any\ndocumentation representing Expedia Options, require the owner of such lost,\nstolen or destroyed documentation representing Company Options to provide an\nappropriate affidavit and indemnity against any claim that may be made against\nExpedia or the Surviving Corporation with respect to such documentation\nrepresenting Company Options. Until so surrendered, each Certificate will be\ndeemed from and after the Effective Time, for all corporate purposes, to\nevidence the ownership of the number of full shares of Expedia Common Stock into\nwhich such shares of Company Capital Stock shall have been so converted. If any\ncertificate for shares of Expedia Common Stock is to be issued in a name other\nthan that in which the Certificate surrendered in exchange therefor is\nregistered, it will be a condition of such issuance that the Certificate so\nsurrendered will be properly endorsed and otherwise in proper form for transfer\nand that the person requesting such exchange will have paid to Expedia or any\nagent designated by it any transfer or other taxes required by reason of the\nissuance of a certificate for shares of Expedia Common Stock in any name other\nthan that of the registered holder of the Certificate surrendered, or\nestablished to the satisfaction of Expedia or any agent designated by it that\nsuch tax has been paid or is not payable.\n\n                                  ARTICLE II\n                        REPRESENTATIONS AND WARRANTIES\n                                        \n\n     2.1  Representations and Warranties of Company and Principal Stockholders.\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\nStockholders, 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, validly existing, and in good standing under the laws of the State of\nDelaware, 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.  As used in this Agreement,\n\"Business \n\n                                       10\n\n \nCondition\" with respect to any entity shall mean the business, financial\ncondition, results of operations, assets or prospects (as defined below)\n(without giving effect to the consequences of the transactions contemplated by\nthis Agreement) of such entity or entities including Subsidiaries taken as a\nwhole. In this Agreement, a \"Subsidiary\" of any corporation or other entity\nmeans a corporation, partnership, limited liability company or other entity of\nwhich such corporation or entity directly or indirectly owns or controls voting\nsecurities or other interests which are sufficient to elect a majority of the\nBoard of Directors or other managers of such corporation, partnership, limited\nliability company or other entity and \"prospects\" shall mean events, conditions,\nfacts or developments which are known to Company and which in the reasonable\ncourse of events are expected to have a material effect on future operations of\nthe business as presently conducted by Company. Each of the Company Subsidiaries\nare set forth on the Company Disclosure Schedule. Company has delivered to\nExpedia complete and correct copies of the certificate of incorporation, bylaws,\nand\/or other primary charter and organizational documents (\"Charter Documents\")\nof Company and each of its Subsidiaries, in each case, as amended to the date\nhereof. The minute books and stock records of Company contain correct and\ncomplete records of all material proceedings and actions taken at all meetings\nof, or effected by written consent of, the Principal Stockholders of Company and\nits Board of Directors, and all original issuances and subsequent transfers,\nrepurchases, and cancellations of Company Common Shares. The Company Disclosure\nSchedule contains a complete and correct list of the officers and directors of\nCompany since its incorporation.\n\n          2.1.2  Capital Structure.\n                 ----------------- \n\n                 (a)  The authorized capital stock of Company consists of\n30,000,000 shares of Company Common Stock, $0.001 par value, (\"Company Common\nShares\") of which 8,085,196 shares are issued and outstanding, and 18,000,000\nshares of Preferred Stock, $0.001 par value, (\"Company Preferred Shares\") of\nwhich (i) 1,346,666 have been designated as Series A Preferred Stock (\"Series A\nShares\") of which 1,010,000 Series A Shares are issued and outstanding, (ii)\n1,346,666 have been designated as Series A-1 Preferred Stock (\"Series A-1\nShares\") of which no Series A-1 Shares are outstanding, (iii) 4,600,000 have\nbeen designated as Series B Preferred Stock (\"Series B Shares\") of which\n4,362,498 Series B Shares are outstanding, (iv) 4,600,000 have been designated\nas Series B-1 Preferred Stock (\"Series B-1 Shares\") of which no Series B-1\nShares are outstanding, (v) 3,000,000 have been designated as Series C Preferred\nStock (\"Series C Shares\") of which 1,999,900 Series C Shares are outstanding,\nand (vi) 3,000,000 have been designated as Series C-1 Preferred Stock (\"Series \nC-1 Shares\") of which no Series C-1 Shares are outstanding. The Company Common\nShares and the Company Preferred Shares are collectively referred to herein as\nthe \"Company Shares\".\n\n                 (b)  As of the date hereof, 2,500,000 Company Common Shares are\nreserved for issuance upon the exercise of outstanding stock options under\nCompany's \"1999 Stock Option Plan\" (the \"Company Stock Plan\"), options for\n2,405,934 Company Common Shares have been granted and remain outstanding (the\n\"Company Options\"). No options to purchase Company Common Shares have been\nissued outside of the Company Stock Plan and remain outstanding.  Warrants to\npurchase 136,436 Company Common Shares and 336,666 Series A Shares are\noutstanding.  Such warrants shall either be exercised into Company Common Shares\nor Series A Shares, as applicable, prior to the Closing, be cancelled by the\nholder thereof, \n\n                                       11\n\n \nor at the Effective Time, terminate. All Company Common Share Equivalents and\nother securities outstanding as of January 28, 2000 are set forth on Schedule\n1.4.\n\n          (c)  All outstanding Company Shares are, and any Company Shares issued\nupon 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. Except for the shares\ndescribed above issuable pursuant to the exercise of Company Options and\nwarrants, there are not any options, warrants, calls, conversion rights,\ncommitments, agreements, contracts, understandings, restrictions, arrangements\nor rights of any character to which Company is a party or by which Company may\nbe bound obligating Company to issue, deliver or sell, or cause to be issued,\ndelivered or sold, additional shares of the capital stock of Company, or\nobligating Company to grant, extend or enter into any such option, warrant,\ncall, conversion right, conversion payment, commitment, agreement, contract,\nunderstanding, restriction, arrangement or right. Company does not have\noutstanding any bonds, debentures, notes or other indebtedness the holders of\nwhich (i) have the right to vote (or convertible or exercisable into securities\nhaving the right to vote) with holders of Company Shares on any matter (\"Company\nVoting Debt\") or (ii) are or will become entitled to receive any payment as a\nresult of the execution of this Agreement or the completion of the transactions\ncontemplated hereby.\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 Stockholders 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 Stockholders, as applicable, in accordance with its terms.\n\n     2.1.4  Compliance with Laws and Other Instruments. Each of Company and its\n            ------------------------------------------  \nSubsidiaries holds, and at all times has held, all licenses, permits, and\nauthorizations from all Governmental Entities, (as defined below) necessary for\nthe lawful conduct of its business pursuant to all applicable statutes, laws,\nordinances, rules, and regulations of all such authorities having jurisdiction\nover it or any part of its operations, excepting, however, when such failure to\nhold would not have a material adverse effect on Company's Business Condition.\nThere are no violations or claimed violations known by Company or the Principal\nStockholders of any such license, permit, or authorization or any such statute,\nlaw, ordinance, rule or regulation.  Neither the execution and delivery of this\nAgreement by Company and the Principal Stockholders nor the performance by\nCompany and the Principal Stockholders of their obligations under this Agreement\nwill, in any material respect, violate any provision of laws or will conflict\nwith, result in the material breach of any of the terms or conditions of,\nconstitute a material breach of any of the terms or conditions of, constitute a\nmaterial default under, permit any party to accelerate any right under,\nrenegotiate, or terminate, require consent, approval, or waiver by any party\nunder, or result in the creation of any lien, charge, encumbrance, or\nrestriction upon any of the properties, \n\n                                       12\n\n \nassets, or Company Common Shares pursuant to, any of the Charter Documents or\nany agreement (including, without limitation, government contracts), indenture,\nmortgage, franchise, license, permit, lease or other instrument of any kind to\nwhich Company is a party or by which Company or any of its assets is bound or,\nto its knowledge, affected. No consent, approval, order or authorization of or\nregistration, declaration or filing with or exemption by (collectively\n\"Consents\"), any court, administrative agency or commission or other\ngovernmental authority or instrumentality, whether domestic or foreign (each a\n\"Governmental Entity\") is required by or with respect to Company in connection\nwith the execution and delivery of this Agreement by Company or the consummation\nby Company of the transactions contemplated hereby, except for (i) the filing of\na premerger notification report and all other required documents by Expedia and\nCompany, and the expiration of all applicable waiting periods, under the Hart-\nScott-Rodino Antitrust Improvements Act of 1976, as amended (the \"HSR Act\") and\n(ii) the filing of the appropriate Merger Documents with the Secretary of State\nof Delaware and except for such other Consents, which if not obtained or made\nwould not have a material adverse effect on 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 following:\n\n                  (i)   all patents, trademarks, trade names, service marks,\nmask works, 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\nand materials 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\n                                       13\n\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\nCompany); and (v) any obligations of exclusivity, noncompetition,\nnonsolicitation, first refusal or first negotiation to which Company is subject\nunder any agreement that does not fall within the ambit of (iii) or (iv) above.\nThe disclosures described in (iii), (iv), and (v) hereof include the names and\ndates of the relevant agreements, as well as the identities of the parties to\nthe relevant agreements.\n\n          (c)  The Company Intellectual Property consists solely of items and\nrights which are either: (i) owned by Company; (ii) in the public domain; or\n(iii) rightfully used and authorized for use by Company and its successors\npursuant to a valid license or other agreement.  