SC 14D9 (Amendment No. 1)

HOMEAWAY, INC.

Date: November 19, 2015

/s/ Melissa Frugé

Name: Melissa Frugé

Title: SVP, General Counsel and Secretary

0001193125-15-382245.txt : 20151119 0001193125-15-382245.hdr.sgml : 20151119 20151119171036 ACCESSION NUMBER: 0001193125-15-382245 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20151119 DATE AS OF CHANGE: 20151119 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOMEAWAY INC CENTRAL INDEX KEY: 0001366684 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 200970381 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-86320 FILM NUMBER: 151244343 BUSINESS ADDRESS: STREET 1: 1011 W. 5TH STREET STREET 2: SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78703 BUSINESS PHONE: 512-505-1525 MAIL ADDRESS: STREET 1: 1011 W. 5TH STREET STREET 2: SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HOMEAWAY INC CENTRAL INDEX KEY: 0001366684 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 200970381 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: 1011 W. 5TH STREET STREET 2: SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78703 BUSINESS PHONE: 512-505-1525 MAIL ADDRESS: STREET 1: 1011 W. 5TH STREET STREET 2: SUITE 300 CITY: AUSTIN STATE: TX ZIP: 78703 SC 14D9/A 1 d90967dsc14d9a.htm SC 14D9 (AMENDMENT NO. 1) SC 14D9 (Amendment No. 1)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14D-9

(RULE 14d-101)

SOLICITATION/RECOMMENDATION STATEMENT

UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. 1)

HOMEAWAY, INC.

(Name of Subject Company)

HOMEAWAY, INC.

(Name of Persons Filing Statement)

Common Stock, par value $0.0001 per share

(Title of Class of Securities)

43739Q100

(CUSIP Number of Class of Securities)

Brian H. Sharples

Chairman, President and Chief Executive Officer

HomeAway, Inc.

1011 W. Fifth Street, Suite 300

Austin, Texas 78703

(512) 684-1100

(Name, address and telephone numbers of person authorized to receive notices and communications

on behalf of the persons filing statement)

With copies to:

Paul R. Tobias, Esq.

Robert T. Ishii, Esq.

Wilson Sonsini Goodrich & Rosati, P.C.

900 South Capital of Texas Hwy

Las Cimas IV, Fifth Floor

Austin, TX 78746-5546

(512) 338-5400

Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

This Amendment No. 1 to Schedule 14D-9 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 (as amended from time to time, the “Schedule 14D-9”) originally filed by HomeAway, Inc., a Delaware corporation (“HomeAway”), with the U.S. Securities and Exchange Commission (the “SEC”) on November 16, 2015, relating to the exchange offer by HMS 1 Inc. (“Purchaser”), a Delaware corporation and a direct wholly owned subsidiary of Expedia, Inc., a Delaware corporation (“Expedia”), to exchange each outstanding share of common stock of HomeAway for $10.15 in cash and 0.2065 of a validly issued, fully paid and non-assessable share of common stock, $0.0001 par value per share, of Expedia, plus cash in lieu of any fractional shares in each case, without interest and less any applicable withholding taxes, as disclosed in the Tender Offer Statement on Schedule TO filed by Expedia with the SEC on November 16, 2015.

Except as specifically noted herein, the information set forth in the Schedule 14D-9 remains unchanged. Capitalized terms used but not defined in this Amendment No. 1 have the meanings ascribed to them in the Schedule 14D-9.

Item 9. Exhibits

Item 9 of the Schedule 14D-9 is hereby amended and supplemented by adding the following exhibits:


(a)(5)(J)		Transcript of HomeAway executive interview at the November 2015 Phocuswright Conference, first used on November 18, 2015
(a)(5)(K)		Email sent to HomeAway employees regarding equity award FAQ, first used on November 19, 2015
(a)(5)(L)		Email sent to HomeAway employees regarding E*Trade accounts, first used on November 19, 2015

SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

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Exhibit Index


Exhibit Number		Description
(a)(1)(A)		Prospectus/Offer to Exchange, dated November 16, 2015 (incorporated by reference to the Form S-4 filed with the SEC by Expedia on November 16, 2015)

(a)(1)(B)		Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(A) to the Schedule TO filed with the SEC by Offeror on November 16, 2015)

(a)(1)(C)		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit 99.3 to the Form S-4 filed with the SEC by Expedia on November 16, 2015)

(a)(1)(D)		Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(C) to the Schedule TO filed with the SEC by Offeror on November 16, 2015)

(a)(2)*		Letter to stockholders of HomeAway, dated November 16, 2015

(a)(4)		Prospectus/Offer to Exchange, dated November 16, 2015 (incorporated by reference to the Form S-4 filed with the SEC by Expedia on November 16, 2015)

(a)(5)(A)		Investor Presentation Materials, dated November 2015, titled “Expedia Agrees to Acquire HomeAway” (incorporated by reference to Exhibit (a)(5)(F) to the Schedule TO filed with the SEC by Offeror on November 16, 2015)

(a)(5)(B)		Form of Summary Advertisement (incorporated by reference to Exhibit (a)(5)(G) to the Schedule TO filed with the SEC by Offeror on November 16, 2015)

(a)(5)(C)		Joint Press Release issued by HomeAway and Expedia dated November 4, 2015 (incorporated by reference to Exhibit (a)(5)(A) to the Schedule TO filed with the SEC by the Offeror on November 16, 2015)

(a)(5)(D)		Employee, customer and management Q&A, first used on November 4, 2015 (incorporated by reference to Schedule 14D-9C filed with the SEC by HomeAway on November 4, 2015)

(a)(5)(E)		Email sent to HomeAway employees, first used on November 4, 2015 (incorporated by reference to Schedule 14D-9C filed with the SEC by HomeAway on November 4, 2015)

(a)(5)(F)		Email sent to HomeAway customers, first used on November 4, 2015 (incorporated by reference to Schedule 14D-9C filed with the SEC by HomeAway on November 4, 2015)

(a)(5)(G)		Email sent to HomeAway employees regarding communications, first used on November 4, 2015 (incorporated by reference to Schedule 14D-9C filed with the SEC by HomeAway on November 4, 2015)

(a)(5)(H)		Transcript from a conference call held by Expedia and HomeAway to discuss the transaction, dated November 4, 2015 (incorporated by reference to Exhibit (a)(5)(C) to the Schedule TO filed with the SEC by the Offeror on November 16, 2015)

(a)(5)(I)		Email to HomeAway APAC employees, first used November 5, 2015 (incorporated by reference to Schedule 14D-9C filed with the SEC by HomeAway on November 5, 2015)

