General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D General Statement of Beneficial Ownership 22 86K
2: EX-1 Underwriting Agreement 3 11K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 14 53K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 8 26K
5: EX-4 Instrument Defining the Rights of Security Holders 11 49K
6: EX-6 Opinion re: Discount on Capital Shares 20 82K
7: EX-7 Opinion re: Liquidation Preference 7 26K
EXHIBIT 6
ESCROW AGREEMENT
BETWEEN
EXPEDIA, INC.
A WASHINGTON CORPORATION,
VACATIONSPOT.COM, INC.
A DELAWARE CORPORATION,
STOCKHOLDERS OF VACATIONSPOT.COM, INC.
REPRESENTATIVE
AND
CHASEMELLON SHAREHOLDER SERVICES, LLC
AS CUSTODIAN
DATED
AS OF MARCH 17, 2000
TABLE OF CONTENTS
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PAGE
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1. ESTABLISHMENT OF ESCROW; ACCOUNT..........................................................1
1.1 DEPOSIT OF SHARES..................................................................1
1.2 DIVIDENDS; VOTING AND OWNERSHIP....................................................2
1.3 NO ENCUMBRANCE.....................................................................2
1.4 POWER TO TRANSFER ESCROWED SHARES..................................................2
2. RESOLUTION OF CLAIMS......................................................................2
2.1 INDEMNIFICATION OBLIGATIONS........................................................3
2.2 NOTICE OF CLAIMS...................................................................3
2.3 RESOLUTION OF CLAIMS...............................................................3
2.3.1 Uncontested Claims........................................................3
2.3.2 Contested Claims..........................................................4
2.3.3 Arbitration...............................................................5
2.4 CASH SETTLEMENT OPTION.............................................................6
3. RELEASE FROM ESCROW.......................................................................6
3.1 RELEASE OF ESCROWED SHARES.........................................................6
3.2 RELEASE OF RETAINED ESCROW.........................................................7
4. CUSTODIAN.................................................................................7
4.1 DUTIES.............................................................................7
4.2 LEGAL OPINIONS.....................................................................8
4.3 SIGNATURES.........................................................................8
4.4 RECEIPTS AND RELEASES..............................................................8
4.5 REFRAIN FROM ACTION................................................................8
4.6 INTERPLEADER.......................................................................8
4.7 TAX FORMS..........................................................................8
5. INDEMNIFICATION...........................................................................8
5.1 WAIVER AND INDEMNIFICATION.........................................................8
5.2 CONDITIONS TO INDEMNIFICATION......................................................9
6. STOCKHOLDERS REPRESENTATIVE...............................................................9
7. ACKNOWLEDGMENT BY THE CUSTODIAN..........................................................11
8. RESIGNATION OR REMOVAL OF CUSTODIAN; SUCCESSOR...........................................11
8.1 RESIGNATION AND REMOVAL...........................................................11
8.1.1 Notice...................................................................11
8.1.2 Court Appointment........................................................11
8.2 SUCCESSORS........................................................................12
8.3 NEW CUSTODIAN.....................................................................12
8.4 RELEASE...........................................................................12
8.4 CHANGE OF TRANSFER AGENT..........................................................12
9. FEE......................................................................................12
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10. TERMINATION.............................................................................13
11. MISCELLANEOUS PROVISIONS................................................................13
11.1 PARTIES IN INTEREST.............................................................13
11.2 ATTORNEYS' FEES.................................................................13
11.3 ENTIRE AGREEMENT................................................................13
11.4 NOTICES.........................................................................13
11.5 CHANGES.........................................................................14
11.6 SEVERABILITY....................................................................14
11.7 COUNTERPARTS....................................................................14
11.8 HEADINGS........................................................................14
11.9 GOVERNING LAW...................................................................14
11.10 BINDING EFFECT.................................................................15
11.11 AMENDMENT......................................................................15
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INDEX OF DEFINED TERMS
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TERM PAGE DEFINED
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Additional Shares............................................................................2
Arbitrable Claims............................................................................4
Chase.......................................................................................12
Claim........................................................................................3
Company......................................................................................1
Contested Claim..............................................................................4
CPR Rules....................................................................................5
Custodian....................................................................................1
Damages......................................................................................3
Effective Time...............................................................................1
Escrow Agreement.............................................................................1
Expedia......................................................................................1
Expedia Demand...............................................................................3
Expedia Distribution Notice..................................................................4
Initial Escrowed Shares......................................................................2
Merger.......................................................................................1
Notice of Claim..............................................................................3
Principal Stockholders.......................................................................1
Release Date.................................................................................7
Release Notice...............................................................................7
Released Escrow..............................................................................7
Reorganization Agreement.....................................................................1
Representative...............................................................................1
Representative Distribution Notice...........................................................4
Retained Escrow..............................................................................7
Sub..........................................................................................1
Transfer Agent...............................................................................2
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ESCROW AGREEMENT
This Escrow Agreement (this "ESCROW AGREEMENT") is made and entered into
as of March 17, 2000 (the "EFFECTIVE TIME"), by and among Expedia, Inc., a
Washington corporation ("EXPEDIA"), VacationSpot.com, Inc., a Delaware
corporation ("COMPANY"), the stockholders of Company executing a signature page
to this Escrow Agreement (the "STOCKHOLDERS"), Carla S. Newell as the
representative of the Stockholders (the "REPRESENTATIVE"), and ChaseMellon
Shareholder Services, LLC as custodian of the Escrowed Shares (as each is
defined below) (the "CUSTODIAN").