Company has all rights in the\nCompany Intellectual Property necessary to carry out Company's current and\nanticipated future (up to the Closing) activities and has or had all rights in\nthe Company Intellectual Property reasonably necessary to carry out Company's\nformer activities, including without limitation, and solely to the extent\nnecessary to carry out such activities, rights to make, use, exclude others from\nusing, reproduce, modify, adapt, create derivative works based on, translate,\ndistribute (directly and indirectly), disclose, transmit, display and perform\npublicly, license, rent, lease, assign, and sell the Company Intellectual\nProperty in all geographic locations and fields of use, and to sublicense any or\nall such rights to third parties, including the right to grant further\nsublicenses.  All software and firmware listings that are part of the Company\nOwned Intellectual Property are adequately commented in accordance with\ngenerally accepted standard industry practices.\n\n          (d)  Company is not, nor as a result of the execution or delivery of\nthis Agreement and all other agreements contemplated hereby, or performance of\nCompany's obligations hereunder or thereunder, will Company be, in violation of\nany license, sublicense, or other agreement relating to the Company Intellectual\nProperty to which Company is a party or otherwise bound.  Except as specifically\ndescribed in the Company Disclosure Schedule, Company is not obligated to\nprovide any consideration (whether financial or otherwise) to any \n\n                                       14\n\n \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, licensing,\nsublicensing, sale, or any other exercise of rights in any Company Owned\nIntellectual Property or any other authorized exercise of rights in or to the\nCompany Owned Intellectual Property by Company or its successors or licensees\ndoes not and will 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 Stockholders, 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 and will not infringe any copyright, patent, trade secret,\ntrademark, service mark, trade name, firm name, logo, trade dress, mask work,\nmoral right, other intellectual property right, right of privacy, right of\npublicity or right in personal or other data of any person.  No claims (i)\nchallenging the validity, effectiveness, or ownership by Company of any of the\nCompany Intellectual Property, or (ii) to the effect that the use, reproduction,\nmodification, manufacturing, distribution, licensing, sublicensing, sale, or any\nother exercise of rights in any Company Intellectual Property by Company or its\nsuccessors or licensees infringes, or will infringe on, any intellectual\nproperty or other proprietary or personal right of any person, have been\nasserted or, to the knowledge of Company and the Principal Stockholders, are\nthreatened by any person nor, to the knowledge of Company and the Principal\nStockholders, 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\nnames, and trademarks listed on the Company Disclosure Schedule and all\ncopyright registrations held by Company are valid, enforceable and subsisting.\nTo the knowledge of Company and the Principal Stockholders, there is no\nunauthorized use, infringement, or misappropriation of any of the Company Owned\nIntellectual Property by any employee, or former employee, or other third party.\n\n          (f) No parties other than Company possess any current or contingent\nrights to any source code that is part of the Company Owned Intellectual\nProperty (including, without limitation, through any escrow account).\n\n          (g) The Company Disclosure Schedule lists all parties who have created\nany 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                                       15\n\n \n          (h) The Company Disclosure Schedule includes a true and complete list\nof support and maintenance agreements relating to Company Owned Intellectual\nProperty or to which Company is a party as to Company Licensed Intellectual\nProperty, including the identity of the parties and the respective dates of such\nagreements.\n\n          (i) Company has obtained legally binding written agreements from all\nemployees 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 consumers\nwith regard to Company's collection and dissemination of personal consumer\ninformation in accordance with Company's privacy policy as published on its\nwebsite.  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 A.D. 2000.  To the knowledge of Company and the\nPrincipal Stockholders, the Company Licensed Intellectual Property is fully Year\n2000 Compliant in all material respects and will not cease to be fully Year 2000\nCompliant in any material respect at any time during or after the calendar year\n2000.  Schedule 2.1.5(k) sets forth the tests, inquiries and other activities\nundertaken by Company up to the Closing, with respect to the Year 2000 Compliant\nnature of any and all Company Intellectual Property.  For the purposes of this\nAgreement, \"Year 2000 Compliant\" means that neither the performance nor the\nfunctionality of any Company Intellectual Property is or will be materially\naffected by dates prior to, during or after the calendar year A.D. 2000 and in\nparticular (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;\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                                       16\n\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 \n                --------------------   \nunaudited balance sheets as of December 31, 1998 and as of September 30, 1999,\nand the related unaudited statements of income for the years ended December 31,\n1998 and for the nine months ended September 30, 1999 (such balance sheets and\nstatements of income 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. There are no material off-balance\nsheet liabilities, claims or obligations of any nature, whether accrued,\nabsolute, contingent, anticipated, or otherwise, whether due or to become due,\nthat are not shown or provided for either in the Financial Statements or the\nCompany Disclosure Schedule. The liabilities of Company were incurred in the\nordinary course of Company's business. The \"Pro Forma Closing Balance Sheet\"\nattached as Schedule 2.1.6 sets forth, based on reasonable assumptions relating\nto the operation of the business conducted by Company, the projected balance\nsheet as of the estimated Closing Date. A \"Final Pro Forma Closing Balance\nSheet\" will be prepared, and any updates or revisions of such statement will be\nprepared, on a basis consistent with the Financial Statements and Schedule\n2.1.6.\n\n          2.1.7 Taxes.\n                ----- \n\n                (a) Each of Company and VacationSpot, S.A., a Belgian\ncorporation and a Subsidiary of Company (\"Foreign Subsidiary\"), has timely filed\n(or caused to be filed) all federal, state, local and foreign tax returns,\nreports, elections and information statements (\"Returns\") required to be filed\nby it, which Returns are true, correct and complete in all respects, and paid\nall taxes required to be paid as shown on such Returns. All taxes required to be\npaid in respect of the periods covered by such Returns (\"Return Periods\") or\nprior to Closing have either been paid or fully accrued on the books of Company\nand Foreign Subsidiary. Company and Foreign Subsidiary have fully accrued all\nunpaid taxes in respect of all periods prior to Closing on the Pro Forma Closing\nBalance Sheet. Company has not taken any position on any tax return or filing\nwhich is or would be subject to penalties under Section 6662 of the Code. Except\nas set forth in the Company Disclosure Schedule, neither Company nor Foreign\nSubsidiary has requested or been granted any extension of time to file any\nReturn the filing of which is pending. There is no difference between the\namounts of the book basis and the tax basis of any asset of Company or Foreign\nSubsidiary that is not reflected in an appropriate accrual of deferred tax\nliability on the books of Company or Foreign Subsidiary or fully reflected in\nthe Pro Forma Closing Balance Sheet or the Financial Statements. Company has\nprovided Expedia true and correct copies of all Returns, all correspondence with\nany taxing authority, all\n\n                                       17\n\n \ntax work papers, any tax planning memoranda prepared for Company and Foreign\nSubsidiary and other tax data.\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. Except as so disclosed, , neither Company nor Foreign\nSubsidiary is subject to any pending or, to the knowledge of Company, threatened\ntax audit or examination. Neither Company nor Foreign Subsidiary has entered\ninto any agreements, waivers or other arrangements in respect of the statute of\nlimitations in respect of its taxes or tax returns. Company Disclosure Schedule\nsets forth as of the date hereof a list of all joint ventures, partnerships,\nlimited liability companies or other business entities (within the meaning of\nTreas. Reg. Section 701.7701-3) in which Company or Foreign Subsidiary has an\ninterest.\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 and other taxes, as well as any interest, additions or penalties\nrelating thereto and any interest in respect of such additions or penalties.\n\n                (d) There are no liens for taxes upon the assets of Company or\nForeign Subsidiary except for taxes that are not yet payable or which are being\ncontested in good faith and for which adequate reserves have been established on\nthe Financial Statements. Each of Company and Foreign Subsidiary has withheld\nall taxes required to be withheld in respect of wages, salaries and other\npayments to all employees, officers and directors and any taxes required to be\nwithheld from any other person and has timely paid all such amounts withheld to\nthe proper taxing authority.\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. Neither\nCompany nor Foreign Subsidiary is or has been a party to any tax sharing or tax\nallocation agreement. No item of income or gain reported by Company or Foreign\nSubsidiary for financial accounting purposes in any pre-closing period is\nrequired to be included in taxable income in any post-closing period. Company\nhas never been a member of any affiliated group of corporations within the\nmeaning of Section 1504 of the Code. Company has not participated in, or\ncooperated with, an international boycott within the meaning of Section 999 of\nthe Code. Neither Company nor Foreign Subsidiary is required to include in\nincome any adjustment pursuant to Section 481(a) of the Code (or similar\nprovisions of other law or regulations) in its current or in any future taxable\nperiod, by reason of a change in accounting method; nor does Company of Foreign\nSubsidiary have any knowledge that the IRS (or other taxing authority) has\nproposed, or is considering, any such change in accounting method. Company is\nnot a party to any agreement, contract, or arrangement that would result in the\npayment of any \"excess parachute payment\" within the meaning of Section 280G of\nthe Code or any similar provision of foreign, state or local law (\"Excess\nParachute Payment\"), including agreements, contracts or arrangements that will\nnot\n\n                                       18\n\n \nresult in Excess Parachute Payments because they can and will be approved prior\nto the Effective Time in a manner meeting the requirements of Section\n280G(b)(5)(B) of the Code. Company does not have and has not had a \"permanent\nestablishment\" (as defined in any applicable income tax treaty) in any country\nother than the United States. Company and the Principal Stockholders will take\nall action necessary to obtain shareholder approvals meeting the requirements of\nSection 280G(b)(5) of the Code and the Regulations thereunder, and will\notherwise act in good faith using best efforts to ensure that no payment in\nconnection with the Merger constitutes an Excess Parachute Payment. Company has\nmade no election under Section 13261(g)(2) of P.L. 103-66, relating to the\napplication of 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) Neither Company nor Foreign Subsidiary is or has ever been a\nreal property holding corporation within the meaning of Section 897 of the Code.