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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
priceline.com Incorporated
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(Name of Issuer)
common stock, par value $.008 per share
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(Title of Class of Securities)
741503106
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(CUSIP Number)
Robert S. Harkey, Esquire
Senior Vice President - General Counsel
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
(404) 715-2387
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 17, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 5 pages)
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SCHEDULE 13D
CUSIP NO. 741503106 PAGE 2 OF 5 PAGES
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(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Delta Air Lines, Inc.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
00
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
00
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7) SOLE VOTING POWER
NUMBER OF 14,440,067
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 0
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON WITH 14,440,067
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(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,440,067
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.8%
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(14) TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP NO. 741503106 PAGE 3 OF 5 PAGES
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This Amendment No. 4 to Schedule 13D relating to the common stock of
priceline.com Incorporated, a Delaware corporation ("priceline"), is being filed
on behalf of Delta Air Lines, Inc., a Delaware corporation ("Delta"), to amend
the Schedule 13D which was originally filed with the Securities and Exchange
Commission ("SEC") on July 21, 1999 and which was amended on July 30, 1999,
August 19, 1999, and November 17, 1999 (the "Schedule 13D"). Unless otherwise
indicated, all capitalized terms used herein but not defined herein shall have
the meaning as set forth in the Schedule 13D.
ITEM 3 SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is hereby amended by adding the following additional information:
On November 17, 1999, Delta and priceline entered into a Master Agreement
that reflects certain understandings, rights and obligations of the parties, in
accordance with the description set forth in Amendment No. 3 to the Schedule 13D
filed with the SEC on November 17, 1999. The Master Agreement, which is filed as
an exhibit to this Amendment No. 4 to the Schedule 13D:
- - Amends the General Agreement dated August 31, 1998, as amended, by (i)
adding United Airlines, American Airlines, USAirways, and certain
foreign-based carriers to the list of participating carriers, and (ii)
revising the sections relating to market restrictions, ticket allocation
methodology, and reporting and audit rights;
- - Amends the Airline Participation Agreement dated August 31, 1998, as
amended, by revising the provision relating to ticket allocation
methodology;
- - Obligates priceline to use its best efforts to cause the managing
underwriter for the August 1999 registered offering to release 8,440,067
shares of priceline common stock held by Delta from the Lock-Up Agreement
signed in connection with that offering;
- - Precludes priceline, during the period from November 17, 1999 to a
designated Release Date (i.e., the earlier of February 7, 2000 or the sale
by Delta of 8,440,067 priceline shares) from permitting cashless exercises
of warrants or initiating sales of equity securities;
- - Requires Jay S. Walker (and Walker Digital), as well as three other senior
executives of priceline, to enter into a lock-up agreement under which all
such persons would not dispose of priceline securities, except in certain
limited circumstances, during the period from November 17, 1999 to the
Release Date; and
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CUSIP NO. 741503106 PAGE 4 OF 5 PAGES
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- - Provides Delta with the right to exchange 6,000,000 shares of priceline
common stock held by it for 6,000,000 shares of priceline covertible
preferred stock having the features described in Amendment No. 3 to the
Schedule 13D filed with the SEC on November 17, 1999.
As mentioned in Amendment No. 3 to the Schedule 13D, (i) the managing
underwriter for the August 1999 registered offering, at the request of
priceline, released the 10,525,834 priceline shares held by Delta from the
Lock-Up Agreement in two separate letters (one dated November 16, 1999 relating
to up to 2,100,000 shares and the other dated November 17, 1999 relating to
8,440,067 shares); (ii) Mr. Walker, Walker Digital, and the three senior
executives of priceline referred to above signed a lock-up agreement on November
17, 1999; and (iii) Delta on November 17, 1999 received the right to exchange
6,000,000 shares of priceline common stock held by it for 6,000,000 shares of
priceline convertible preferred stock. A copy of the lock-up agreement signed
by the priceline parties is included as an exhibit to this Amendment No. 4
to the Schedule 13D.
In connection with the foregoing, and as described in Amendment No. 3 to
the Schedule 13D, priceline issued on November 17, 1999 a warrant to Delta which
provides Delta with the right to acquire 5,500,000 shares of priceline common
stock at a price of $56.625 per share. The warrant contains the features
described in Amendment No. 3, and a copy of the warrant is filed as an exhibit
to this Amendment No. 4.
ITEM 4 PURPOSE OF TRANSACTION
Item 4 is hereby amended by adding the following information:
In connection with Delta's intention to sell a substantial portion, and
possibly all, of the 8,440,067 shares held by it that are not committed to be
sold to or exchanged with other parties, Delta filed with the SEC on November
17, 1999 a Form 144 indicating that it may sell up to 8,440,067 shares of
priceline common stock pursuant to Rule 144 under the Securities Act of 1933.
