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Entry into a Material Definitive Agreement

On November4, 2015, Expedia, Inc., a Delaware corporation (the Company or Expedia), HomeAway, Inc., a Delaware corporation (HomeAway), and HMS 1 Inc., a Delaware corporation and a direct wholly owned subsidiary of Expedia (Purchaser), entered into an Agreement and Plan of Reorganization (the Transaction Agreement).

Pursuant to the Transaction Agreement, and upon the terms and conditions thereof, Purchaser will commence an exchange offer (the Offer) to purchase any and all of HomeAways outstanding shares of common stock (the HomeAway Shares), with each HomeAway Share accepted by Purchaser in the Offer to be exchanged for the right to receive $10.15 in cash and 0.2065 of a validly issued, fully paid and non-assessable share of Company common stock, plus cash (without interest) in lieu of any fractional shares of Company common stock, in each case subject to any applicable withholding of taxes (together, the Transaction Consideration).It is a condition to the closing of the Offer that at least a majority of the outstanding HomeAway Shares, when added to the HomeAway Shares owned by the Company and Purchaser (if any), are validly tendered and not validly withdrawn. Immediately following the closing of the Offer, on the terms and subject to the conditions set forth in the Transaction Agreement, (i)Purchaser will be merged with and into HomeAway (the First Merger), with HomeAway surviving the First Merger and (ii)immediately following the First Merger, HomeAway will be merged with and into the Company (the Second Merger and together with the First Merger, the Mergers), with the Company surviving the Second Merger.

In addition to the minimum tender condition, completion of the Offer is subject to the satisfaction or waiver of a number of other customary closing conditions as set forth in the Transaction Agreement, including receipt of required regulatory approvals and the expiration or termination of the applicable HSR waiting period, and effectiveness of a registration statement on FormS-4 registering the shares of HomeAway common stock to be issued in connection with the Offer and the First Merger. The Transaction Agreement contemplates that, if the Offer is completed, the First Merger will be effected pursuant to Section251(h) of the General Corporation Law of the State of Delaware (the DGCL), which permits completion of the First Merger without a vote of the holders of HomeAway Shares upon the acquisition by Purchaser of a majority of HomeAway Shares that are then issued and outstanding.

The HomeAway board of directors has agreed to recommend that holders of HomeAway Shares accept the Offer and tender their HomeAway Shares to Purchaser pursuant to the Offer, and has agreed not to solicit alternative transactions, subject to customary exceptions.

The Transaction Agreement contains certain termination rights by the Company and HomeAway. If the Transaction Agreement is terminated under specified circumstances, including with respect to the change of the recommendation of HomeAways board...


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