\nNone of the assets of Company is property that is required to be treated as\nowned by any other person pursuant to the \"safe harbor lease\" provisions of\nformer Section 168(f)(8) of the Code and in effect immediately prior to the\nenactment of the Tax Reform Act of 1986 and none of the assets of Company is\n\"tax exempt use property\" within the meaning of Section 168(h) of the Code. None\nof the assets of Company secures any debt the interest on which is tax exempt\nunder Section 103 of the Code. Company is liable for no taxes under the\nprovisions of Treas. Reg. Section 1.1502-6(a).\n\n                (g) With the exception of Foreign Subsidiary, Company has no\nSubsidiary which is resident for taxation purposes in a jurisdiction other than\nthe United States. Foreign Subsidiary is resident for taxation purposes in\nBelgium and no other jurisdictions, and does not have and has not had a\npermanent establishment in any country other than Belgium. Foreign Subsidiary\nhas been a controlled foreign corporation within the meaning of Section 957 of\nthe Code at all times since its acquisition by Company. Foreign Subsidiary is\nnot and has not been since its acquisition by Company a passive foreign\ninvestment company within the meaning of Section 1297 of the Code. Company has\nor, prior to the Closing Date, will have made an election pursuant to Section\n338 of the Code to treat its acquisition of Foreign Subsidiary as an asset\nacquisition.\n\n          2.1.8 Absence of Certain Changes and Events. Since September 30, 1999,\n                -------------------------------------     \nthere has not been:\n\n                (a) Any transaction involving more than $10,000 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\nStockholders 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 $10,000 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                                       19\n\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;\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 balance sheet included in the Financial Statements as of September 30, 1999\nhave been collected or are good and collectible in the aggregate recorded\namounts thereof (less the allowance for doubtful accounts also appearing in such\nSeptember 30, 1999 balance sheet and net of returns and payment discounts\nallowable by Company's policies) and can reasonably be anticipated to be paid in\nfull without outside collection efforts within sixty (60) days of the due date,\nsubject to no counterclaims or setoffs.\n\n          2.1.10 Leases in Effect. All real property leases and subleases as to\n                 ----------------  \nwhich Company and its Subsidiaries are a party and any amendments or\nmodifications thereof are listed on the Company Disclosure Schedule (each a\n\"Lease\" and collectively, the \"Leases\") and are valid, in full force and effect,\nenforceable, and there are no existing defaults, and Company has not received or\ngiven notice of default or claimed default with respect to any Lease, nor is\nthere any event that with notice or lapse of time, or both, would constitute a\ndefault thereunder.\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 September 30, 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 since September 30, 1999 in the ordinary course of business. The\nCompany Disclosure Schedule lists (i) all computer equipment and (ii) all other\npersonal property having a book value of $5,000 or more, which are used by\nCompany in the conduct of its business, and all such equipment and property are\nin good operating condition and repair, reasonable wear and tear excepted.\n\n          2.1.12 Certain Transactions. None of the directors, officers, or\n                 -------------------- \nPrincipal Stockholders 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\n\n                                       20\n\n \ntransaction with Company, including, without limitation, any contract,\nagreement, or other arrangement (i) providing for the furnishing of services to\nor by, (ii) providing for rental of real or personal property to or from, or\n(iii) otherwise requiring payments to or from, any such person or any\ncorporation, partnership, trust, or other entity in which any such person has or\nhad a 5%-or-more interest (as a stockholder, partner, beneficiary, or otherwise)\nor is or was a director, officer, employee, or trustee other than for services\nrendered by the Principal Stockholders as employees of Company. None of\nCompany's officers or directors has any material interest in any property, real\nor personal, tangible or intangible, including inventions, copyrights,\ntrademarks or trade names, used in or pertaining to the business of Company, or\nany supplier, distributor or customer of Company, except for the normal rights\nof a stockholder, and except for rights under existing employee benefit plans.\nFor purposes of this Agreement \"families\" shall include all individuals who by\nreason of ancestry, adoption or marriage have a common parent or grandparent.\n\n          2.1.13 Litigation and Other Proceedings. Neither Company, its\n                 --------------------------------                         \nSubsidiaries, nor any of its officers, directors, or employees is a party to any\npending or, to the knowledge of Company and the Principal Stockholders,\nthreatened action, suit, labor dispute (including any union representation\nproceeding), proceeding, investigation, or discrimination claim in or by any\ncourt or governmental board, commission, agency, department, or officer, or any\narbitrator, arising from the actions or omissions of Company, its Subsidiaries\nor, in the case of an individual, from acts in his or her capacity as an\nofficer, director, or employee of Company which individually or in the aggregate\nwould be materially adverse to Company.  Company is not subject to any order,\nwrit, judgment, decree, or injunction that has a material adverse effect on\nCompany's Business Condition.\n\n          2.1.14 No Defaults. Neither Company nor any of its Subsidiaries is,\n                 ----------- \nnor has Company or any of its Subsidiaries received notice that it would be with\nthe passage of time, in default or violation of any term, condition or provision\nof (i) the Charter Documents of Company; (ii) any judgment, decree or order\napplicable to Company; or (iii) any loan or credit agreement, note, bond,\nmortgage, indenture, contract, agreement, lease, license or other instrument to\nwhich Company is now a party or by which it or any of its properties or assets\nmay be bound, except for defaults and violations which, individually or in the\naggregate, would not have a material adverse effect on the Business Condition of\nCompany.\n\n          2.1.15 Major Contracts. Neither Company nor any of its Subsidiaries\n                 ---------------\nis a party to or subject to:\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                                       21\n\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 over the life of the contract $10,000 or pursuant to\nwhich Company has granted or received manufacturing rights, most favored nation\npricing provisions or exclusive marketing, reproduction, publishing or\ndistribution rights related to any product, group of products or territory;\n\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$10,000;\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) Except for trade indebtedness incurred in the ordinary\ncourse of business, 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 $10,000 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     All contracts, arrangements, plans, agreements, leases, licenses,\nfranchises, permits, indentures, authorizations, instruments and other\ncommitments which are listed in the Company Disclosure Schedule pursuant to this\nSection 2.1.15 are valid and in full force and effect and Company has not, nor,\nto the best knowledge of Company, has any other party thereto, breached any\nmaterial provisions of, or entered into default in any material respect under\nthe terms thereof.\n\n          2.1.16 Material Relations. To Company's and the Principal \n                 ------------------      \nStockholders' knowledge, none of the parties to any of the major contracts\nidentified in the Company Disclosure Schedule pursuant to Section 2.1.15 have\nterminated, or in any way expressed an intent to materially reduce or terminate\nthe amount of its business with Company or its Subsidiaries 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\n\n                                       22\n\n \nall banks in which Company has accounts or safe deposit boxes, the designation\nof each such account and safe deposit box, and the names of all persons\nauthorized to draw on or have access to each such account and safe deposit box.\nAll premiums and other payments due from Company with respect to any such\ncontracts of insurance or indemnity have been paid, and Company does not know of\nany fact, act, or failure to act which has or might cause any such contract to\nbe canceled or terminated. All material known claims for insurance or indemnity\nhave been presented.\n\n          2.1.18 Employees.  Neither Company nor any of its Subsidiaries has any\n                 --------- \nwritten contract of employment or other employment agreement with any of its\nemployees that is not terminable at will by Company.  Company is not a party to\nany pending, or to Company's knowledge, threatened, labor dispute.  Company has\ncomplied in all material respects with all applicable federal, state, and local\nlaws, ordinances, rules and regulations and requirements relating to the\nemployment of labor, including but not limited to the provisions thereof\nrelating to wages, hours, collective bargaining, payment of social security,\nunemployment and withholding taxes, and ensuring equality of opportunity for\nemployment and advancement of minorities and women.  There are no claims\npending, or threatened to be brought, in any court or administrative agency by\nany former or current Company employees for compensation, pending severance\nbenefits, vacation time, vacation pay or pension benefits, or any other claim\npending from any current or former employee or any other person arising out of\nCompany's status as employer, whether in the form of claims for employment\ndiscrimination, harassment, unfair labor practices, grievances, wrongful\ndischarge or otherwise.\n\n          2.1.19 Employee Benefit Plans. Each employee benefit plan (\"Plan\")\n                 ----------------------                                        \ncovering active, former, or retired employees of Company or its Subsidiaries is\nlisted in the Company Disclosure Schedule.  Company has made available to\nExpedia a copy of each Plan, and where applicable, any related trust agreement,\nannuity, or insurance contract.  No annual reports (Form 5500) have been\nrequired to be filed with the Internal Revenue Service.  To the extent\napplicable, each Plan complies, in all material respects, with the requirements\nof the Employee Retirement Income Security Act of 1974 as amended (\"ERISA\"), and\nthe Code, and any Plan intended to be qualified under Section 401(a) of the Code\nhas been determined by the Internal Revenue Service to be so qualified and has\nremained tax-qualified to this date and its related trust is tax-exempt and has\nbeen so since its creation.  