RECITALS
A. VacationSub, Inc., a Delaware corporation and a wholly owned subsidiary of
Expedia ("SUB"), Company, and certain principal Stockholders (the "PRINCIPAL
STOCKHOLDERS") have entered into an Agreement and Plan of Reorganization dated
as of January 30, 2000 (the "REORGANIZATION AGREEMENT") setting forth certain
terms and conditions pursuant to which Sub is being merged with and into Company
(the "MERGER").
B. Pursuant to Section 1.4.1 of the Reorganization Agreement, Expedia
Common Shares are to be issued to the Stockholders.
C. The Reorganization Agreement provides that Expedia Common Shares
having a value equal to ten percent (10%) of the Final Valuation ("ESCROW
PERCENTAGE") as provided for in the Reorganization Agreement shall be held in
escrow to secure certain indemnification obligations of the Holders to Expedia
under Article VII of the Reorganization Agreement on the terms and conditions
set forth therein and herein.
D. Unless otherwise indicated herein, all terms beginning with an
initial capital shall have the same meaning as set forth in the Reorganization
Agreement.
NOW THEREFORE, for and in consideration of the premises and mutual
covenants and agreements contained in the Reorganization Agreement and in this
Escrow Agreement, the parties agree as follows:
1. ESTABLISHMENT OF ESCROW; ACCOUNT
1.1 DEPOSIT OF SHARES. Expedia shall immediately deposit on the
Stockholders' behalf with the Custodian an aggregate of 259,741 Expedia Common
Shares issued in the respective names of the Stockholders and in the relative
amounts as set forth on Exhibit 1.1 hereto (the "INITIAL ESCROWED SHARES") and
shall promptly deliver to the Custodian duly authorized share certificates for
the Initial Escrowed Shares registered in the respective names of the
Stockholders as set forth on Exhibit 1.1 hereto. In lieu of issuing share
certificates,
the issuance of Escrowed Shares (as defined below) provided for in this Escrow
Agreement may be recorded by book entry in the stock transfer records of the
transfer agent for Expedia's Common Shares (the "TRANSFER AGENT"). Any Expedia
capital shares that result from any share dividend, reclassification, stock
split, subdivision or combination of shares, recapitalization, merger or other
events made with respect to any Expedia Common Shares held in escrow under this
Escrow Agreement ("ADDITIONAL SHARES") shall be delivered to the Custodian and
shall be held in the Escrow Account (and, as required under this Escrow
Agreement, shall be released from the Escrow Account). Unless otherwise
indicated, as used in this Escrow Agreement, the term "ESCROWED SHARES" includes
the Initial Escrowed Shares and any Additional Shares. The Custodian agrees to
accept delivery of the Escrowed Shares and to hold such Escrowed Shares in
escrow in accordance with this Escrow Agreement and to release the Escrowed
Shares out of escrow as provided in this Escrow Agreement. The Escrowed Shares
are to be held by the Custodian and released pursuant to the provisions of this
Escrow Agreement.
1.2 DIVIDENDS; VOTING AND OWNERSHIP. Any cash dividends, dividends
payable in property or other distributions of any kind (except for Additional
Shares) made in respect of the Escrowed Shares shall be distributed currently by
Expedia to the Stockholders on a pro rata basis. Each Stockholder shall have the
right to vote the Escrowed Shares held in escrow for the account of such
Stockholder so long as such Escrowed Shares are held in escrow. While the
Escrowed Shares remain in the Custodian's possession pursuant to this Escrow
Agreement, the Stockholders shall retain and shall be able to exercise all other
incidents or rights of ownership of the Escrowed Shares that are not
inconsistent with the terms and conditions hereof. Expedia shall take all steps
necessary to allow the exercise by Stockholders of all such voting and other
rights with respect to the Escrowed Shares.
1.3 NO ENCUMBRANCE. None of the Escrowed Shares or any beneficial
interest therein may be pledged, sold, assigned or transferred, including by
operation of law, by a Stockholder or may be taken or reached by any legal or
equitable process in satisfaction of any debt or other liability of a
Stockholder, prior to the delivery of the Escrowed Shares by the Custodian or
Expedia to such Stockholder pursuant to this Escrow Agreement.
1.4 POWER TO TRANSFER ESCROWED SHARES. The Custodian is hereby
granted the power to effect any transfer of the Escrowed Shares provided for in
this Escrow Agreement.