(a)(5)(J)**		Transcript of HomeAway executive interview at the November 2015 Phocuswright Conference, first used on November 18, 2015

(a)(5)(K)**		Email sent to HomeAway employees regarding equity award FAQ, first used on November 19, 2015

(a)(5)(L)**		Email sent to HomeAway employees regarding E*Trade accounts, first used on November 19, 2015

(e)(1)		Agreement and Plan of Reorganization, dated November 4, 2015, by and among Expedia, the Offeror and HomeAway (incorporated by reference to Exhibit 2.1 to the Form 8-K filed with the SEC by HomeAway on November 5, 2015)

(e)(2)		Form of Indemnification Agreement between HomeAway and each of its directors and officers (incorporated by reference to Exhibit 10.1B to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(3)		Amended and Restated Bylaws of HomeAway (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

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(e)(4)		Amended and Restated Certificate of Incorporation of HomeAway (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(5)		2004 Stock Plan, as amended (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(6)		Form of Stock Option Agreement for 2004 Stock Plan effective for grants made prior to April 3, 2009 (incorporated by reference to Exhibit 10.3A to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(7)		Form of Stock Option Agreement for 2004 Stock Plan effective for grants made after April 3, 2009 (incorporated by reference to Exhibit 10.3B to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(8)		Form of Restricted Stock Agreement for 2004 Stock Plan (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(9)		The HomeAway, Inc. Nonstatutory Share Option Plan (UK NSO Sub-Plan under 2004 Stock Plan) (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(10)		The WVR Group, Inc. 2005 UK Enterprise Management Incentive Plan (UK EMI Sub-Plan under 2004 Stock Plan) (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(11)		Form of Stock Option Agreement for 2004 Stock Plan (UK EMI Sub-Plan) (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(12)		Incentive Plan for the Management of the German Subsidiary of the WVR Group, Inc. (German Sub-Plan under 2004 Stock Plan) (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(13)		Form of Stock Option Agreement for 2004 Stock Plan (German Sub-Plan) (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(14)		Addendum to 2004 Stock Plan containing terms and conditions for French option grants (French Sub-Plan under 2004 Stock Plan) (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(15)		Form of Stock Option Agreement for 2004 Stock Plan (French Sub-Plan) (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(16)		2005 Stock Plan, as amended (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(17)		Form of Stock Option Agreement, as amended, for 2005 Stock Plan (incorporated by reference to Exhibit 10.13 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(18)		2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(19)		2011 Equity Incentive Plan French Sub-Plan (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K for the period ended December 31, 2013 filed with the SEC by HomeAway on February 26, 2014)

(e)(20)		UK Schedule to the 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K for the period ended December 31, 2013 filed with the SEC by HomeAway on February 26, 2014)

(e)(21)		Form of Stock Option Award Agreement approved for use under the 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.15 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

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(e)(22)		Form of Stock Option Award Agreement approved for use in France under the 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K for the period ended December 31, 2013 filed with the SEC by HomeAway on February 26, 2014)

(e)(23)		Form of Option Certificate approved for use under Part A of the UK Schedule of the 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K for the period ended December 31, 2013 filed with the SEC by HomeAway on February 26, 2014)

(e)(24)		Form of Restricted Stock Unit Award Agreement approved for use under the 2011 Equity Incentive Plan (incorporated by reference to Exhibit 17 to the Annual Report on Form 10-K for the period ended December 31, 2011 filed with the SEC by HomeAway on March 29, 2012)

(e)(25)		Form of Restricted Stock Unit Award Agreement approved for use in France under the 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K for the period ended December 31, 2013 filed with the SEC by HomeAway on February 26, 2014)

(e)(26)		Executive Employment Agreement between the Registrant and Brian H. Sharples dated February 1, 2005 (incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(27)		Amendment to Executive Employment Agreement between the Registrant and Brian H. Sharples dated December 29, 2010 (incorporated by reference to Exhibit 10.17 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(28)		Executive Employment Agreement between the Registrant and Brian H. Sharples dated May 27, 2011 (incorporated by reference to Exhibit 10.17A to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(29)		Amendment to Executive Employment Agreement between the Registrant and Brian H. Sharples dated October 14, 2014 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC by HomeAway on October 16, 2014)

(e)(30)		Offer Letter between the Registrant and Lynn Atchison dated August 4, 2006 (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(31)		Executive Employment Agreement between the Registrant and Lynn Atchison dated May 27, 2011 (incorporated by reference to Exhibit 10.18A to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(32)		Amendment to Executive Employment Agreement between the Registrant and Lynn Atchison dated October 14, 2014 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC by HomeAway on October 16, 2014)

(e)(33)		Offer Letter between the Registrant and Carl G. Shepherd dated January 22, 2005 (incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(34)		Executive Employment Agreement between the Registrant and Carl G. Shepherd dated May 27, 2011 (incorporated by reference to Exhibit 10.19A to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(35)		Amendment to Executive Employment Agreement between the Registrant and Carl G. Shepherd dated October 14, 2014 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC by HomeAway on October 16, 2014)

(e)(36)		Offer Letter between the Registrant and Thomas Hale dated June 14, 2010 (incorporated by reference to Exhibit 10.20 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(37)		Amendment to Offer Letter between the Registrant and Thomas Hale dated December 29, 2010 (incorporated by reference to Exhibit 10.21 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(38)		Executive Employment Agreement between the Registrant and Thomas Hale dated May 27, 2011 (incorporated by reference to Exhibit 10.21A to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(39)		Amendment to Executive Employment Agreement between the Registrant and Thomas E. Hale dated October 14, 2014 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC by HomeAway on October 16, 2014)

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(e)(40)		Offer Letter between the Registrant and Mariano Dima dated June 25, 2014 (incorporated by reference to Exhibit 43 to the Annual Report on Form 10-K for the period ended December 31, 2014 filed with the SEC by HomeAway on February 25, 2015)

(e)(41)		Executive Employment Agreement between the Registrant and Mariano Dima dated July 14, 2014 (incorporated by reference to Exhibit 44 to the Annual Report on Form 10-K for the period ended December 31, 2014 filed with the SEC by HomeAway on February 25, 2015)

(e)(42)		2011 Executive Officer Performance Bonus Plan (incorporated by reference to Exhibit 10.24 to the Registration Statement on Form S-1 filed with the SEC by HomeAway, as declared effective by the SEC on June 28, 2011)

(e)(43)		2012 Executive Officer Performance Bonus Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC by HomeAway on March 29, 2012)

(e)(44)		2013 Executive Officer Performance Bonus Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC by HomeAway on March 8, 2013)

(e)(45)		2014 Executive Officer Performance Bonus Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC by HomeAway on May 2, 2014)

(e)(46)		2015 Executive Officer Performance Bonus Plan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC by HomeAway on April 23, 2015)

(e)(47)		Executive Employment Agreement between the Registrant and Melissa Frugé dated October 1, 2015 (incorporated by reference to the Quarterly Report on Form 10-Q filed with the SEC by HomeAway on November 6, 2015)

(e)(48)		Form of Restricted Stock Agreement approved for use under the 2011 Equity Incentive Plan (incorporated by reference to the Quarterly Report on Form 10-Q filed with the SEC by HomeAway on August 5, 2015)

(e)(49)		Form of Restricted Stock Agreement (UK Form) approved for use under the 2011 Equity Incentive Plan (incorporated by reference to the Quarterly Report on Form 10-Q filed with the SEC by HomeAway on August 5, 2015)

*	Previously filed.