No Plan is covered by Title IV of ERISA or Section\n412 of the Code.  No \"prohibited transaction,\" as defined in ERISA Section 406\nor Code Section 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\ninvolving any of the Plans and no suit, action, or other litigation (excluding\nclaims for benefits incurred in the ordinary course of Plan activities) has been\nbrought against or with respect to any Plan.  All contributions, reserves, or\npremium payments to the Plan, accrued to the date hereof have been made or\nprovided for.  Company has not incurred any liability under Subtitle C or D of\nTitle IV of ERISA with respect to any \"single-employer plan,\" within the meaning\nof Section 4001(a)(15) of ERISA, currently or formerly maintained by Company, or\nany entity which is considered one employer with Company under Section 4001 of\nERISA.  Company has not incurred any withdrawal liability under Subtitle E of\nTitle IV of ERISA with respect to any\n\n                                       23\n\n \n\"multiemployer plan.\" within the meaning of Section 4001(a)(3) of ERISA. There\nare no restrictions on the rights of Company to amend or terminate any Plan\nwithout incurring any liability thereunder. Company has not engaged in or is a\nsuccessor or parent corporation to an entity that has engaged in a transaction\ndescribed in ERISA Section 4069. There have been no amendments to, written\ninterpretation of, or announcement (whether or not written) by Company relating\nto, or change in employee participation or coverage under, any Plan. Neither\nCompany nor any of its ERISA affiliates have any current or projected material\nliability in respect of post-employment or post-retirement welfare benefits for\nretired or former employees of Company other than health care continuation\nbenefits required to be provided under applicable law. No tax under Section\n4980B of the Code has been incurred in respect of any Plan that is a group\nhealth plan, as defined in Section 5000(b)(1) of the Code. Except as disclosed\non the Company Disclosure Schedule, Company has administered the executive\ncompensation Plans, if any, in a manner which will not result in a compensation\ncharge against earnings or the loss of deductions for federal and state income\ntax purposes.\n\n          2.1.20 Certain Agreements. Except as contemplated by this Agreement\n                 ------------------\n(or as set forth in the Company Disclosure Schedule), neither the execution and\ndelivery of this Agreement, nor the consummation of the transactions\ncontemplated hereby will:  (i) result in any payment by Company or any of its\nSubsidiaries (including, without limitation, severance, unemployment\ncompensation, parachute payment, bonus or otherwise) becoming due to any\ndirector, employee or independent contractor of Company under any Plan,\nagreement or otherwise, (ii) materially increase any benefits otherwise payable\nunder any Plan or agreement, or (iii) result in the acceleration of the time of\npayment or vesting of any such 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 liabilities of any person,\ncorporation, partnership, joint venture, association, organization, or other\nentity.\n\n          2.1.22 Brokers and Finders. Neither Company nor the Principal\n                 -------------------                                  \nStockholder 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                 ---------------- \nStockholders acting on behalf of Company, nor to the best knowledge of Company\nand the Principal Stockholders, 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                                       24\n\n \n          2.1.24 Environmental Matters. To the best knowledge of Company and the\n                 ---------------------          \nPrincipal Stockholders:\n\n                 (a) There has not been a discharge or release on any real\nproperty owned or leased by either Company or its Subsidiaries (the \"Real\nProperty\") of any Hazardous Material (as defined below) in violation of any\nfederal, state or local statute, regulation, rule or order applicable to health,\nsafety and the environment, including without limitation, contamination of soil,\ngroundwater or the environment, generation, handling, storage, transportation or\ndisposal of Hazardous Materials or exposure to Hazardous Materials\n(\"Environmental Laws\"), except for those that would not, individually or in the\naggregate have a material 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 presently\nowned or operated by Company, and no asbestos has been removed from any Real\nProperty while such Real Property was owned or operated by Company; and\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\nwaste\" or \"hazardous substance\" under any federal, state or local statute,\nregulation, rule, or order, (ii) that is toxic, explosive, corrosive, flammable,\ninfectious, radioactive, or otherwise hazardous and is regulated by any\nGovernmental Entity, (iii) the presence of which on any of the Real Property\ncauses or threatens to cause a nuisance on any of the Real Property or to\nadjacent properties or poses or threatens to pose a hazard to the health or\nsafety of persons on or about any of the Real Property, or (iv) the presence of\nwhich on adjacent properties could constitute a trespass by Company or the then\ncurrent owner(s) of any of the Real Property.\n\n                 2.1.25 Disclosure. Neither the representations or warranties\n                        ----------\nmade by Company or the Principal Stockholders in this Agreement, nor the final\nCompany Disclosure Schedule or any other certificate executed and delivered by\nCompany or the Principal Stockholders pursuant to this Agreement, when taken\ntogether, contains any untrue statement of a material fact, or\n\n                                       25\n\n \nomits to state a material fact necessary to make the statements or facts\ncontained herein or therein not misleading in light of the circumstances under\nwhich they were furnished.\n\n                 2.1.26 Information Supplied. None of the information supplied\n                        --------------------\nor to be supplied by Company, its auditors, attorneys, financial advisors or\nother consultants or advisors for inclusion in the Consent Solicitation\nStatement\\Private Placement Memorandum to be prepared and distributed to all\nholders of Company Shares (the \"PPM\"), will not, at the time of the mailing of\nthe PPM or any amendment or supplement thereto, contain any untrue statement of\na material fact or omit to state any material fact required to be stated therein\nor necessary to make the statements therein, in light of the circumstances in\nwhich they are made, not misleading.\n\n                 2.1.27 Reliance. The foregoing representations and warranties\n                        -------- \nare made by Company and the Principal Stockholders 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 \n               -------------------------------------------------    \ndisclosed in a document referring specifically to the representations and\nwarranties in this Agreement which identifies by section number the section and\nsubsection to which such disclosure relates and is delivered by Expedia to\nCompany prior to the execution of this Agreement (the \"Expedia Disclosure\nSchedule\"), Expedia and Sub represent and warrant to Company and the Principal\nStockholders as follows:\n\n               2.2.1 Organization, Standing and Power. Each of Expedia and Sub \n                     --------------------------------\nis a corporation duly organized and validly existing under the laws of the\nstates of their respective jurisdictions, has all requisite power and authority\nto own, lease and operate its properties and to carry on its businesses as now\nbeing conducted, and is duly qualified and in good standing to do business in\neach jurisdiction in which a failure to so qualify would have a material adverse\neffect on the Business Condition of Expedia. Sub was incorporated solely for the\npurpose of effectuating the transactions contemplated by this Agreement and has\nconducted no business to date otherwise.\n\n               2.2.2 Authority. The execution, delivery, and performance of this\n                     --------- \nAgreement by Expedia and Sub (including but not limited to the execution,\ndelivery, and performance of the agreements and transactions contemplated by\nthis Agreement) has been duly authorized by all necessary corporate action of\nExpedia and Sub. Certified copies of the resolutions adopted by the Board of\nDirectors of Expedia and Sub approving this Agreement and the Merger have been\nprovided to Company.  Each of Expedia and Sub has duly and validly executed and\ndelivered this Agreement, and this Agreement constitutes a valid, binding, and\nenforceable obligation of each of Expedia and Sub in accordance with its terms.\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\nprovision of law or will conflict with, result in the breach of any of the terms\nand conditions of, constitute a default under, permit any party to accelerate\nany right under, renegotiate or terminate, require consent, approval, or waiver\nby any\n\n                                       26\n\n \nparty under, or result in the creation of any lien, charge, or encumbrance upon\nany of the properties, assets, or shares of capital stock of Expedia pursuant to\nany charter document of Expedia or Sub or any agreement, indenture, mortgage,\nfranchise, license, permit, lease, or other instrument of any kind to which\nExpedia is a party or by which Expedia or any of its assets are bound or\naffected. No Consent is required by or with respect to Expedia or Sub in\nconnection with the execution and delivery of this Agreement by Expedia or Sub\nor the consummation by Expedia or Sub of the transactions contemplated hereby or\nthereby, except for (i) the filing of a premerger notification report and all\nother required documents by Expedia and Company, and the expiration of all\napplicable waiting periods, under the HSR Act and (ii) the filing of the Merger\nDocuments with the Secretary of State of Delaware and such other consents,\nauthorizations, filings, approvals and registrations which if not obtained or\nmade would not have a material 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 and\nthe prospectus dated November 9, 1999 contained in the Form S-1 Registration\nStatement and (b) all other reports filed by Expedia pursuant to Section 13 of\nthe 1934 Act with the SEC since November 9, 1999 (such reports are collectively\nreferred to herein as the \"SEC Documents\"). The SEC Documents constitute all of\nthe documents required to be filed by Expedia under Section 13 of the 1934 Act\nwith the SEC since November 9, 1999 and were prepared in accordance with the\nrequirements of the 1934 Act. The SEC Documents (including without limitation\nall information and filings incorporated therein by reference) are, as of the\ntime filed, accurate and complete and contain no material misstatement and do\nnot omit to state any fact necessary to make the statements therein not\nmisleading.\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. Assuming the validity and accuracy of the representations of each\nCompany stockholder set forth in Section 1.1 of the Investment Agreement, such\nExpedia Common Shares shall be issued in compliance with federal and state\nsecurities laws. The authorized, issued and outstanding capital shares of\nExpedia are as set forth in the SEC Documents as of the dates of the financial\nstatements or other information included in the SEC Documents. All outstanding\nshares of capital stock of Expedia and Sub are duly authorized, validly issued,\nfully paid, nonassessable and not subject to any preemptive rights.