ITEM 7 MATERIALS FILED AS EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
14. Lock-up Agreement, dated August 11, 1999**
15. Lock-up Agreement, dated November 17, 1999
16. Master Agreement, dated November 17, 1999
17. Participation Warrant Agreement, dated November 17, 1999
</TABLE>
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** Incorporated by reference from underwriting agreement dated August 11, 1999
for registered public offering of priceline, filed as exhibit 1.1 to
registration statement no. 333-83513.
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CUSIP NO. 741503106 PAGE 5 OF 5 PAGES
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SIGNATURE
After reasonable 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.
Dated: November 18, 1999 Delta Air Lines, Inc.
By: /s/ M. MICHELE BURNS
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M. Michele Burns
Vice President and Treasurer
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EXHIBIT 15
November 17, 1999
Delta Air Lines, Inc.
P.O. Box 20574
Atlanta, Georgia 30320-6001
Dear Sirs and Madams:
Each of the undersigned understands that Delta Air Lines, Inc. ("Delta") and
priceline.com Incorporated ("Priceline") propose to enter into a Master
Agreement (the "Master Agreement") whereby Delta and Priceline will amend
certain terms and provisions of that certain General Agreement and
Participating Airline Agreement by and between Delta and Priceline dated August
31, 1998, as amended on December 31, 1998 and July 16, 1999 (the "General
Agreement").
To induce Delta to execute and enter into the Master Agreement each of the
undersigned hereby agrees, severally and not jointly, that, without the prior
written consent of Delta, he or it will not, during the period commencing on
the date hereof and ending on the earlier of February 7, 2000 or Delta having
sold 8,440,067 shares (the "Market Sale Shares") of Priceline Common Stock held
by Delta (the "Release Date"), (1) offer, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, shares of common stock of Priceline (the
"Common Stock") or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; provided, however, that
nothing in this letter shall (x) prevent any of the undersigned from pledging
shares of Common Stock to a third party lender (including registration of such
shares in the name of such lender for the purpose of perfecting a security
interest) as collateral to secure a loan on terms under which such third party
lender is not restricted from selling or otherwise disposing of such shares
upon the exercise of its rights to such collateral under the loan and so long
as on the date of the loan, the market price per share of the Common Stock
multiplied by the aggregate number of shares of Common Stock so pledged is
equal to or exceeds the product of three multiplied by the amount of the loan
or (y) prevent Jay S. Walker ("Walker") from transferring shares of Common
Stock to any of Mr. Richard S. Braddock, The Gore Creek Trust, Ms. Bernee D. L.
Strom, Ms. Nancy B. Peretsman or
<PAGE> 2
Delta Air Lines, Inc.
November 17, 1999
Page 2
Mr. Paul Breitenbach (or their assignees), pursuant to the exercise by such
party of existing options to purchase shares of Common Stock owned by the
undersigned. In addition, each of the undersigned agrees that, without the
prior written consent of Delta, he or it will not, during the period commencing
on the date hereof and ending on the Release Date, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for
Common Stock.
The foregoing provisions shall not apply to the sale or other transfer of shares
of Common Stock by each of the undersigned to any associate (as such term is
defined in rule 12B-2 of the Securities Exchange Act of 1934) of the respective
undersigned; provided that, prior to any such sale or other transfer of shares
of Common Stock, any such associated transferee agrees in writing to the
restrictions on transfer set forth herein.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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Delta Air Lines, Inc.
November 17, 1999
Page 3
Very truly yours,
/s/ JAY S. WALKER
Walker Digital Corporation -----------------------------
Jay S. Walker
By: /s/ JAY S. WALKER
-------------------------
/s/ RICHARD S. BRADDOCK
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Name: Jay S. Walker Richard S. Braddock
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Title: Vice Chairman
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/s/ PAUL E. FRANCIS
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Paul E. Francis
/s/ TIMOTHY BRIER
-----------------------------
Timothy Brier
<PAGE> 1
EXHIBIT 16
MASTER AGREEMENT
This Master Agreement ("Agreement"), dated the 17th day of November, 1999, is
between Delta Air Lines, Inc. ("Delta") and priceline.com Incorporated
("Priceline").
Recitals
Delta has agreed to amend the General Agreement, dated August 31, 1998,
as amended (the "GA"), to add United Airlines, American Airlines, US Airways,
Japan Airlines, Alitalia and Aerolineas Argentinas to the list of permitted
carriers and to modify sections of the GA relating to market restrictions, the
allocation methodology, and reporting and audit rights set forth therein. In
exchange, Priceline (a) has agreed to provide financial consideration to Delta
by making possible certain arrangements described herein and (b) has requested
the release by Morgan Stanley of Delta from a lock-up arrangement so that Delta
may sell 8,440,067 shares ("Market Sale Shares") of its approximately 14.4
million shares of Priceline common stock. In addition, Priceline has agreed that
the remaining approximately six million shares of Priceline common stock held by
Delta will be exchanged, at Delta's option, for approximately six million shares
of newly issued Priceline convertible preferred stock, which will bear an eight
percent annual pay-in-kind dividend.