**	Filed herewith.

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EX-99.(A)(5)(J) 2 d90967dex99a5j.htm EX-99.(A)(5)(J) EX-99.(a)(5)(J)

Exhibit (a)(5)(J)

PHOCUSWRIGHT CONFERENCE

Executive Interview: HomeAway

INTERVIEW OF BRIAN SHARPLES, CO-FOUNDER

AND CEO, HOMEAWAY.COM, INC.

BY: DOUGLAS QUINBY, VICE PRESIDENT,

RESEARCH, PHOCUSWRIGHT, INC.

Hollywood, Florida

November 18, 2015

3:10 p.m.

Reported By: Doreen Fox Krenchicki

Job No. 15347

Interview of BRIAN SHARPLES held at Diplomat Resort & Spa, Theater of the Great Hall, 3555 South Ocean Drive, Hollywood, Florida 33019. Conducted by Douglas Quinby and stenographically transcribed by Doreen Fox Krenchicki, CCR, CM, RPR, CRR

MR. QUINBY: Actually, I was thinking after the last (unintelligible) call it was kind of boring, not much to talk about, so I was really kind of struggling. What are we going to do for the next 20 minutes or so.

MR. SHARPLES: Fire away.

MR. QUINBY: All right. So I think actually it was two years ago at this conference, or maybe around this time, that you had announced a partnership with Expedia.

MR. SHARPLES: Yes.

MR. QUINBY: But — so, honestly, from an outsider looking in, it’s kind of hard to see how that partnership was progressing. I think both you and Dara at different times kind of downplayed it on — you know, in your public statements and earnings calls and so forth.

So what changed over the two years? Why now? Why not six months ago? Why not next year?

MR. SHARPLES: Yeah, I mean, one of the things that was very impressive to us when we first got into a partnership with Expedia was just watching; their culture is test and learn, and so what you see with Expedia over the two years I think is, number one, a ton of patience and a lot of very rigorous testing, trying to understand things like cannibalization between vacation rentals and hotels, where the best place is to put them. And Expedia hasn’t done yet a full implementation of HomeAway properties on the site.

Well, obviously, now that they’re acquiring the company, they saw some things that they liked in that.

But the fact is that when you’re splitting economics, it’s tougher for them to expose our inventory across their portfolio, but when you own a hundred percent of the economics, you know, that changes pretty dramatically. And one of the nice things about this acquisition is there’s still things that are possibly left unknown. But they’ve spent years playing with our product and I think they know exactly what they’re getting into.

In terms of the question about why now, I mean, we operate still in a very competitive environment, getting more competitive all the time. We have, you know, pure play competitors like Airbnb, we’ve got Booking.com in the states, you know, Steve has been in the states for a number of years. And it’s a business that’s going through quite a bit of change, you know.

When we were first here at Phocuswright, I remember telling you that it felt almost a little bit odd to be here because we didn’t feel like a travel company so much at the time, we were a marketplace and we felt we were more like eBay. It was a very simple, classic (unintelligible) model.

Now fast forward ten years and we are running very, very hard and fast to make the booking experience look as much like the hotel booking experience as we can.

And to get through that transition, we’re sort of, you know, at the last mile of now fulfilling a promise we made to Wall Street last year, which is that by the end of 2016 we were going to make everything online bookable on our sites.

MR. QUINBY: So with booking online, online bookable, that’s not, however, instant booking and instant confirmation. So it’s — I’ve had this experience booking on Airbnb and elsewhere where you send a request and you put your credit card information in, but you don’t know if it’s going to be accepted. And you can’t make another request, right, until you know if it’s accepted or not.

So, there’s still some friction even in that process on Airbnb and on HomeAway, right?

MR. SHARPLES: Yeah, it’s a unique category and we’ve had to adapt to it. We — a lot of owners in the vacation rental space still care very much about who stays in their house. Some do a little bit of work, some do a lot of work. Sometimes they just want to do a quick check of the e-mail address on Google to see who the person is that’s renting their place.

So, we do now have instant book as an option on our sites. We’ve got professional managers using it now. It’s going to become available to individual owners, too.

One thing I would say is that many of those owners won’t adopt it. The booking process on HomeAway right now is going to look very much like you see on any OTA, and it will be confirmed and you’ll know, for example, that, you know, this individual accepts 98 percent of the bookings.

So I think you’ll generally feel pretty good about it, but a lot of owners still want 24 hours, you know, to say yes or no.

MR. QUINBY: But why?

MR. SHARPLES: You know what, we’re dealing with an industry that’s been around a very long time. And the way it’s worked in the past, and if you really, you know, try to compare where it’s come from and where it is today, you know, in the past people would have multiple conversations over a period of a couple weeks and they negotiate and they talk about whether there’s a crib in the property, do I need to bring towels for the beach.

And it’s now at a point where, you know, a ton of the volume on our sites is driven with a very quick booking button, maybe a little bit of conversation back and forth.

And so I think where it’s going to be by the end of this year — or the end of 2016 is such a dramatic departure from where it was, that I frankly don’t think there’s a whole lot of friction in the process. Not enough friction that’s going to keep people from renting houses, that’s for sure.

MR. QUINBY: How do you deal with — so you do have this two-sided marketplace and you have this dynamic where, okay, homeowners don’t want reviews but obviously consumers do. And homeowners don’t want online booking but obviously —

MR. SHARPLES: Yeah.

MR. QUINBY: — obviously travelers do. Homeowners may not want instant booking but, you know, I think, I think travelers do. I think these are areas where, for example, booking at Airbnb has maybe been, you know, a step ahead of HomeAway.

How do you balance that dynamic of that two-sided marketplace?