\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  Reliance.  The foregoing representations and warranties are \n                 --------   \nmade by Expedia and Sub with the knowledge and expectation that Company is and\nthe Principal Stockholders are placing reliance thereon.\n\n                                       27\n\n \n          2.2.8  Tax Matters.  Neither Expedia nor any of its subsidiaries nor,\n                 -----------                                                \nto the knowledge of Expedia, any of their respective affiliates or agents is\naware of any agreement, plan or other circumstance that would prevent the Merger\nfrom constituting a transaction under Section 368(a) of the Code.\n\n          2.2.9  No Vote Required.  No vote of the shareholders of Expedia is \n                 ----------------              \nrequired by law, Expedia's Articles of Incorporation or Bylaws or otherwise in\norder for Expedia and Sub to consummate the Merger and the transactions\ncontemplated hereby.\n\n          2.2.10 Information Supplied.  None of the information supplied or to\n                 --------------------          \nbe supplied or incorporated by reference by Expedia, Sub, its auditors,\nattorneys, financial advisors or other consultants or advisors for inclusion in\nthe PPM, will not, at the time of the mailing of the PPM and any amendment or\nsupplement thereto, contain any untrue statement of a material fact or omit to\nstate any material fact required to be stated therein or necessary to make the\nstatements therein, in light of the circumstances in which they are made, not\nmisleading.\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 Stockholders, 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 policies to preserve intact\nits present business organizations, keep available the services of its present\nofficers, consultants, and employees and preserve its relationships with\ncustomers, suppliers, distributors and others having business dealings with it.\nCompany shall promptly notify Expedia of any event or occurrence or emergency\nwhich is not in the ordinary course of business of Company and which is material\nand adverse to Company's Business Condition. The foregoing notwithstanding,\nCompany shall not, except as approved in writing by Expedia, which approval\nshall not be unreasonably withheld:\n\n                 (a)  enter into any commitment or transaction (i) to be\nperformed over a period longer than six months in duration, or (ii) to purchase\nassets (other than raw materials, supplies, or cash equivalents) for a purchase\nprice in excess of $10,000;\n\n                 (b)  grant any bonus, severance, or termination pay to any\nofficer, director, independent contractor or employee of Company;\n\n                                       28\n\n \n               (c)  enter into or amend any agreements pursuant to which any\nother party is granted marketing, publishing or distribution rights of any type\nor scope with respect to any hardware or software products of Company;\n\n               (d)  except in the ordinary course of business consistent with\nprior practice, enter into or terminate any contracts, arrangements, plans,\nagreements, leases, licenses, franchises, permits, indentures, authorizations,\ninstruments or commitments, 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\ncorporate end user licenses or service agreements or enter into new corporate\nend user licenses or service agreements except in the case of agreements\npresently being negotiated (provided that Company shall not grant exclusive\nmarketing, reproduction, publishing, distribution or other rights related to any\nproduct, group of products or territory pursuant to any such agreements\npresently being negotiated); or\n\n               (h)  accelerate the vesting or otherwise modify any restricted\nstock, or other outstanding rights or other securities.\n\n         3.1.2 Dividends, Issuance of or Changes in Securities.  Neither \n               -----------------------------------------------          \nCompany nor its Subsidiaries shall: (i) declare or pay any dividends on or make\nother distributions to its stockholders (whether in cash, shares or property),\n(ii) issue, deliver, sell, or authorize, propose or agree to, or commit to the\nissuance, delivery, or sale of any shares of its capital stock of any class, any\nCompany Voting Debt or any securities convertible into its capital stock, any\noptions, warrants, calls, conversion rights, commitments, agreements, contracts,\nunderstandings, restrictions, arrangements or rights of any character obligating\nCompany to issue any such shares, Company Voting Debt or other convertible\nsecurities, other than (a) issuances of Company Common Stock upon the exercise\nof options granted under the Company 1999 Stock Option Plan or (b) issuances of\nsecurities issuable upon conversion or exercise of outstanding convertible or\nexercisable 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.  Neither Company nor its Subsidiaries shall\n               -------------------       \namend its Charter Documents.\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 \n\n                                       29\n\n \nother manner, any business or any corporation, partnership, association or other\nbusiness organization or division thereof or otherwise acquire or agree to make\nany 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 \n                 ------------       \npay any pension or retirement allowance not required by any existing Plan.\nCompany shall not enter into or modify any employment contracts, increase the\nsalaries, wage rates or fringe benefits of its officers, directors or employees\nor pay bonuses or other remuneration except for current salaries and other\nremuneration for which Company is obligated pursuant to a written agreement a\ncopy of which has been provided to Expedia.\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, during reasonable business hours but in such a\nmanner as not unduly to disrupt the business of Company, to its premises,\nproperties, contracts, commitments, books, records, and affairs, and shall\nprovide Expedia with such financial, technical, and operating data and other\ninformation pertaining to its business as Expedia may request.  With Company's\nprior consent, which shall not be unreasonably withheld, Expedia shall be\nentitled to make appropriate inquiries of third parties in the course of its\ninvestigation.\n\n     3.3  Breach of Representations and Warranties.  Except as specifically\n          ----------------------------------------                           \npermitted by this Agreement, neither Company nor any Principal Stockholder 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 Stockholders 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 best efforts to obtain, all consents and approvals, and make all filings,\nrequired with respect to the consummation of the Merger.\n\n     3.5  Tax Returns.  Company shall promptly provide Expedia with copies of \n          -----------      \nall tax returns, reports and information statements that have been filed or are\nfiled prior to the Closing Date.\n\n                                       30\n\n \n     3.6  Stockholder Approval.  Each of the Principal Stockholders agrees to\n          --------------------                                                  \nvote all of such Principal Stockholder's Company Common Shares, to the extent\nallowed by Company's Governing Documents or applicable law, for the approval of\nthis Agreement 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\nCompany stockholders 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 stockholders, 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\nSection 280G(b)(2) of the Code, in form and substance satisfactory to Expedia\nand its counsel, to satisfy all requirements of applicable state and federal\nsecurities laws, the DGCL and, to the extent within the power of the Company,\nSection 280G(b)(5)(B) of the Code and the regulations thereunder.  Company will\nnot provide or publish to its stockholders any material concerning it or its\naffiliates that violates the DGCL, the 1933 Act or the 1934 Act with respect to\nthe 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 8.4, neither Company nor any of the Principal\nStockholders 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, knowingly\nencourage, initiate or participate in any negotiations, inquiries or discussions\nwith respect to any offer or proposal to acquire all or any significant part of\nits business, assets or capital shares whether by merger, consolidation, other\nbusiness combination, purchase of assets, tender or exchange offer or otherwise\n(each of the foregoing, an \"Acquisition Transaction\"), (ii) disclose, in\nconnection with an Acquisition Transaction, any information not customarily\ndisclosed to any person other than Expedia or its representatives concerning\nCompany's business or properties or afford to any person other than Expedia or\nits representatives or entity access to its properties, books or records, except\nin the ordinary course of business and as required by law or pursuant to a\ngovernmental request for information (and then only after giving prior notice to\nExpedia), (iii) enter into or execute any agreement relating to an Acquisition\nTransaction, or (iv) make or authorize any public statement, recommendation or\nsolicitation in support of any Acquisition Transaction or any offer or proposal\nrelating to an Acquisition Transaction other than with respect to the Merger.\nIn addition, if Company is contacted by any third party expressing interest in\nan Acquisition Transaction, Company will promptly notify Expedia in writing of\nsuch contact.\n\n     3.9  Employees.  Prior to Closing, Company agrees to terminate the \n          --------- \nemployees listed on Schedule 3.9 and use its best efforts to obtain releases\nfrom such employees substantially in the form attached hereto as Exhibit 3.9.\nCompany shall pay all severance expenses, if any, associated with termination of\nsuch employees.\n\n                                       31\n\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 Stockholders contained in this Agreement.\n\n     3.11  Best Efforts.  Company and the Principal Stockholders 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     3.12  Employee Benefits Matters.  To the extent that service is relevant\n           -------------------------                                            \nfor eligibility, vesting and (except as would result in duplication of benefits)\nbenefit accruals under any employee benefit plan, program or arrangement\nmaintained by Expedia or any Subsidiary of Expedia, such plan, program or\narrangement shall credit each employee of Company or any Subsidiary of Company\n(a \"Company Employee\") who participate therein for service on or prior to the\nEffective Time with Company or any Subsidiary of Company or any Affiliate or\npredecessor of any of them.  Expedia agrees to offer to Company Employees\nbenefits commensurate with those benefits conferred to Expedia employees\nsimilarly situated.  In addition, Expedia shall (i) waive limitations on\nbenefits relating to any pre-existing conditions under any Expedia or Subsidiary\nof Expedia welfare benefit plan in which Company Employees may participate and\n(ii) recognize, for purposes of annual deductible and out-of-pocket limits under\nits medical and dental plans, deductible and out-of-pocket expenses paid by\nCompany Employees and their respective dependents under Company's and any of its\nSubsidiary's medical, dental and other healthcare plans in the calendar year in\nwhich the Effective Time occurs.  