2. RESOLUTION OF CLAIMS
2.1 INDEMNIFICATION OBLIGATIONS. The Escrowed Shares shall serve as
sole security for the indemnity obligations of the Stockholders under Article
VII of the Reorganization Agreement. For the purposes of this Escrow Agreement,
those indemnity obligations shall continue in accordance with Article VII of the
Reorganization Agreement, notwithstanding the merger of Sub with and into
Company pursuant to the Reorganization Agreement. Payment for any amount
determined as provided below to be owing to Expedia under such indemnity
obligations ("DAMAGES") and any award of reasonable attorneys' fees and charges
pursuant to Section 2.3.3.5 or 11.2 (a "PREVAILING PARTY AWARD") shall be made
by the
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release of Escrowed Shares ("ESCROW ADJUSTMENTS"). By the execution of this
Escrow Agreement, each of the Stockholders agree to be bound by the
indemnification provisions set forth in Article VII of the Reorganization
Agreement. Any Escrow Adjustments shall be made in proportion to each of the
Stockholders' interest in the Escrowed Shares as of the date or dates specified
in and the manner provided for in this Escrow Agreement. The value of the
Escrowed Shares shall equal the average closing prices of Expedia Common Shares
for the respective periods as provided for in this Escrow Agreement and shall
not be subject to any reduction, discount or other adjustment.
2.2 NOTICE OF CLAIMS. Promptly after the receipt by Expedia of notice
or discovery of any claim, damage, or legal action or proceeding giving rise to
indemnification rights under the Reorganization Agreement (a "CLAIM"), Expedia
shall give the Representative written notice of such Claim stating that Expedia
or any other Indemnified Person has paid or reasonably anticipates that it will
have to pay or incur Damages which on a cumulative basis with all prior Damages
exceed $75,000, and specifying in reasonable detail the individual items of
Damages included in the amount so stated, the date each such item was paid or
incurred, or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or claim to which such item is related,
and shall provide a copy of such notice to the Custodian. Each notice of a Claim
by Expedia (the "NOTICE OF CLAIM") shall be in writing and shall be delivered on
or before the Release Date.
2.3 RESOLUTION OF CLAIMS. Any Notice of Claim received by the
Representative and the Custodian pursuant to Section 2.2 above shall be resolved
as follows:
2.3.1 UNCONTESTED CLAIMS. In the event that the Representative
does not contest a Notice of Claim in writing within twenty (20) calendar days,
as provided below in Section 2.3.2, Expedia may deliver to the Custodian, with a
copy to the Representative, a written demand by Expedia (a "EXPEDIA DEMAND")
stating that a Notice of Claim has been given as required in this Escrow
Agreement and that no notice of contest has been received from the
Representative during the period specified in this Escrow Agreement and further
setting forth the proposed Escrow Adjustments to be made in accordance with this
Section 2.3.1. The value of the Escrowed Shares to be released to Expedia shall
be based on the Expedia Average Closing Price notwithstanding any changes in the
market value of Expedia Common Shares. It is provided, however, that within
twenty (20) calendar days after receipt of the Expedia Demand, the
Representative may object to the computations or the other administrative
matters relating to the proposed Escrow Adjustments (but may not object to the
validity or amount of the Claim noticed in the Notice of Claim), whereupon
neither the Custodian nor Expedia shall make any of the Escrow Adjustments until
either: (i) Expedia and the Representative shall have given the Custodian
written notice setting forth agreed Escrow Adjustments, or (ii) the matter is
resolved as provided in Sections 2.3.2 and 2.3.3, provided that such objection
shall not affect the dates used to determine the share value pursuant to this
Section. Upon satisfaction of the foregoing the Custodian and Expedia shall
promptly take all steps to implement the final Escrow Adjustments.
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2.3.2 CONTESTED CLAIMS. In the event that the Representative
gives written notice contesting all or a portion of a Notice of Claim to Expedia
and the Custodian (a "CONTESTED CLAIM") within the 20-day period provided above,
matters that are subject to third party claims brought against Expedia or
Company in a litigation or arbitration shall await the final decision, award or
settlement of such litigation or arbitration, while matters that arise between
Expedia on the one hand and Company and/or the Stockholders on the other hand,
including, but not limited to any disputes regarding performance or
nonperformance of a party's obligations under this Escrow Agreement ("ARBITRABLE
CLAIMS"), shall be settled in accordance with Section 2.3.3 below. Any portion
of a Notice of Claim that is not contested or is subsequently settled shall be
resolved as set forth above in Section 2.3.1, provided that in the case of a
settlement the value of Escrowed Shares shall equal the Expedia Average Closing
Price notwithstanding any change in the market value of Expedia Common Shares.
If notice is received by the Custodian that a Notice of Claim is contested by
the Representative, then the Custodian shall hold in the Escrow Account, after
what would otherwise be the Release Date (as defined in Section 3.1 below), the
number of Escrowed Shares as specified in the Release Notice or as otherwise
provided in Section 3.1, until the earlier of: (i) receipt of a settlement
agreement executed by Expedia and the Representative setting forth a resolution
of the Notice of Claim and the Escrow Adjustments; (ii) receipt of a written
notice from Expedia (a "EXPEDIA DISTRIBUTION NOTICE") attaching a copy of the
final award or decision of the arbitrator and setting forth the Escrow
Adjustments (Expedia shall at the same time provide a copy of the Expedia
Distribution Notice to the Representative); or (iii) receipt of a written notice
from the Representative (a "REPRESENTATIVE DISTRIBUTION NOTICE") attaching a
copy of the final award or decision of the arbitrator that no Escrow Adjustments
are to be made as a result of such award (Representative shall at the same time
provide a copy of the Representative Distribution Notice to Expedia). If the
earliest of the three events described in the preceding sentence is (i) or (ii),
the Custodian shall, within twenty (20) calendar days of receipt of the
settlement agreement or Expedia Distribution Notice, as applicable, release to
Expedia the number of Escrowed Shares as specified in the Escrow Adjustments. If
the award or decision of the arbitrator concludes that any of the Escrowed
Shares is to be released to Expedia either in satisfaction of Damages or as
Prevailing Party Awards, the arbitrator shall specify the number of Escrowed
Shares to be so released either in the arbitrator's final award or decision or a
supplementary report or finding. The value or the Escrowed Shares released shall
be based on the Expedia Average Closing Price notwithstanding any change in the
market value of Expedia Common Shares. In the event that the Custodian
institutes an action for interpleader in accordance with Section 4.6 of this
Escrow Agreement as a result of a dispute between the parties, the parties
hereby agree to jointly seek to stay such interpleader action pending the
resolution of any arbitration commenced by the parties or, if the parties are
unable to agree, pursuant to this Section 2.3.2 and Section 2.3.3.