MR. SHARPLES: Yeah, we talk about it all the time inside of HomeAway, that we sort of operate with a slider bar. It’s just, one end we have owners and at the other end we have travelers. It’s true there are many things that are in the best interest of both of them, but there are many things that the two different groups view as diametrically opposed.

When we first started the business, I would say for the first five to six, even seven years, we had the slider bar set on the supplier side because we were trying to accumulate supply all over the word. We felt, you know, there was a period of time where it really was a supply game. But now as we move into the online booking world, we have to be very, very focused on the needs of the traveler. And I think the slider bar for us has now been set much more towards the traveler side. That does create some pain.

In fact, you know, some of the risks involved in the transition that we’re about to go through to move into this online bookable marketplace, you know, do involve customer satisfaction issues with suppliers. And teaming up with Expedia, among other things, helps to de-risk some of that because at the same time where suppliers might not exactly like, you know, the place we’re going with online booking, they’re also going to find that now all of a sudden our distribution has increased by a huge factor.

And again, what suppliers really want, as you very well know, they’re there to make money.

So if we can keep, you know, increasing their business with us every year, they’ll put up with that.

You know, in the end, what’s good for the traveler is good for the owner. If you don’t make the travelers happy, they’re going to go somewhere where else.

MR. QUINBY: Do you think that with Booking.com’s rapid growth and investment in this, in this sector, Darren has always — Darren Huston of Priceline Group has always said that everything has to be instantly bookable, instantly confirmable.

Do you think that — sounds like you wouldn’t agree with that, with that strategy. Do you think they can make some significant inroads into the individual owner market?

MR. SHARPLES: I think if you force instant bookability, you will lose a big chunk of the market that own properties that people really want to stay in.

So I would say we are going to be as aggressive a company as Booking.com in saying, sure, we’d love everything to be instantly bookable. And when we look at the reasons why people might not want to do that, you know, one by one we’re going to try to address those problems.

So, for example, if, you know, 20 percent of the people don’t do it because they’re worried about who might be staying in their house, we can probably provide information, tools, and services to overcome that. Or maybe we’re doing an instant check of somebody behind the scenes saying that’s verified by HomeAway, don’t worry about it, book it.

So we’re going to push just as hard. I just don’t believe that if you adopted that strategy wholesale today, you would — you

would just cut out too many properties that people want to stay in.

MR. QUINBY: What about the future of merchandising for these — for all of these different types of accomodation? Does it make sense to have, in the case of Expedia and Marriott, Starwood, Joseph Hartmann, how do you, how do you think about merchandising? What’s that going to look like?

MR. SHARPLES: I think it remains to be seen.

I think what — I think one of the smart things Expedia has done is recognize that this is a unique marketplace and there is a big segment of the traveler population that is highly enamored with vacation rentals, love it and always will, and those people would prefer to go to a kind of vertical point solution type of site, like a HomeAway, where there’s not a lot of other noise, where they know they’re getting exactly the product they’re looking for.

And I’ll bet, years from now, no matter how well we’re integrated across the Expedia properties, that the majority of the business is still going to be driven through the point solution website.

That said, you know, we have, for example, ownership of BedandBreakfast.com which is the leading bed and breakfast site in the U.S. We have a very good integration with Expedia, and have for years in that business.

You know, about half of the online booking revenue that we do in that business comes from partners like Expedia and half comes from our point solution site.

So I think by covering both of the bases, they’re going to do a great job in owning a big chunk of the market share in this business.

AUDIENCE MEMBER: Brian, we’ve got a question.

AUDIENCE MEMBER: Thanks.

Brian, you talked about implementing a six percent traveler fee and obviously this is something we’ve seen work well on Airbnb. They have much smaller booking (unintelligible) than HomeAway. Still probably, even with HomeAway, it’s not that significant amount of money.

But what friction, if any, do you see in implementing that traveler fee over the coming years?

MR. SHARPLES: Well, I mean, we have, in our forecast for the business, tried to accommodate for some friction.

In general, we’ve been pretty fascinated watching both Trip Advisor and Airbnb charge fees that are in excess of six percent with very little friction.

In fact, when you go out and talk to owners on Airbnb and you ask them, you know, what they pay for the service, they say, we don’t pay anything for the service. You know, we pay three percent for the credit card fees. Well, wait a second. But they’re charging, you know, ten, 12 percent fees. Well, they’re not charging them to me. Well, it’s coming out of somewhere, right?

And so we found the same in the research with our (unintelligible) , that, you know, the owners are willing to put up with a fee. We’re marketing the fee to both owners and travelers as a benefit. The big benefit is that if we take in more revenue as a platform, we can turn around and do better marketing for owners, so we’re going to up our spend pretty dramatically on the parking front. And for travelers we’re going to put in place much stronger guarantees because a lot of people do very much worry about things like fraud or properties being misrepresented on the sites.

We have certain products that add insurance protection that people can buy, but we can get a lot more aggressive just trying to make the marketplace as safe as we, as we possibly can.

MR. QUINBY: Two big developments in the market over the past three to four years I think really spurred by Airbnb. One is this extraordinary growth of private accomodation, especially in urban markets, which has got a lot of hotels suddenly really looking closely at the impact there. Also this idea of renting out the primary home. So when I’m off traveling or here, I could be renting out, renting out my home.

So those turned out to be two pretty big trends with some momentum.

Did you — did HomeAway miss, miss those boats?

MR. SHARPLES: Well, you know, did we miss those boats.

Airbnb, as far as I know, hasn’t made a profit yet, so those are tough markets to make money in. The city markets tend to be a shorter stay, there’s obviously a ton of hotel product in those markets, so in order to compete you have to have fairly low prices.

And that’s really what got Airbnb off the ground was, you know, providing stays at very good prices for a category of traveler that, you know, that needed that type of economy.

But cities are also a very expensive place to drive travelers to. It’s the place where all the big OTAs compete for traffic.

Key words are very expensive. And so the ability to make a profit in those markets in the low end of the business is something that we question.

And I think as a public company we probably would have had to invest, you know, a billion dollars like they have in that business and lose money for a long period of time, but we’re in the business of making money.

Now, I do think on the question of are urban markets attractive, you know, there’s no doubt with the rise of Airbnb, we’ve looked very hard at our traffic, where it’s coming from, where it’s going to. We’ve also talked to Expedia about this quite a bit and both companies have a lot of demand for cities and we do think we have to find more product to sell to our customers in cities.

Whether we go the primary home route or not is a big question and something that we’re going to spend a lot of time I think discussing with Expedia.

Internally, we view staying in a house that somebody lives in as a fundamentally different experience than the HomeAway experience.

So 95 plus percent of our properties are second homes and they’re set up for rental. They’re set up like hotel rooms.