Provided, however, that any Company Employee\nwho continues with Expedia shall not be eligible to enter the Expedia 401(k)\nplan until the next regular entry date set forth in the Expedia 401(k) plan.\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 agrees (except as expressly contemplated by this\nAgreement or with Company's prior written consent) that either it or Sub will\ntake or cause the following actions to be taken:\n\n     4.1   Breach of Representations and Warranties.  Neither Expedia nor Sub \n           ----------------------------------------   \nwill take 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                                       32\n\n \n     4.2  1933 Act Materials.  If required by the 1933 Act, Expedia shall \n          ------------------    \nprovide Company and its stockholders with the information relating to Expedia as\nrequired by Rule 502(b) of Regulation D of the 1933 Act and copies of all SEC\nfilings.\n\n     4.3  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     4.4  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     4.5  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 or any of its\nSubsidiaries shall agree to acquire by merging or consolidating with, by\npurchasing an equity interest in, or a portion of the assets of, or by any other\nmanner, any business or any corporation, partnership, association or other\nbusiness organization or division thereof and any such business or assets to be\nacquired includes products that could reasonably be considered to be competitive\nwith the Company's business generally related to the online booking of\nproperties (a \"Competitive Business\"), Expedia shall either (i) delay any\nfilings required 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     4.6  Tax Free Reorganization.  Expedia shall not knowingly take any action\n          -----------------------                                           \n(either before or after the Closing) that would cause the Merger to fail to\nqualify as a reorganization within the meaning of Section 368(a) of the Code.\nExpedia agrees to file its federal and applicable state income tax returns\nconsistent with treatment of the Merger as a reorganization.\n\n     4.7  Nasdaq Listing.  Expedia will use its commercially reasonable best\n          --------------                                                       \nefforts (i) to cause the shares of Expedia Common Stock to be issued in the\nMerger to be quoted upon the Effective Time on the Nasdaq National Market or\nlisted on such national securities exchange as Expedia Common Stock is listed\nand (ii) to cause the shares of Expedia Common Stock issued upon the exercise of\nassumed Company Options to be quoted upon issuance on the Nasdaq National Market\nor listed on such national securities exchange as shares of Expedia Common Stock\nare listed.\n\n                                   ARTICLE V\n                             ADDITIONAL AGREEMENTS\n                                        \n\n                                       33\n\n \n     In addition to the foregoing, Expedia, Sub, Company and the Principal\nStockholders each agree to take the following actions after the execution of\nthis Agreement.\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\nRegistration Statement and investment agreements in the form attached as Exhibit\n5.1 which shall be entered into by each New Expedia Shareholder and Expedia (the\n\"Investment Agreements\").  Expedia shall be entitled to place appropriate\nlegends on the certificate evidencing any Expedia Common Shares to be received\nby New Expedia Shareholders pursuant to the terms of this Agreement and to issue\nappropriate stop transfer instructions to the transfer agent for Expedia Common\nShares consistent with the terms of the Investment 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 Stockholders 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.\n\n     5.3  HSR Act Filings.\n          ---------------   \n\n          5.3.1  Filings and Cooperation.  Each of Expedia and Company shall \n                 -----------------------   \ntake all reasonable steps (i) promptly to make or cause to be made the filings\nrequired of such party or any of its Affiliates or Subsidiaries under the HSR\nAct with respect to the Merger and the other transactions provided for in this\nAgreement, (ii) to comply in a timely manner with any request under the HSR Act\nfor additional information, documents, or other material received by such party\nor any of its Affiliates or Subsidiaries from the Federal Trade Commission or\nthe Department of Justice or other Governmental Entity in respect of such\nfilings, the Merger, or such other transactions, and (iii) to cooperate with the\nother party in connection with any such filing and in connection with resolving\nany investigation or other inquiry of any such agency or other Governmental\nEntity under any Antitrust Laws (as defined in Section 5.3.2) with respect to\nany such filing, the Merger, or any such other transaction. Company shall\npromptly inform Expedia of any material communication with, and any proposed\nunderstanding, undertaking, or agreement with, any Governmental Entity regarding\nany such filings, the Merger, or any such other transactions. Company shall not\nparticipate in any meeting with any Governmental Entity in respect of any such\nfilings, investigation, or other inquiry without giving Expedia notice of the\nmeeting and, to the extent permitted by such Governmental Entity, the\nopportunity to attend and participate.\n\n          5.3.2  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,\n\n                                       34\n\n \nif any administrative or judicial action or proceeding is instituted (or\nthreatened to be instituted) challenging the Merger as violative of any\nAntitrust Law, and, if by mutual agreement, Expedia and Company decide that\nlitigation is in their best interests, each of Expedia and Company shall\ncooperate vigorously to contest and resist any such action or proceeding and to\nhave vacated, lifted, reversed, or overturned any decree, judgment, injunction,\nor other order, whether temporary, preliminary, or permanent (each an \"Order\"),\nthat is in effect and that prohibits, prevents, or restricts consummation of the\nMerger. Each of Expedia and Company shall take such reasonable action as may be\nrequired to cause the expiration of the notice periods under the HSR Act or\nother Antitrust Laws with respect to the Merger and such other transactions as\npromptly as possible after the execution of this Agreement. Notwithstanding\nanything to the contrary in this Section 5.3.2 or in Section 5.3.1, (x) Expedia\nshall not be required to divest any of its respective businesses, product lines,\nor assets, or to take or agree to take any other action or agree to any\nlimitation that would have a material adverse effect on vacation planning\nbusiness of Expedia combined with the Surviving Corporation after Closing, (y)\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 and (z) neither Expedia nor Company\n(nor any of their Subsidiaries) shall be required to continue to contest or\nresist any action or proceeding brought by a Governmental Entity if it concludes\nthat such action is no longer in its best interest.\n\n     5.4  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     5.5  Expenses.  Whether or not the Merger is consummated, all fees, costs\n          --------                                                              \nand other expenses incurred in connection with this Agreement and the\ntransactions contemplated hereby and thereby shall be paid by the party\nincurring such expense and, with respect to expenses of Company, to the extent\nnot paid prior to the Closing such expenses shall be accrued on the Final Pro\nForma Closing Balance Sheet.\n\n     5.6  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     5.7  Public Announcements.  Neither Expedia, Company nor the Principal\n          --------------------                                               \nStockholders 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) without\nthe prior written consent of each of the other parties hereto.  It is\nanticipated that a mutually acceptable joint press release shall be issued only\nafter the Closing.\n\n     5.8  Officers and Directors.  Expedia agrees that all rights to\n          ----------------------                                      \nindemnification (including advancement of expenses) existing on the date hereof\nin favor of the present or former officers, directors and employees of Company\nor any of its Subsidiaries (collectively, the \"Indemnified Parties\") with\nrespect to actions taken in their capacities as officers, directors and\nemployees prior to the Effective Time as provided in Company's Certificate of\nIncorporation or Bylaws, employment agreements and indemnification agreements\nshall survive the Merger and continue in full force and effect for a period of\nthree years following the Effective Time and shall be guaranteed by Expedia.\nThis Section 5.8 shall survive the consummation of the Merger at the Effective\nTime, and is intended to be for the benefit of, and shall be enforceable by, the\nIndemnified Parties, their heirs and personal representatives and shall be\nbinding on the Surviving Corporation and its respective successors and assigns.\n\n                                   ARTICLE VI\n                              CONDITIONS PRECEDENT\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          6.1.3  Termination of Ownership by Expedia.  All shares, warrants or\n                 -----------------------------------\nother evidences of equity ownership of Company owned by Expedia or Microsoft\nCorporation, a Washington corporation (\"Microsoft\") shall be terminated and\ncancelled by Company and \n\n                                       36\n\n \nExpedia or Microsoft, as applicable, immediately prior to, and subject to the\noccurrence of, the Effective Time.\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                 -----------------------------------------------------------\nStockholders.  The representations and warranties of Company and the Principal\n------------                                                                    \nStockholders 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 as otherwise contemplated by\nthis Agreement.  Expedia shall have received a certificate signed by each of\nSteven D. Murch and Greg Slyngstad, individually as stockholders and as officers\nof Company, to such effect on the Closing Date.\n\n          6.2.2  Performance of Obligations of Company and the Principal\n                 -------------------------------------------------------\nStockholders.  Company and the Principal Stockholders shall have performed\n------------\nin all material respects all agreements and covenants required to be performed\nby them under this Agreement prior to the Closing Date, and Expedia shall have\nreceived a certificate signed by each of Steven D. Murch and Greg Slyngstad,\nindividually as stockholders and as officers of Company, to such effect on the\nClosing Date and except such representations and warranties which address\nmatters only as of a particular date which shall remain true and correct in all\nmaterial respects as of such dates.\n\n          6.2.3  Investment and Escrow Agreements.  Expedia shall have received \n                 --------------------------------   \nduly executed Escrow Agreements and Investment Agreements from each stockholder.