2.3.3 ARBITRATION.
2.3.3.1 CPR RULES. Any Arbitrable Claim, and any dispute
between the Stockholders and the Representative on the one hand and Expedia on
the other hand under this Escrow Agreement, shall be submitted to final and
binding arbitration in King County, Seattle, Washington, which arbitration
shall, except as herein specifically stated, be conducted in
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accordance with the CPR Non-Administered Arbitration Rules (the "CPR RULES")
then in effect; provided, however, that the parties agree first to try in good
faith to resolve any Arbitrable Claim that does not exceed One Hundred Thousand
Dollars ($100,000) by mediation under the CPR Mediation Procedure for Business
Disputes, before resorting to arbitration; provided, further, that, in the event
of an arbitration, the arbitration provisions of this Escrow Agreement shall
govern over any conflicting rules which may now or hereafter be contained in the
CPR Rules.
2.3.3.2 BINDING EFFECT. The final decision of the
arbitrator shall be a reasoned opinion based on applicable law and furnished in
writing to the Custodian, the Representative and Expedia and will constitute a
conclusive determination of the issue in question, binding upon the Stockholders
and Expedia. Such decision or award shall state that it is the final and binding
decision or award of the arbitrator. The arbitrator shall have the authority to
grant any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve an Arbitrable Claim. Any judgment upon the
award rendered by the arbitrator may be entered and enforced in any court having
jurisdiction over the subject matter thereof.
2.3.3.3 COMPENSATION OF ARBITRATOR. Any such arbitration
shall be conducted before a single arbitrator, who will be compensated for his
or her services, as provided below in Section 2.3.3.5, at a rate to be
determined by the parties or pursuant to the CPR Rules, but based upon
reasonable hourly or daily consulting rates for the arbitrator in the event
Expedia and the Representative are not able to agree upon his or her rate of
compensation.
2.3.3.4 SELECTION OF ARBITRATOR. The parties shall select
the arbitrator by mutual agreement promptly following initiation of arbitration
in accordance with the CPR Rules; provided, however, that in the event the
parties are unable to reach such agreement within twenty (20) days of
initiation, the CPR shall have the authority to select an arbitrator from a list
of arbitrators who are partners in a nationally or regionally recognized firm of
independent certified public accountants from the management advisory services
department (or comparable department or group) of such firm or who are partners
in a major law firm; provided, however, that such accounting firm or law firm
cannot be a firm that has within the last three years rendered, or is then
rendering, services to any party hereto or any affiliate of a party hereto or,
in the case of a law firm, appeared, or is then appearing, as counsel of record
in opposition to any party hereto. Any arbitrator selected to serve shall be
qualified by training and experience for the matters for which such arbitrator
is designated to serve.
2.3.3.5 PAYMENT OF COSTS. The prevailing party in any
arbitration shall be entitled to an award of attorneys' fees and costs, and all
costs of arbitration, including those provided for above, will be paid by the
losing party, subject in each case to a determination by the arbitrator as to
which party is the prevailing party and the amount of such fees and costs to be
allocated to such party. Any amounts payable to Expedia by or on account of the
Stockholders under this subsection will be reimbursed as if the amount of such
awarded fees and expenses were an Uncontested Claim, and the Holders will have
no further liability for any amounts payable under this Section 2.3.3.5.
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2.3.3.6 TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions shall not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Escrow Agreement, the Acquisition Agreements or any other documents that
are executed in connection therewith.
2.3.3.7 EXCLUSIVE REMEDY. Arbitration or mediation under
this Section 2.3.3 shall be the sole and exclusive remedy of the parties for any
Arbitrable Claim arising out of this Escrow Agreement.
2.4 CASH SETTLEMENT OPTION. Each individual Stockholder shall have
the option to pay its proportionate interest of any Escrowed Shares to be
released to Expedia pursuant to this Section 2 in either Escrowed Shares or
cash. If such a release to Expedia is paid by a Stockholder in Escrowed Shares,
such Escrowed Shares shall be valued in accordance with this Agreement. The
Custodian shall notify each Stockholder in writing of any resolution of Claims
pursuant to this Section 2 and include in such notification a form to be
returned to the Custodian with such Stockholder's choice of payment. The
Custodian shall send a copy of such notice to Expedia and the Representative. If
such form indicating choice of payment is not received by the Custodian from
such Stockholder, together with a certified check in the amount due from such
Stockholder, within fifteen (15) days from the date of mailing such notice, the
Stockholder shall be presumed to have chosen to have in Escrowed Shares released
and not elected the cash payment option. Upon receipt of payment by Custodian,
Custodian will deliver the cash payment to Expedia and return the Escrowed
Shares otherwise to be released to Expedia pursuant to the resolution of the
Claim to the Stockholder who has made the cash election pursuant to this Section
2.4.