You know, they have fresh bars of soap and there’s nothing in the drawers. And it’s just a very different experience than walking into somebody’s place, their food is in the refrigerator, they’ve got things in the medicine cabinet, there’s clothes in the drawers.

I feel that if we get into that business, we’re probably going to have to delineate, you know, the products for travelers because our travelers don’t expect that at all.

So we’ve stayed out of that. I think as we move into cities, we will first look towards, you know, investment property owners who are making properties available for short-term rental as, you know, as professional rental properties. We think there’s enough — you know, you can, as a property owner right now, in most cities, make more money renting on a short-term basis than a long-term basis.

Well, think about all the people who own long-term rentals.

AUDIENCE MEMBER: Question from the floor.

MR. SHARPLES: Yes.

AUDIENCE MEMBER: Congratulations.

MR. SHARPLES: Thank you.

AUDIENCE MEMBER: There have been a lot of innovators doing both channel management for vacation rental properties as well as Meta search, presumably because those business models have been successful for years and hotel accommodations.

Do you think these businesses will be successful in vacation rentals or it’s not going to work because things are significantly different?

MR. SHARPLES: I think that, you know, probably one of the most interesting trends that we’ve seen in the last few years are these folks that are, that are starting to do channel management. There obviously are other channels besides just HomeAway and there are a number of companies that have sprung up and sort of stepped in between and said, look — I mean, 60 percent of our market of the supply is individual homeowners. And it’s a lot of work to manage a rental.

Our platforms generate continuous e-mails, continuous booking requests, continuous pricing requests. And one of the things we’re starting to do is reward those owners that respond quickly because we are competing now in this marketplace where people do want instant confirmation. So if there’s somebody who picks up the phone fast, who accepts a booking fast, you’re going to be higher up in the search and like any other platform, you’re going to make more money.

Well, these new companies are now stepping in, saying to owners, let me take care of that part of it for you.

The traditional property manager used to charge, you know, 30, 40 percent for a full suite of services. These companies charge maybe ten to 15 percent for, you know, optimizing your business on our platform, or on Airbnb’s platform or somebody else’s. And those businesses are very fast becoming some of our biggest customers, so I think that’s working really well.

I think Meta remains to be seen. I know the question was asked of Steve Hafner and he said, and I’m not sure the economics really support that business and I think I’d have to agree.

MR. QUINBY: What about some of those kind of intermediary sort of property managers or property management companies, are they — that you talked about, are they taking your privately owned homes or are they taking homes from your larger professional

management —

MR. SHARPLES: They’re mostly, they’re mostly taking from private homes. They’re basically upgrading the experience for a private owner, making it easier.

We love these companies, by the way, because they improve the quality of the listings on our site. When one of these channel partners comes in, you know, they study our systems, they know the best places to advertise, they know that certain types of photos and certain kinds of headline images work better than others. And they, and they very much promote quality because they know quality leads to more bookings. They’re very responsive and quick.

So we love these companies, we partnered with them, we think they’re making our sites a lot better.

MR. QUINBY: Could there ever — there’s been talk about potentially, say Airbnb kind of moving into the hotel space. They’ve already made moves into your market, the vacation rental word, and there’s been speculation that independent hotels or even some chains begin listing on, on Airbnb.

So is there, you know, a future, just like if Joe’s home from HomeAway is on Expedia, there could be a hotel listed on HomeAway or broadly within that private accommodation marketplace?

MR. SHARPLES: Well, Booking.com does a fairly large multibillion dollar business in what they term the vacation rental market, and a lot of that are condo hotels. So, you know, the definition of a vacation rental is sort of a, you know, a multiunit property with a kitchen.

And there are a lot of hotel-like properties that have vacation rental inventory locked within them, and historically we have not played in that space.

Expedia has a lot of those relationships.

One of the things that we have yet to build, that’s going to become a priority, is a multiunit capability where we can take buildings that have that kind of inventory, and instead of, you know, putting a listing of all 300 different units on our site, you know, market types of units and be able to control availability and inventory.

So we’re going to do that relatively quickly because that’s going to be a major benefit I think of the, of the new partnership between the two companies.

MR. QUINBY: I want to talk a bit about the product itself, the guest experience. We’ve talked a lot about shopping and booking and finding the channels, but one of the things that we’ve seen, so those three out of four U.S. travelers who don’t rent a home, why they don’t rent is because of expectations around the stay. They want the conveniences of the hotel experience.

I get a sense that some steps that Airbnb is taking, for example, to introduce some of those conveniences into the Airbnb stay, a little bit of a sense from that, would you say that the partnership with Instacart —

MR. SHARPLES: Yeah.

MR. QUINBY: — is an indication of more to come?

What could the future guest experience look like? How can you remove some of those frictions around getting the, you know, getting the key, providing some type of concierge service —

MR. SHARPLES: We’re working hard on that one. I think you nailed it.

When people go on vacation, they want a vacation now and it turns out that vacation rentals are great for families because you don’t have to go out to breakfast every day and you can cook out on the back porch occasionally. But people still don’t want to work too hard when they’re on vacation, and so I think some of the barriers of people choosing that path are the fact that, you know, you can’t call up room service and have something delivered.

And so luckily today the shared economy is pumping up. You know, all kinds of companies that send in private chefs to your home or send massage therapists to your home or, you know, now you can order, you know, full meals that you just have to pop in and cook from sites like Blue Apron and Chef and others.

And so we’re working with all those guys. We’re starting to have a lot of discussions.

We have an app that we’ve built, as I think we talked about last year, that you now download with your stay and that app contains all the information about your stay; how to get in and out of the house, directions, who to call if something goes wrong. But it’s also — we’ve integrated in Uber, we’ve integrated in Instacart, we’ve integrated in, you know, babysitting services, and we’re just going to keep expanding that and do whatever we can to make the, you know, the stay more pleasurable.

MR. QUINBY: But you said five years ago you had a hard time just getting your owners to check their e-mails, so now they’re opening up apps and managing their guest experience in their home.

What kind of adoption or what kind of battle is that to get them to —

MR. SHARPLES: It’s been okay. I think the owners really like this new tool. They’ve adopted it fairly quickly, in part because we prepopulate it with a lot of information and we give them the option to either go deep with it or go light with it.

So, for example, as an owner you can put in all the restaurants that you think, you know, would be a great place for your guests to stay. If you don’t do that, we pull in those recommendations from sites like Gogobot and we populate it into the app.

So, we’ve kind of accommodated for the fact some people do it heavy, some people do it light. But in the end it’s like any of these businesses. People want to get great reviews.