\n\n          6.2.4  Employment Agreements for Required Employees.  As of the \n                 --------------------------------------------   \nClosing, each of the Required Employees listed on Schedule 6.2.4 shall have\nsigned, and not taken any action or expressed any intent to terminate or modify,\nan offer letter accepting employment with Company or Expedia together with any\nsuch other agreements as are customarily executed by new employees of Expedia or\nits Subsidiaries or other affiliates in form and content satisfactory to\nExpedia.\n\n          6.2.5  Noncompetition Agreements.  Each of the Principal Stockholders \n                 -------------------------   \nshall have executed a Noncompetition Agreement substantially in the form\nattached as Exhibit 6.2.5 and not taken any action or expressed any intent to\nterminate or modify such agreements.\n\n          6.2.6  Legal Action.  There shall not be overtly threatened or \n                 ------------   \npending any action, proceeding or other application before any court or\nGovernmental Entity brought by any person or Governmental Entity: (i)\nchallenging or seeking to restrain or prohibit the consummation of the\ntransactions contemplated by this Agreement, or seeking to obtain any damages\ncaused by such transactions which if successful would have a material adverse\neffect on the viability of such transactions; or (ii) seeking to prohibit or\nimpose any limitations on Expedia's ownership or operation of all or any portion\nof Company's business or \n\n                                       37\n\n \nassets as a result of the transactions contemplated by the Agreement which if\nsuccessful would have a material adverse effect on the viability of such\ntransactions.\n\n          6.2.7  Opinion of Counsel.  Expedia shall have received an opinion \n                 ------------------      \ndated as of the Closing Date of the Venture Law Group, counsel to Company,\nsubstantially in the form attached as Exhibit 6.2.7.\n\n          6.2.8  Stockholder Approvals.  This Agreement, the Merger shall have\n                 ---------------------      \nbeen approved by the requisite voting power of the outstanding Company Shares\nunder applicable law and no more than five percent (5%) of the outstanding\nCompany Shares shall be Eligible Appraisal Shares.\n\n          6.2.9  Consents.  Expedia shall have received duly executed copies \n                 --------   \nof all 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 material contracts\nand leases of Company and for Expedia to consummate the transactions\ncontemplated hereby in form and substance reasonably satisfactory to Expedia,\nexcept for such thereof as Expedia and Company shall have agreed in writing\nshall not be obtained.\n\n          6.2.10 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 forth in Schedule 1.4, no warrants,\noptions, convertible securities or other rights to purchase or acquire any\nsecurities of Company shall be outstanding.\n\n          6.2.11 Assignments of Personal Rights to Company Intellectual \n                 ------------------------------------------------------\nProperty.  The Principal Stockholders, 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          6.2.12 No Casualty.  There shall not have been any damage, \n                 -----------   \ndestruction or loss, whether or not covered by insurance, materially and\nadversely affecting the material proprietary software, documentation or other\nCompany Intellectual Property where there are no undamaged duplicate copies of\nsuch proprietary software, documentation or other Company Intellectual Property\nin the possession of Company. Company shall have delivered copies of its source\ncode, Company website information and code and other Company Intellectual\nProperty as requested by Expedia.\n\n          6.2.13 Financial Statement Matters.  Company shall have provided \n                 ---------------------------   \nExpedia with the Final Pro Forma Closing Balance Sheet (as defined in Section\n2.1.6) which shall have been prepared in good faith, in a form reasonably\nsatisfactory to Expedia and shall not reflect a material adverse change in\nCompany from the Pro Forma Balance Sheet attached as Schedule 2.1.6. In\naddition, Company shall have provided Expedia with financial statements audited\nby an \n\n                                       38\n\n \nindependent public accountant for the years ended December 31, 1998 and 1999\nsatisfactory for inclusion in a Form 8-K filing with the SEC disclosing the\ntransactions contemplated by this Agreement.\n\n          6.2.14 Transaction Expenses.  Expedia shall have received from \n                 --------------------   \nCompany a true, correct and complete schedule of all expenses paid or incurred\nin conjunction with the negotiation, preparation, execution and performance of\nthis Agreement and the transactions contemplated hereby by or on behalf of\nCompany through the Closing Date (the \"Company Expenses\"), accompanied by a\ncertificate signed by the President of Company certifying the accuracy and\ncompleteness thereof.\n\n          6.2.15 Tax Matters.  The Company shall have filed with the IRS a \n                 -----------   \nForm 8023, in form reasonably satisfactory to counsel to Expedia, as\ncontemplated by Section 2.7(g) hereof.\n\n     6.3  Conditions of Obligation of Company.  The obligation of Company and \n          -----------------------------------   \nthe Principal Stockholders to effect the Merger is subject to the satisfaction\nof the following conditions unless waived by Company and the Principal\nStockholders:\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 \n                 ---------------------------------------------   \nSub shall 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                 ----------------------------   \nStockholders 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          6.3.4  Tax Opinion.  Company and the Principal Stockholders shall have\n                 -----------   \nreceived an opinion dated the Closing Date of Venture Law Group, counsel to\nCompany and the Principal Stockholders, relating to the tax-free treatment of\nthe Merger. In connection therewith, such counsel may rely on reasonable\nrepresentations of the Company and the stockholders of Company.\n\n          6.3.5  Listing.  Expedia shall have filed an Application for the\n                 -------                                                    \nListing of Additional Shares with Nasdaq with respect to the Expedia Common\nShares to be issued in the Merger.\n\n                                       39\n\n \n                                  ARTICLE VII\n                                INDEMNIFICATION\n\n     7.1  Indemnification Relating to Agreement.  The stockholders of Company,\n          -------------------------------------   \nby reason of the approval by the stockholders of the Merger and\/or each\nstockholder's acceptance of the consideration provided for in Section 1.4 and by\nthe execution of the Escrow Agreement pursuant to Section 1.4.6 which is a\ncondition to receiving such consideration, shall, jointly and severally, agree\nto defend, indemnify, and hold Expedia harmless from and against, and to\nreimburse Expedia with respect to, any and all losses, damages, liabilities,\nclaims, judgments, settlements, fines, costs, and expenses (including attorneys'\nfees) (\"Indemnifiable Amounts\") of every nature whatsoever incurred by Expedia\nby reason of or arising out of or in connection with (i) any breach, or any\nclaim (including claims by parties other than Expedia) that if true, would\nconstitute a breach, by Company or the Principal Stockholders of any\nrepresentation or warranty of Company or the Principal Stockholders contained in\nthis Agreement or in any certificate or other document delivered to Expedia\npursuant to the provisions of this Agreement, (ii) the failure, partial or\ntotal, of Company or the Principal Stockholders to perform any agreement or\ncovenant required by this Agreement to be performed by it or them, (iii) any\naction or omission by Company, the Principal Stockholders, their affiliates,\nagents or representatives relating to this Agreement, and (iv) any unpaid\nfederal or state tax liability, or asserted liability of Company relating to any\nperiod of time prior to and through the Closing which is not recorded as a\nliability in the Financial Statements or the Final Pro Forma Closing Balance\nSheet, and in each case without giving effect to any \"materiality\" limitations\nor references to \"material adverse effect\" set forth therein. The obligations of\nany Holder to indemnify Expedia shall be determined without regard to any right\nto indemnification to which any Holder may have in his or her capacity as an\nofficer, director, employee, agent or any other capacity of Company and no\nHolder shall be entitled to any indemnification from Company or the Surviving\nCorporation for amounts paid hereunder. There shall be no right of contribution\nfrom Company or any successor to Company.\n\n     7.2  Third Party Claims.  With respect to any claims or demands by third\n          ------------------                                                   \nparties, other than claims or demands covered by Section 7.3, whenever Expedia\nshall have received a written notice that such a claim or demand has been\nasserted or threatened, Expedia shall notify the \"Representative\" (as designated\nin the Escrow Agreement) of such claim or demand and of the facts within\nExpedia's knowledge that relate thereto within a reasonable time after receiving\nsuch written notice.  The Representative shall then have the right to contest,\nnegotiate or settle any such claim or demand through counsel of his own\nselection, satisfactory to Expedia and solely at the Holders' own cost, risk,\nand expense.  Notwithstanding the preceding sentence, the Holders shall not\nsettle, compromise, or offer to settle or compromise any such claim or demand\nwithout 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 Representative\nfails to give written notice to Expedia of his intention to contest or settle\nany such claim or demand within twenty (20) calendar days after \n\n                                       40\n\n \nExpedia has notified the Representative that any such claim or demand has been\nmade in writing and received by Expedia, or if any such notice is given but any\nsuch claim or demand is not promptly contested by the Representative, Expedia\nshall have the right to satisfy and discharge the same by payment, compromise,\nor otherwise, in accordance with the procedures set forth in the Escrow\nAgreement. Expedia may also, if it so elects and entirely within its own\ndiscretion, defend any such claim or demand if the Representative fails to give\nnotice of his intention to contest or settle any such claim or demand, in which\nevent Expedia and its affiliates shall be entitled to indemnification to the\nfull extent of the Escrowed Shares (as defined in the Escrow Agreement ) for any\nand all costs, 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 or participate in any federal or state income tax\naudit, and Expedia shall have the sole right to conduct any tax audit or other\ntax contest relating to the Expedia tax return.  In the event any Indemnifiable\nAmounts arise out of such tax audits, Expedia will notify the Representative\nprior to taking any action with respect thereto and allow him or her to comment\non any written submissions relating to any Indemnifiable Amounts.\n\n     7.4  Limitations.  