3. RELEASE FROM ESCROW
3.1 RELEASE OF ESCROWED SHARES. The Escrowed Shares shall be released
by the Custodian and Expedia as soon as practicable after March 17, 2001, (the
"RELEASE DATE"), less: (i) any Escrowed Shares and delivered to or deliverable
to Expedia, in satisfaction of Uncontested Claims or Contested Claims which have
been settled and (ii) any of the Escrowed Shares subject to delivery to Expedia
in accordance with Section 2.3.2 with respect to any then pending Contested
Claims. On or before the Release Date, Expedia and the Representative shall
deliver to the Custodian a written notice (a "RELEASE NOTICE") setting forth the
number of Escrowed Shares to be released by the Custodian (the "RELEASED
ESCROW") including the number of Escrowed Shares to be released to each
Stockholder, and the number of Escrowed Shares to be retained as provided above
(the "RETAINED ESCROW"). The Released Escrow shall be released to the
Stockholders in proportion to their respective interests in the Escrowed Shares
as set forth in Exhibit 1.1 (as adjusted from time to time). Exhibit 1.1 hereto
shall be deemed automatically adjusted to reflect the effect of the Released
Escrow on the number of Escrowed Shares. In lieu of releasing any fractional
Escrowed Shares, any fraction of a released Escrowed Share that would otherwise
be released shall be rounded to the nearest whole Expedia Common Share. Within
ten (10) business days after receipt of the Release Notice, the Custodian,
acting as
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Expedia's transfer agent, shall deliver (by registered mail or overnight
carrier) to each Stockholder the number of Escrowed Shares in the names of the
appropriate Stockholders and in the amounts set forth in Column 2 of Exhibit 1.1
hereto bearing any legends required by the Investment Agreement, as defined in
the Reorganization Agreement. The Custodian shall not be required to deliver the
Escrowed Shares to the Stockholders following satisfaction of release conditions
until the Custodian has received the Release Notice executed by Expedia and the
Stockholders' Representative or, in the event Expedia and the Stockholders'
Representative fail to execute and deliver a jointly approved Release Notice, a
final award or decision which specifies the distribution of the Escrowed Shares.
3.2 RELEASE OF RETAINED ESCROW. Upon the resolution of Contested
Claims as provided for in Section 2.3.2, the Retained Escrow shall be subject to
release by the Custodian to Expedia and/or to the Stockholders in accordance
with Section 2.3.2, this Section and as otherwise provided for in this Escrow
Agreement. The Custodian and Expedia shall cause the transfer agent to cancel
the number of Escrowed Shares to be released to Expedia pursuant to Section
2.3.2 and reissue certificates for Escrowed Shares that are to be either
distributed to the Stockholders pursuant to Section 3.1 or further retained by
the Custodian pending the resolution of Contested Claims and/or Prevailing Party
Awards. Any Escrowed Shares released from escrow to Expedia shall, in accordance
with this Escrow Agreement, be subject to cancellation by Expedia, without
requiring Expedia to pay any consideration whatsoever in receipt thereof to
Company or any of the Stockholders.
4. CUSTODIAN
4.1 DUTIES. The duties of the Custodian hereunder shall be entirely
administrative and not discretionary. The duties, responsibilities and
obligations of the Custodian shall be limited to those expressly set forth
herein and the Custodian shall not have any responsibility as to the accuracy
of, and shall incur no liability with respect to, any statement, representation,
warranty, agreement or covenant made by any party hereto. The Custodian shall be
obligated to act only in accordance with written instructions received by it as
provided in this Escrow Agreement and is authorized hereby to comply with any
orders, judgments, or decrees of any court with or without jurisdiction and
shall not be liable as a result of its compliance with the same.
4.2 LEGAL OPINIONS. As to any legal questions arising in connection
with the administration of this Escrow Agreement, the Custodian may rely
absolutely upon the joint instruction of Expedia and the Representative or the
opinions or advice given to the Custodian by its outside counsel and shall be
free of liability resulting from any delay due to waiting for, or for acting in
reliance on, such opinions or advice.
4.3 SIGNATURES. The Custodian may rely absolutely upon the
genuineness and authorization of the signature and purported signature of any
party (including arbitrator(s) hereunder) upon any instruction, notice, release,
receipt or other document delivered to it pursuant to this Escrow Agreement and
shall incur no liability acting in reliance thereon.
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4.4 RECEIPTS AND RELEASES. The Custodian may, as a condition to the
disposition of securities as provided herein, require from the recipient a
receipt therefor and, upon final disposition, a release of the Custodian from
any liability arising out of its execution or performance of this Escrow
Agreement, such release to be in a form reasonably satisfactory to the
Custodian.
4.5 REFRAIN FROM ACTION. The Custodian shall be entitled to refrain
from taking any action contemplated by this Escrow Agreement in the event it
becomes aware of any dispute between Company, the Holders and Expedia as to any
material facts or as to the happening of any event precedent to such action.