And we also find that when travelers use this app, the reviews actually are higher. So we’re marketing that pretty significantly to our customer base.

MR. QUINBY: Ladies and gentleman, Mr. Brian Sharples.

(Applause)

(Conclusion of interview. Time noted 3:35 p.m.)

EX-99.(A)(5)(K) 3 d90967dex99a5k.htm EX-99.(A)(5)(K) EX-99.(a)(5)(K)

Exhibit (a)(5)(K)

Dear Employee,

As a participant in the HomeAway equity plan, we know that you have questions about how the proposed merger with Expedia might affect your equity (Restricted Stock Units, Stock Options). The answers to these Frequently Asked Questions are very specific with detailed legal and financial considerations. Please read the below carefully and consider it, as appropriate, in any financial planning decisions.

Given the complexity of the topic, we have scheduled some webex sessions for clarification of the below FAQ. If there are specific questions you would like to have answered in these sessions, please email them in advance to Compensation-Global@homeaway.com. The webex sessions are attached. If you wish to attend, simply join the session that is most convenient for you.

Best,

Lynn, Melissa and Lori

HOMEAWAY, INC.

FREQUENTLY ASKED QUESTIONS REGARDING TREATMENT OF

EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK UNITS AND RESTRICTED STOCK

As you know, HomeAway, Inc. (“HomeAway”) has entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Expedia, Inc. (“Expedia”) and HMS1, Inc., a wholly owned subsidiary of Expedia (“Purchaser”). In accordance with the terms of the Merger Agreement, Purchaser will launch a tender offer (the “Offer”) to purchase all of HomeAway’s outstanding common stock. Following the expiration of the Offer, Purchaser will merge with and into HomeAway, which, if completed, will result in HomeAway becoming a wholly owned subsidiary of Expedia (the “Merger”).

We have received numerous questions regarding the effect of this transaction on HomeAway’s outstanding Company stock options, restricted stock awards, and restricted stock units. We are in the process of preparing notices concerning the treatment of these equity awards, which we will be distributing over the coming weeks. In the meantime, we wanted to provide you answers to the following frequently asked questions. These FAQs are being provided to you for information purposes only and shall not serve as an amendment or modification of any of your equity awards and any information contained in these FAQs is qualified in its entirety by the terms of the Merger Agreement.

Q1.

What will HomeAway stockholders receive in the Merger?

A1.	Pursuant to the Merger Agreement, common stockholders will receive per share Merger consideration of $10.15 in cash plus 0.2065 of a share of Expedia common stock (the “Merger Consideration”).

Q2.

Can the current cash equivalent value that HomeAway stockholders receive in the Merger change?

A2.

Yes. The Merger Consideration includes a fixed ratio of Expedia shares. Accordingly, the ultimate cash equivalent value that HomeAway stockholders will receive can change, and it will generally fluctuate in relation to fluctuations in the value of Expedia common stock. All other things being equal, if the price per share of Expedia common stock goes up in the interim, HomeAway stockholders will receive greater cash equivalent value of consideration, and vice versa if price per share of Expedia common stock goes down.

Q3.

How will HomeAway equity awards be treated, generally?

A3.	See the questions below for specific types of awards, but generally speaking, vested HomeAway equity awards will ultimately be treated similarly to common stock held by the public in that they will generally be exchanged for Merger Consideration. In contrast,

holders of unvested HomeAway equity awards will not receive any cash, but instead will have their awards converted into unvested Expedia equity awards, subject to the same terms and conditions, including vesting schedule terms.

Q4.

What will happen to my stock options, restricted stock units and restricted stock awards once they are assumed by Expedia?

A4.

Your assumed stock options, restricted stock units and restricted stock awards will continue to be subject to the same terms and conditions, including vesting schedule terms, that apply to your awards prior to the Merger, except that they will be exercisable or settled in shares of Expedia common stock. The number of shares of Expedia common stock subject to each assumed award and, if applicable, the exercise price of each assumed award will be adjusted to reflect the Merger, as further explained below.

Q5.

How can I calculate the value of my awards?

A5.

We are in the process of preparing notices concerning the treatment of these equity awards, which we plan to distribute over the coming weeks. Generally speaking though, for vested awards, the value received will reflect the Merger Consideration of $10.15 in cash plus 0.2065 of a share of Expedia common stock per each share of HomeAway common stock deliverable pursuant to the award (subject to any withholding, exercise price, and fractional share settlement as described below). Generally speaking, for unvested HomeAway awards, the Expedia awards that will replace them will be adjusted pursuant to a formula in the Merger Agreement that generally preserves the value of the awards immediately before and after the adjustment.

Q6.

What will happen to my vested HomeAway stock options in the Merger?

A6.

At the effective time of the Merger, any vested stock options (including any options that vest upon the effective time of the Merger) will be cancelled and converted into the right to receive the Merger Consideration for each “net share” of HomeAway stock subject to the vested option, if any, less applicable tax withholdings. The number of “net shares” is determined pursuant to a formula in the Merger Agreement that takes into account the exercise price of the vested option. Any fractional net shares will be settled in the cash-equivalent value of the stock and cash Merger Consideration, less applicable tax withholdings.

Example (vested in the money options): You have one vested option award that has a strike price of $20 dollars and allows you to buy 100 shares of HomeAway common stock. Assuming the applicable Expedia stock price is the same at the effective time of the Merger as it was on the date that the 0.2065 per share conversion ratio was set (the closing stock price of a share of Expedia common stock on such date was $136.39), the cash equivalent of the Merger Consideration would be $38.31. That results in an $18.31 value over the strike price per share, or $1,831 in total spread value for the underlying 100 shares. To determine the number of “net shares” subject to your option, this aggregate spread value will be divided by the cash equivalent of the Merger

Consideration ($38.31), resulting in ~47.79 HomeAway “net shares”. You will be entitled to receive the Merger Consideration with respect to each net share as follows:

•

For the fractional share (0.79), you will have the right to receive cash equal to the cash equivalent of the Merger Consideration, or approximately $30.26 (i.e., 0.79 of a share multiplied by $38.31).

•

For the 47 net shares, you will have the right to receive the Merger Consideration with respect to each of your 47 net shares of HomeAway common stock ($10.15 in cash and .2065 of a share of Expedia common stock per net share).

•

Specifically, this would result in an aggregate payment of approximately $477.05 in cash (47 shares multiplied by $10.15 per share) and approximately 9.7 shares of Expedia common stock (47 shares multiplied by 0.2065 of a share).