Notwithstanding any other provision in this Article VII,\n          -----------        \nExpedia shall be entitled to indemnification only if the aggregate Indemnifiable\nAmounts exceed Seventy-Five Thousand Dollars ($75,000) (the \"Threshold Amount\"),\nprovided that at such time as the amount to which Expedia is entitled to be\nindemnified exceeds the Threshold Amount, Expedia shall be entitled to be\nindemnified up to the full Indemnifiable Amounts including the Threshold Amount.\nNotwithstanding any other provision in this Article VII, Indemnifiable Amounts\nto be paid by the Company stockholders shall be satisfied solely by the\nsecurities deposited into escrow pursuant to Section 1.4.6, provided that the\nobligations of the Company stockholders for Indemnifiable Amounts arising out of\nbreaches of the representations, warranties and covenants in Section 2.1.7\nrelating to taxes, and fraud or willful misstatements or willful omissions by\nthe Principal Stockholders or Company shall not be subject to the foregoing\nlimitation (but in no event shall Company stockholders be obligated to pay\naggregate Indemnifiable Amounts, arising out of fraud or willful misstatements\nor willful omissions by the Principal Stockholders (each, a \"Fraudulent Act\")).\nWith respect to Indemnifiable Amounts arising out of a Fraudulent Act:  (i) no\nPrincipal Stockholder responsible for all or a part of such Fraudulent Act shall\nbe entitled to contribution from any Company stockholder who was not responsible\nfor a part of such Fraudulent Act, (ii) each Principal Stockholder responsible\nfor all or a part of such Fraudulent Act shall indemnify and hold harmless each\nCompany shareholder who was not responsible for any part of such Fraudulent Act\nfrom and against all Indemnifiable Amounts paid, payable or satisfied by such\nCompany stockholder (other than by means of the securities deposited into escrow\npursuant to Section 1.4.6) provided that Expedia's right to be indemnified by\nsuch Principal Stockholder shall have a priority to the claims of other Company\nstockholders, and (iii) no Principal Stockholder responsible for all or a part\nof such Fraudulent Act shall have his liability limited by this Section.\n\n     7.5  Time Limit.  The provisions of this Article VII shall apply only to\n          ----------                                                           \nIndemnifiable Amounts which are incurred or relate to claims which are asserted\nor overtly threatened within \n\n                                       41\n\n \none year from the Closing Date; provided (i) that the obligation of the Company\nstockholders to indemnify Expedia for breaches of the representations,\nwarranties and covenants in Sections 2.1.7 relating to taxes (as defined in\nSection 2.1.7) shall continue until thirty (30) days after the expiration of all\nstatutes of limitations applicable to such taxes and (ii) that obligations of\nthe Company stockholders for Indemnifiable Amounts arising out of fraud or\nwillful misstatements or omissions of Company or the Principal Stockholders will\nnot have a time limit.\n\n     7.6  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                                  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 Stockholders 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, if there has been a material\nbreach by Expedia of any representation, warranty, covenant or agreement set\nforth in the Agreement or other ancillary agreements, which breach has not been\ncured within ten (10) business days following receipt by Expedia of notice of\nsuch breach.\n\n     8.4  Stockholder Approval.  This Agreement may be terminated by either\n          --------------------                                               \nExpedia or Company if any approval of the stockholders of Company shall not have\nbeen obtained by reason of the failure to obtain the required vote upon a vote\ntaken at any Company stockholders meeting or any adjournment thereof.\n\n     8.5  Injunction.  This Agreement may be terminated by either Expedia or\n          ----------                                                          \nCompany if any permanent injunction or other order of a court or other competent\nauthority preventing the Merger shall have become final and not subject to\nappeal.\n\n     8.6  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 June 30, 2000.\n\n     8.7  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 \n\n                                       42\n\n \nhave no effect, and there shall be no liability or obligation on the part of\nExpedia, Company, Sub or their respective officers or directors or the Principal\nStockholders, except that (i) the provisions of Sections 5.5, 5.7, 9.2, 9.11,\nand any other confidentiality agreement between the parties shall survive any\nsuch termination and abandonment, and (ii) no party shall be released or\nrelieved from any liability arising from the willful breach by such party of any\nof its representations, warranties, covenants or agreements as set forth in this\nAgreement.\n\n                                   ARTICLE IX\n                                 MISCELLANEOUS\n\n     9.1  Entire Agreement.  This Agreement, including the exhibits and \n          ----------------   \nschedules delivered pursuant to this Agreement, and any confidentiality\nagreement between the parties, contain all of the terms and conditions agreed\nupon by the parties relating to the subject matter of this Agreement and\nsupersede all prior agreements, negotiations, correspondence, undertakings, and\ncommunications of the parties, whether oral or written, respecting that subject\nmatter.\n\n     9.2  Governing Law.  Other than corporate matters with respect to the \n          -------------   \nMerger which shall be governed by Delaware laws, as applicable, this Agreement\nshall be governed 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.\nExpedia, Company, the Principal Stockholders and the 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\ndelivery if personally delivered by hand, (ii) upon the third day after such\nnotice is (a) deposited in the United States mail, if mailed by registered or\ncertified mail, postage prepaid, return receipt requested, or (b) sent by a\nnationally recognized overnight express courier, or (iii) by facsimile upon\nwritten confirmation (other than the automatic confirmation that is received\nfrom the recipient's facsimile machine) of receipt by the recipient of such\nnotice:\n\n     If to Expedia or Sub:                   Expedia, Inc.\n     ---------------------                   13810 SE Eastgate Way, Suite 400\n                                             Bellevue, WA 98005                 \n                                             Attention: Mark S. Britton,        \n                                              Vice 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     --------------                          5000 Bank of America Tower   \n                                             701 Fifth Avenue             \n                                             Seattle, WA 98104-7078       \n                                             Attention: Mark R. Beatty    \n                                             Telephone No.: (206) 623-7580\n                                             Facsimile No.: (206) 623-7022 \n\n                                       43\n\n \n     If to Company:                          VacationSpot.com, Inc.\n     -------------                           2200 Sixth Avenue, Suite 1122\n     Or the Principal Stockholders           Seattle, WA 98121             \n                                             Attention: Steve Murch        \n                                             Telephone No.: (206) 256-0504 \n                                             Facsimile No.: (206) 256-0502  \n                                             \n     With a copy to:                         Venture Law Group\n     --------------                          4750 Carillon Point\n                                             Kirkland, Washington 98033\n                                             Attention: John Robertson\n                                             Telephone No. (425) 739-8700\n                                             Facsimile No: (425) 739-8750\n\n     If to the                               Carla S. Newell\n     ---------                               575 High Street\n     Representative:                         Suite 400, Palo Alto, CA  94301 \n     --------------                          Telephone No.: (650) 614-8210   \n                                             Facsimile No.: (650) 614-8222    \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.\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 and\nexcept for claims permitted by Section 7.5, such survival shall terminate one\nyear from the Effective Time.\n\n     9.6  Assignment.  No party to this Agreement may assign, by operation of \n          ----------   \nlaw or 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\nthis Section 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.\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 \n\n                                       44\n\n \nAgreement by any party hereto who shall have been furnished the final form of\nthis Agreement shall constitute the execution and delivery of this Agreement by\nsuch 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, and headings contained in this Agreement are for reference\npurposes only and shall not affect in any way the meaning or interpretation of\nthis Agreement.\n\n     9.11 Confidentiality.  Prior to any required disclosure by Expedia pursuant\n          ---------------   \nto applicable laws, or any other disclosure by Expedia, Company and the\nPrincipal Stockholders agree to keep confidential and not to disclose the terms\nand conditions of this Agreement specifically including, without limitation, the\nFinal Valuation and number of Expedia Common Shares to be issued and to advise\nall Company officers, directors, stockholders and employees (and counsel to\nCompany and its stockholders) of this obligation and to indemnify and hold\nExpedia harmless from any breach of this agreement in accordance with the\nprovisions 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                                       45\n\n \n             SIGNATURE PAGE - AGREEMENT AND PLAN OF REORGANIZATION\n\n     IN WITNESS WHEREOF, Expedia, Sub, Company and the Principal Stockholders\nhave executed this Agreement as of the date first written above.\n\nEXPEDIA, INC.                                       VACATIONSPOT.COM, INC.\n \n \nBy \/s\/ Richard N. Barton                            By \/s\/ Steven D. Murch\n   ------------------------------------                ------------------------\nName: Richard N. Barton                             Name: Steven D. Murch\nTitle: President                                    Title: President\n\nVACATIONSUB, INC.\n\nBy  \/s\/ Mark Britton\n  ------------------------------------- \nName: Mark Britton\nTitle: Vice President and Secretary\n\nPRINCIPAL STOCKHOLDERS:\n\n \n\/s\/ Steven D. Murch                                 \/s\/ Greg Slyngstad\n---------------------------------------             ---------------------------\nSteven D. Murch                                     Greg Slyngstad\n \n                \n\n                                       46\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-43180","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\/43180","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=43180"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43180"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43180"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}