4.6 INTERPLEADER. If any controversy arises between the parties
hereto or with any third person, the Custodian shall not be required to
determine the same or to take any action, but the Custodian in its discretion
may institute such interpleader or other proceedings in connection therewith as
the Custodian may deem proper, and in following either course, the Custodian
shall not be liable.
4.7 TAX FORMS. All entities entitled to receive interest from the
Escrow Account, will provide Custodian with W-9 IRS tax forms prior to
disbursement of interest. Interest earned in the account will be reported as
income to the party receiving such interest.
5. INDEMNIFICATION OF CUSTODIAN
5.1 WAIVER AND INDEMNIFICATION. Expedia, Company, the Representative,
and the Holders agree to and hereby do waive any suit, claim, demand or cause of
action of any kind which they may have or may assert against the Custodian
arising out of or relating to the execution or performance by the Custodian of
this Escrow Agreement, unless such suit, claim, demand or cause of action is
based upon the willful neglect or gross negligence or bad faith of the
Custodian; provided, however, that notwithstanding anything in this Escrow
Agreement to the contrary, the Custodian shall in no event be liable for
special, punitive, indirect or consequential losses or damages of any kind
whatsoever, even if the Custodian has been advised of the likelihood of such
loss or damage and regardless of the form of action. They further agree to
indemnify the Custodian and hold it harmless against and from any and all
claims, demands, costs, liabilities and expenses, including reasonable
attorneys' fees, which may be asserted against it or to which it may be exposed
or which it may incur for any action taken, suffered or omitted to be taken, by
reason of its execution, administration or performance of this Escrow Agreement,
except to the extent attributable to its willful neglect, gross negligence, or
bad faith. Such agreement to indemnify shall survive the termination of this
Escrow Agreement until extinguished by any applicable statute of limitations.
Notwithstanding the foregoing the liability of the Holders pursuant to this
Section shall be limited to the Stockholder's interest in any remaining Escrow
Shares.
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5.2 CONDITIONS TO INDEMNIFICATION. In case any litigation is brought
against the Custodian in respect of which indemnification may be sought
hereunder, the Custodian shall give prompt notice of that litigation to the
parties hereto, and the parties upon receipt of that notice shall have the
obligation and the right to assume the defense of such litigation, provided that
failure of the Custodian to give that notice shall not relieve the parties
hereto from any of their obligations under this Section 5 unless that failure
prejudices the defense of such litigation by said parties. At its own expense,
the Custodian may employ separate counsel and participate in the defense. The
parties hereto shall not be liable for any settlement without their respective
consents.
6. STOCKHOLDERS REPRESENTATIVE
(a) For purposes of this Escrow Agreement, the Stockholders have, by
the execution of this Escrow Agreement, consented to the appointment of the
Representative as representative of the Stockholders and as the attorney-in-fact
for and on behalf of each Stockholder, and, subject to the express limitations
set forth below, the taking by the Representative of any and all actions and the
making of any decisions required or permitted to be taken by him under this
Escrow Agreement, including but not limited to the exercise of the power to: (i)
authorize delivery to or cancellation by Expedia of the Escrowed Shares, or any
portion thereof, in satisfaction of Claims otherwise in connection with an
Escrow Adjustment, (ii) agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such Claims, (iii) resolve any Claims, and
(iv) take all actions necessary in the judgment of the Representative for the
accomplishment of the foregoing and all of the other terms, conditions and
limitations of this Escrow Agreement. The Representative shall have unlimited
authority and power to act on behalf of each Stockholder with respect to this
Escrow Agreement and the disposition, settlement or other handling of all
Claims, rights or obligations arising under this Escrow Agreement so long as all
Stockholders are treated in the same manner. The Stockholders shall be bound by
all actions taken by the Representative in connection with this Escrow
Agreement, and Expedia shall be entitled to rely on any action or decision of
the Representative. In performing his functions hereunder, the Representative
shall not be liable to the Stockholders in the absence of gross negligence or
willful misconduct.
(b) The Representative shall not be entitled to receive any
compensation from Expedia or the Escrow Account in connection with this Escrow
Agreement. Any out-of-pocket costs and expenses reasonably incurred by the
Representative in connection with actions taken pursuant to the terms of this
Escrow Agreement will be paid by the Stockholders to the Representative in
proportion to their percentage interests in the Escrowed Shares and such costs
and expenses will be treated as an Uncontested Claim pursuant to Section 2.3.1.
The Representative shall be entitled to submit a written claim and receive
reimbursement from the escrow for all reasonable, documented out-of-pocket
expenses incurred by the Representative as a result of acting as the
Representative; provided, however, that such right to reimbursement shall be
subordinate to Expedia's claims to Escrowed Shares, if any and shall be paid
only after all such claims have been satisfied. Each individual Stockholder
shall have the option to pay its
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proportionate interest of the amount of any such reimbursement in either
Escrowed Shares or cash. If such a reimbursement is paid by a Stockholder in
Escrowed Shares, such Escrowed Shares shall be valued in accordance with this
Agreement. The Representative shall notify each Stockholder in writing of any
request for such reimbursement of expenses and include in such notification a
form to be returned to the Representative such Stockholder's choice of payment.