•

Expedia common stock will only be settled in whole numbers of shares. Thus, the resulting fractional share of Expedia common stock (0.7) will be paid out in cash, based on the applicable Expedia common stock price specified in the Merger Agreement, which results in an additional $94.45 (0.7 multiplied by the assumed value of a share of Expedia common stock of $136.39).

This results in a final payout of 9 shares of Expedia common stock and approximately $601.76 (in all cases less any tax withholding).

Example (vested out of the money options): If you hold one vested option award that has a strike price of $60 dollars, and assuming the Expedia stock price is the same at the effective time of the Merger as it was on the signing date of the Merger such that the cash equivalent of the Merger Consideration would be $38.31, your option would not have any value over the strike price per share. This award would terminate and you would receive nothing for it.

Q7.

What will happen to my unvested HomeAway stock options?

A7.

At the effective time of the Merger, all outstanding unvested options will be assumed by Expedia and converted into options to purchase shares of Expedia common stock. The number of shares of Expedia common stock subject to the assumed option will equal the number of shares of HomeAway common stock subject to the option immediately prior to the Merger multiplied by the equity award exchange ratio (defined below), rounded down the nearest whole share of Expedia common stock. The per share exercise price of the assumed option will be determined by dividing the exercise price per share of HomeAway common stock subject to such assumed option, as in effect immediately prior to the Merger, by the equity award exchange ratio, rounded up the nearest whole cent. Except for changes relating to these rounding items, you will hold option awards with approximately the same total value of underlying securities (albeit a different security) and they will have approximately the same ratio of strike price to market price as your current awards have.

The “equity award exchange ratio” means a fraction (rounded to four decimal places) having (x) a numerator equal to the cash-equivalent value of the Merger Consideration per HomeAway common share, and (y) a denominator equal to the weighted average closing sales price of Expedia common stock as reported on Nasdaq for the ten (10) consecutive trading day period ending one day prior to the acceptance time of the Offer (Note: that this date has not yet been determined but will be on or promptly after Expedia completes its Tender offer which could be as early as December 15, 2015. The date referred to here is not the announcement dates of the merger or the tender offer). The equity award exchange ratio is dependent upon the market price of Expedia common stock prior to the Merger and will be determined shortly before the effective time of the Merger.

Example (unvested in the money options): You have one unvested option award that has a strike price of $20 dollars and allows you to buy 100 shares of HomeAway common stock. In return for that award, you will receive an unvested option award with underlying Expedia common stock on the same terms and conditions (including vesting schedule) as your HomeAway award except for the following. Assuming the equity award exchange ratio is 0.2809 (which assumes that the cash equivalent of the Merger Consideration is $38.31, as described in the example in A6 above, and the assumed stock price of a share of Expedia common stock as described in A6 above ($136.39)), then the number of shares of Expedia common stock subject to your award will be 28 shares (this is 100 times 0.2809 rounded down to the nearest whole share). The strike price of the new award will be $71.20 (this is 20 dollars divided by 0.2809, rounded up to the nearest whole cent). The end result is that you will have in the money unvested options for shares of Expedia common stock.

Example (unvested out of the money options): The treatment for unvested out of the money options is the same as described for in the money options above. The end result is that you will have out of the money unvested options for Expedia common stock.

Q8.

What will happen to my unvested HomeAway restricted stock units?

A8.

At the effective time of the Merger, each outstanding HomeAway restricted stock unit that is unvested (and does not vest upon the effective time of the Merger) will be assumed by Expedia and converted into a restricted stock unit with respect to a number of shares of Expedia common stock (rounded up to the nearest whole share of Expedia common stock) equal to (i) the number of shares of HomeAway common stock subject to the unvested restricted stock unit immediately prior to the effective time of the Merger, multiplied by (ii) the equity award exchange ratio. Each assumed HomeAway restricted stock unit will otherwise be subject to the same terms and conditions that apply to your awards immediately prior to the Merger, including vesting terms.

At the effective time of the Merger, any HomeAway restricted stock units outstanding immediately prior to the Merger that vest upon the occurrence of the Merger will be cancelled in exchange for the Merger Consideration for the number of shares of HomeAway common stock subject to the HomeAway restricted stock unit award, less applicable tax withholding.

Example (unvested HomeAway restricted stock units): You have one unvested restricted stock unit award that will grant you 100 shares of HomeAway common stock when it vests. In return for that award, you will receive an unvested restricted stock unit award for Expedia stock on the same terms and conditions (including vesting schedule) as your HomeAway award except for the following. Assuming the equity award exchange ratio is 0.2809 (as described in the example in A7 above), then number of shares of Expedia common stock subject to your award will be 29 shares (this is 100 times 0.2809 rounded up to the nearest whole share).

Q9.

What will happen to my vested HomeAway restricted stock units?

A9.

When your restricted stock unit awards vest, they immediately become HomeAway common stock. Accordingly, any HomeAway common stock that you hold as a result of previously vested HomeAway restricted stock unit awards will receive the Merger Consideration and will be treated the same as any other share of HomeAway common stock.

Q10.

What will happen to my unvested restricted stock awards in the Merger?

A10.

At the effective time of the Merger, each HomeAway restricted stock award that is outstanding and unvested immediately prior to the Merger (and does not vest upon the effective time of the Merger) will be assumed by Expedia and converted into a restricted stock award covering a number of shares of Expedia common stock (rounded up to the nearest whole share) equal to (i) the number of shares of HomeAway common stock subject to the unvested restricted stock award immediately prior to the Merger, multiplied by (ii) the equity award exchange ratio. Each assumed HomeAway restricted stock award will otherwise be subject to the same terms and conditions that apply to your awards prior to the Merger, including vesting schedule terms.

At the effective time of the Merger, any HomeAway restricted stock award outstanding immediately prior to the Merger that vests upon the occurrence of the Merger will be cancelled in exchange for the right to receive the Merger Consideration in respect of each share of HomeAway common stock covered by such award, less applicable tax withholding.

Example (unvested HomeAway restricted stock): You have one unvested restricted stock award that will become 100 shares of HomeAway common stock when it vests. In return for that award, you will receive an unvested restricted stock award for shares of Expedia common stock on the same terms and conditions (including vesting schedule) as your HomeAway award except for the following. Assuming the equity award exchange ratio is .2809 (as described in the example in A7 above), then the number of shares of Expedia common stock subject to your award will be 29 shares (this is 100 times 0.2809 rounded up to the nearest whole share).

Q11.

What will happen to my vested HomeAway restricted stock?

A11.

When your restricted stock awards vest, they immediately become HomeAway common stock. Accordingly, any shares of HomeAway common stock that you hold at the effective time of the Merger as a result of previously vested HomeAway restricted stock awards will receive the Merger Consideration and will be treated the same as any other share of HomeAway common stock.