The Representative shall send a copy of such notice to Expedia and the
Custodian. If such form indicating choice of payment is not received by the
Custodian and the Representative from such Stockholder within fifteen (15) days
from the date of mailing the notice of request for reimbursement, the
Stockholder shall be presumed to have chosen to pay such reimbursement request
in Escrowed Shares and not cash.
(c) The Representative may be changed by Stockholders from time to
time upon not less than 10 days' prior written notice to Expedia; provided that
the Representative may not be removed unless holders of a majority in interest
of the Escrow Fund agree to such removal and to the identity of the substituted
agent. No bond shall be required of the Representative, and the Representative
shall not receive compensation for his or her services. Notices or
communications to or from the Representative shall constitute notice to or from
each of the Stockholders. The Representative shall be entitled to submit a claim
and receive reimbursement from the Escrow Fund for all reasonable, documented
out-of-pocket expenses incurred by The Representative as a result of acting as
the Representative; provided, however, that such right to reimbursement shall be
subordinate to Expedia's claims on the Escrow Fund, if any, and shall be paid
only after all such claims have been satisfied. Any such reimbursement shall be
paid in Escrowed Shares out of the Escrow Fund.
(c) The Representative shall not be liable for any act done or
omitted hereunder as the Representative while acting in good faith and in the
exercise of reasonable judgment. Stockholders on whose behalf Escrowed Shares
were contributed to the Escrow Fund shall severally indemnify the Representative
and hold the Representative harmless against any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct on the part
of the Representative and arising out of or in connection with the acceptance or
administration of the Representative's duties hereunder, including the
reasonable fees and expenses of any legal counsel retained by the
Representative.
(d) A decision, act, consent or instruction of the Representative
shall constitute a decision of all Stockholders and shall be final, binding and
conclusive upon each of such stockholders, and Custodian, Expedia, and all other
Indemnified Persons may rely upon any such decision, act, consent or instruction
of the Representative as being the decision, act, consent or instruction of each
and every such Stockholder. Custodian, Expedia, and all other Indemnified
Persons are hereby relieved from any liability to any person for any acts done
by them in accordance with such decision, act, consent or instruction of the
Representative.
7. ACKNOWLEDGMENT BY THE CUSTODIAN
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By execution and delivery of this Escrow Agreement, the Custodian
acknowledges that the terms and provisions of this Escrow Agreement are
acceptable and it agrees to carry out the provisions of this Escrow Agreement on
its part.
8. RESIGNATION OR REMOVAL OF CUSTODIAN; SUCCESSOR
8.1 RESIGNATION AND REMOVAL.
8.1.1 NOTICE. The Custodian (and any successor Custodian) may at
any time resign as such by delivering a written notice of resignation to Expedia
and Representative, whereupon the Custodian shall be discharged of and from any
and all further obligations arising in connection with this Escrow Agreement;
provided, however, that the provisions set forth in Articles 5, 7 and 8 of this
Escrow Agreement shall survive such resignation. The resignation of the
Custodian will take effect on the date of the earlier to occur of: (i) the date
a successor Custodian is appointed by either Expedia or Representative or (ii)
the date which is 30 days after the date of delivery of a written notice of
resignation to Expedia and Representative.
8.1.2 COURT APPOINTMENT. If the parties hereto are unable to
agree upon a successor or shall have failed to appoint a successor prior to the
expiration of thirty (30) days following the date of the notice of resignation
or removal, then the acting Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian or other appropriate
relief, and any such resulting appointment shall be binding upon all of the
parties hereto.
8.2 SUCCESSORS. Every successor appointed hereunder shall execute,
acknowledge and deliver to its predecessor, and also to the Stockholders and
Expedia, an instrument in writing accepting such appointment hereunder, and
thereupon such successor, without any further act, shall become fully vested
with all the duties, responsibilities and obligations of its predecessor; but
such predecessor shall, nevertheless, on the written request of its successor or
any of the parties hereto, execute and deliver an instrument or instruments
transferring to such successor all the rights of such predecessor hereunder, and
shall duly assign, transfer and deliver all property, securities and monies held
by it pursuant to this Escrow Agreement to its successor. Should any instrument
be required by any successor for more fully vesting in such successor the
duties, responsibilities, and obligations hereby vested or intended to be vested
in the predecessor, any and all such instruments in writing shall, on the
request of any of the other parties hereto, be executed, acknowledged, and
delivered by the predecessor.
8.3 NEW CUSTODIAN. In the event of an appointment of a successor, the
predecessor shall cease to be custodian of any funds, securities or other assets
and records it may hold pursuant to this Escrow Agreement, and the successor
shall become such custodian.
8.4 RELEASE. Upon acknowledgment by any successor Custodian of the
receipt of the then remaining balance of the Escrowed Shares, the then acting
Custodian shall be
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fully released and relieved of all duties, responsibilities and obligations
under this Escrow Agreement that may arise and accrue thereafter.
8.5 CHANGE OF TRANSFER AGENT. In the event ChaseMellon Stockholder
Services, L.L.C. ("CHASE") ceases to be Expedia's transfer agent, Expedia shall
have the right to substitute its successor transfer agent as the Custodian
(assuming such change is acceptable to the successor transfer agent). In the
event of such substitution Chase agrees to waive any transfer or other charges
other than regular charges for services rendered through such change.
9. FEE
Except as provided in Section 5 hereof, the Custodian will be paid by
Expedia as billed for services hereunder in accordance with the fee schedule
attached hereto as Exhibit A. In the event that the Custodian is made a party to
litigation with respect to the property held hereunder, or brings an action in
interpleader, or in the event that the conditions to this Escrow are not
promptly fulfilled, or the Custodian is required to render any service not
provided for in this Escrow Agreement and fee schedule, or there is any
assignment of the interests of this Escrow or any modification hereof, the
Custodian shall be entitled to reasonable compensation for such extraordinary
services and reimbursement for all fees, costs, liability, and expenses,
including attorneys fees.
10. TERMINATION
This Escrow Agreement and the Escrow created hereby shall terminate
following Custodian's delivery, and Expedia's delivery or cancellation of all
remaining Escrowed Shares to either the Stockholders and/or Expedia pursuant to
Section 2 or 3.
11. MISCELLANEOUS PROVISIONS
11.1 PARTIES IN INTEREST. This Escrow Agreement is not intended, nor
shall it be construed, to confer any enforceable rights on any person not a
party hereto. All of the terms and provisions of this Escrow Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
11.2 ATTORNEYS' FEES. In the event of any action to enforce any
provision of this Escrow Agreement, or on account of any default under or breach
of this Escrow Agreement, the prevailing party in such action shall be entitled
to recover, in addition to all other relief, from the other party all attorneys'
fees incurred by the prevailing party in connection with such action (including,
but not limited to, any appeal thereof).
11.3 ENTIRE AGREEMENT. This Escrow Agreement constitutes the final
and entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior arrangements or understandings.
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11.4 NOTICES. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Escrow
Agreement will be in writing and will be deemed to have been duly given: (i) on
the date of delivery if personally delivered by hand, (ii) upon the third day
after such notice is (a) deposited in the United States mail, if mailed by
registered or certified mail, postage prepaid, return receipt requested, or (b)
sent by a nationally recognized overnight express courier, or (iii) by facsimile
upon written confirmation (other than the automatic confirmation that is
received from the recipient's facsimile machine) of receipt by the recipient of
such notice:
If to the
Representative: Carla S. Newell
575 High Street
Suite 400, Palo Alto, CA 94301
Telephone No: (650) 614-8210
Facsimile No.: (650) 614-8222
If to Expedia: Expedia, Inc.
13810 SE Eastgate Way, Suite 400
Bellevue, WA 98005
Attention: Mark S. Britton, Vice President and
General Counsel
Telephone No.: (425) 564-7332
Facsimile No.: (425) 564-7240
With a copy to: Preston Gates & Ellis LLP
5000 Bank of America Tower
701 Fifth Avenue
Seattle, WA 98104-7078
Attention: Mark R. Beatty
Telephone No.: (206) 623-7580
Facsimile No.: (206) 623-7022
If to Custodian: ChaseMellon Shareholder Services, LLC
520 Pike Street, Suite 1220
Seattle, WA 98101
Attention: Dee Henderson
Facsimile: (206) 292-3196
11.5 CHANGES. The terms of this Escrow Agreement may not be modified
or amended, or any provisions hereof waived, temporarily or permanently, except
pursuant to the written agreement of the parties.
11.6 SEVERABILITY. If any term or provision of this Escrow Agreement
or the application thereof as to any person or circumstance shall to any extent
be invalid or
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unenforceable, the remaining terms and provisions of this Escrow Agreement or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby and each term and provision of this Escrow Agreement shall be valid and
enforceable to the fullest extent permitted by law.
11.7 COUNTERPARTS. This Escrow Agreement may be executed in two or
more partially or fully executed counterparts each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument. The execution and delivery of an
Escrow Agreement - Signature Page in the form annexed to this Escrow Agreement
by any party hereto who shall has been furnished the final form of this Escrow
Agreement shall constitute the execution and delivery of this Escrow Agreement
by such party.
11.8 HEADINGS. The headings of the various sections of this Escrow
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Escrow Agreement.
11.9 GOVERNING LAW. This Escrow Agreement shall be construed and
controlled by the laws of the State of Washington without regard to the
principles of conflicts of laws.
11.10 BINDING EFFECT. This Escrow Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
affiliates, successors and assigns.
11.11 AMENDMENT. This Escrow Agreement may not be amended except by
a writing executed by Expedia and the Representative.
[Remainder of Page Intentionally Left Blank]
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ESCROW AGREEMENT -- SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement
as of the day and year first above written.
EXPEDIA, INC. VACATIONSPOT.COM, INC.
By /s/ Gregroy S. Stanger By /s/ Steven Murch
-------------------------- ----------------------------
Its Vice President Its President
------------------------- ---------------------------
STOCKHOLDERS' REPRESENTATIVE
/s/ Carla Newell
-----------------------------
CHASEMELLON SHAREHOLDER SERVICES
By /s/ Ardis "Dee" Henderson
--------------------------
Authorized Signatory
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ESCROW AGREEMENT -- SIGNATURE PAGE, CONT.
SHAREHOLDER
--------------------------------------------
______________________________________
Print Name ___________________________
Social Security Number: ______________
Address ______________________________
______________________________
--------------------------------------------
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Dates Referenced Herein and Documents Incorporated by Reference
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