Q12.

If I am given a HomeAway award before the Merger is completed, what will happen to those awards?

A12.	Under the Merger Agreement, those awards will be treated the same as previously existing awards described above. (Those awards will remain subject to the terms of the awards agreement themselves as well).

Q13.

With regard to the rounding up and down of shares underlying unvested awards, is each of my awards subject to rounding or is it the total amount of shares underlying my awards?

A13.	The rounding applies to each award.

Q14.

Can I exercise my outstanding stock options prior to the effective time of the Merger?

A14.	Yes, you may exercise your outstanding stock options in accordance with their existing terms and only to the extent that they have vested prior to the closing of the Offer.

Q15.

Can I sell shares of Company common stock issued to me upon exercise of my stock options or vesting of my restricted stock units or restricted stock awards prior to the effective time of the Merger?

A15.	If you have not been notified that you are subject to a special trading restriction by HomeAway, and are not otherwise in possession of material non-public information, then you may trade. Note this is consistent with the Company’s ordinary course policies and procedures.

Q16.

What are my tax consequences of the treatment of my HomeAway equity awards in the Merger?

A16.

You should consult a financial or tax advisor regarding the Federal, foreign, state and local tax consequences related to the treatment of your HomeAway equity awards in connection with the Merger. Please note also that amounts that you may receive in connection with the Merger for HomeAway awards may be subject to HomeAway tax withholding.

Q17.

Are my options in or out of the money?

A17.

Until the tender offer is completed, you will be able to tell if your options are in or out of the money the same way that you did before the announcement of the proposed acquisition of HomeAway by Expedia: by comparing the trading price of HomeAway common stock to the strike price of your option. (Even though it is expected that the price per share of HomeAway common stock will now largely follow movements in the price per share of Expedia common stock given the fixed exchange ratio, your ability to determine if your options are currently in the money or not remains unchanged).

As described in this FAQ, in connection with the completion of the transaction, unvested options will be assumed by Expedia (with a new strike price and new number of underlying shares in Expedia). Also as described in this FAQ, except for changes relating to rounding, you will hold option awards with approximately the same total value of underlying securities (albeit a different security) and they will have approximately the same ratio of strike price to market price as your current awards. Unfortunately, the exact equity exchange ratio informing those new numbers will not be known until a later date shortly before the effective time of the Merger. As a result, it will not be possible to determine the exact amount assumed unvested options will be in or out of the money until after the conversion.

Additional Information and Where to Find It

The exchange offer referenced in this communication has commenced. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares, nor is it a substitute for any offer materials that Expedia and its acquisition subsidiary, the Purchaser, will file with the U.S. Securities and Exchange Commission (“SEC”). At the time the exchange offer was commenced on November 16, 2015, Expedia and its acquisition subsidiary filed a tender offer statement on Schedule TO, Expedia filed a registration statement on Form S-4, and HomeAway filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the exchange offer. THE EXCHANGE OFFER MATERIALS (INCLUDING AN OFFER TO EXCHANGE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER EXCHANGE OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT CONTAIN IMPORTANT INFORMATION. HOMEAWAY STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF HOMEAWAY SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING EXCHANGING THEIR SECURITIES. The Offer to Exchange, the related Letter of Transmittal and certain other exchange offer documents, as well as the Solicitation/Recommendation Statement, are available to all holders of HomeAway stock at no expense to them. The exchange offer materials and the Solicitation/Recommendation Statement are available for free at the SEC’s website at www.sec.gov. Additional copies may be obtained for free by contacting Expedia’s Investor Relations department at (425) 679-3759.

In addition to the Offer to Exchange, the related Letter of Transmittal and certain other exchange offer documents, as well as the Solicitation/Recommendation Statement, Expedia and HomeAway file annual, quarterly and current reports and other information with the SEC. You may read and copy any reports or other information filed by Expedia and HomeAway at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Expedia and HomeAway’s filings with the SEC are also available to the public from commercial document-retrieval services and at the website maintained by the SEC at http://www.sec.gov.

Forward Looking Statements

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements herein that describe the proposed transaction, including its financial and operational impact, and other statements of management’s beliefs, intentions or goals also are forward-looking statements. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of the combined companies or the price of Expedia or HomeAway stock. These forward-looking statements involve certain risks and uncertainties, many of which are beyond the parties’ control, that could cause actual results to differ materially from those indicated in such forward-looking statements, including but not limited to the ability of the parties to consummate the proposed transaction on a timely basis or at all and the satisfaction of the conditions precedent to consummation of the proposed transaction, including the majority of HomeAway’s shares being validly tendered into the exchange offer, the ability to secure regulatory approvals on the terms expected, at all or in a timely manner; the ability of Expedia to successfully integrate HomeAway’s operations; the ability of Expedia to implement its plans, forecasts and other expectations with respect to HomeAway’s business after the completion of the transaction and realize expected synergies; business disruption following the merger; and the other risks and important factors contained and identified in Expedia’s and HomeAway’s filings with the SEC, such as their respective Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, any of which could cause actual results to differ materially from the forward-looking statements, the Tender Offer Statement on Schedule TO (including the offer to purchase, the letter of transmittal and other documents relating to the tender offer) filed by Expedia and its acquisition subsidiary, the registration statement on Form S-4 filed by Expedia, and the Solicitation/Recommendation Statement on Schedule 14D-9 filed by HomeAway. The forward-looking statements included in this press release are made only as of the date hereof. Neither Expedia nor HomeAway undertakes any obligation to update the forward-looking statements to reflect subsequent events or circumstances, except as required by law.

EX-99.(A)(5)(L) 4 d90967dex99a5l.htm EX-99.(A)(5)(L) EX-99.(a)(5)(L)

Exhibit (a)(5)(L)

Dear Employee:

If you have shares in E*Trade and elected to receive information electronically, you will likely have received an email referring to “AN EXCHANGE OFFER for HOMEAWAY, INC. has been made by EXPEDIA INCORPORATED.”

We encourage you to review the materials and follow the instructions which can be found at the links in the email. If you did not receive the email but you hold HomeAway shares, and you have elected with E*Trade to receive electronic information, feel free to call E*Trade to inquire at 1-800-786-2575.

Note: If you do not hold actual shares (i.e., if you have unexercised options, unvested restricted stock units or no equity), you will not have received this notice because only actual issued and outstanding shares are requested for tender in the exchange offer. Other types of outstanding equity would be exchanged as provided under the Agreement and Plan of Merger between HomeAway and Expedia.

Thanks,

Melissa

Additional Information and Where to Find It

Forward Looking Statements