The parties agree to the following:
ARTICLE 1 - ACTIONS OF THE PARTIES
1.1 Amendment to General Agreement and Airline Participation Agreement
Delta and Priceline agree to amend the General Agreement and Airline
Participation Agreement, dated August 31, 1998, as amended ("APA"), in
accordance with Exhibit A, attached hereto and incorporated by reference
herein (the "Amendment").
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1.2 Release from Lock-up
Priceline will use its best efforts to cause Morgan Stanley & Co.
Incorporated and Morgan Stanley & Co. International Limited (collectively,
Morgan Stanley) to release the Market Sale Shares held by Delta from the
lock-up that expires on February 7, 2000 pursuant to that certain Lock-Up
Letter from Delta to Morgan Stanley and several Underwriters dated August
11, 1999 (the "Lock-Up"). In addition, Priceline shall not request, will
oppose if requested, and will use its best efforts to cause Morgan Stanley
not to release any other parties from any existing lock-up agreements
relating to Priceline, until Delta has sold the Market Sale Shares.
1.3 No Amendment of Warrant Agreements
Priceline shall not amend, during the period from the date hereof until the
earlier of February 7, 2000 or Delta having sold the Market Sale Shares
(the "Release Date"), any warrant agreement or warrant certificate to
permit a cashless exercise feature.
1.4 No Sale or Registration of Securities
Priceline shall not initiate, and to the extent it has a contractual right
to do so, Priceline shall not consent to or participate in, a sale of
equity securities of Priceline until after the Release Date.
1.5 Convertible Preferred Stock
At Delta's option, , all of the shares of Priceline Common Stock held by
Delta (other than the Market Sale Shares) will be exchanged for
$359,580,000 aggregate principal amount of a newly issued class of
convertible preferred stock of Priceline bearing an accruing semi-annual
paid-in-kind dividend at a rate of eight percent (8%) per annum, payable
semiannually, in Priceline common shares (the "Convertible Preferred
Stock"), which such exchange to be structured to the extent possible in a
tax-free transaction to Delta pursuant to I.R.C. Section 368 (a)(1)(E). Any
shares of Convertible Preferred Stock held by Delta after the date of
issuance may be converted at Delta's option at any time into shares of
Priceline common stock at a one (1) to one (1) ratio (i.e. a zero percent
premium). The Convertible Preferred Stock will have a final maturity of ten
(10) years from the date of issue and
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be subject to a mandatory redemption at the tenth (10th) anniversary for
cash at a price per share of $59.93; provided that Priceline shall have a
call right for the Convertible Preferred Stock after three (3) years from
the date of issue for cash at a price per share of $59.93. To the extent
all or a portion of the Convertible Preferred Stock is called, Priceline
will provide Delta with 30 days' advance written notice so that Delta will
first have the right to convert its Convertible Preferred Stock during such
30 day period. Whether or not Priceline has exercised its call right, Delta
is guaranteed the first six semiannual dividends. The Convertible Preferred
Stock will be subordinated to any indebtedness of Priceline, will rank pari
passau with any existing or future preferred stock issued by Priceline, and
will have priority over the the common stock of Priceline. Delta will have
voting rights for the Convertible Preferred Stock as if Delta held an
equivalent number of Priceline common shares (i.e., on a one to one ratio).
In the event that Priceline issues a cash dividend to the holders of common
shares, then Delta shall be entitled to demand a cash dividend on the
Convertible Preferred Stock in lieu of the paid-in-kind dividend.
In the event of a change of control of Priceline where cash is a portion of
the consideration paid by the acquiring company, Delta will have the right
to elect to receive the greater of par (cash at a price per share of
$59.93) or the cash value of the transaction. If the transaction is for
stock, the exchange ratio will be adjusted such that Delta receives the
same monetary consideration for its Convertible Preferred Stock.
Priceline hereby confirms that such shares, when converted to Priceline
common stock, shall have demand and piggyback registration rights under the
existing Amended and Restated Registration Rights Agreement dated December
8, 1998 by and among Delta, Priceline, and other parties or any successor
or substitute registration rights agreement thereto.
The Convertible Preferred Stock will be subordinated to any indebtedness of
Priceline, will rank pari passau with any existing or future preferred
stock issued by Priceline, and will have priority over the the common stock
of Priceline. Delta will have voting rights for the Convertible Preferred
Stock as if Delta held an equivalent number of Priceline common shares
(i.e., on a one to one ratio). In the event that Priceline issues a cash
dividend to the holders of common shares, then Delta shall be entitled to
demand a cash dividend on the Convertible Preferred Stock in lieu of the
paid-in-kind dividend.
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1.6 Other Agreements
Priceline and Delta, respectively, shall execute and deliver the agreements
described in Article 6 to which either is a party.
ARTICLE 2 - CLOSING
2.1 Closing. The closing (the "Closing") of the transactions contemplated by
this Agreement shall take place immediately, following the satisfaction or
waiver of all of the conditions set forth in Article 6 hereof (the "Closing
Date").
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF PRICELINE
Representations and Warranties of Priceline. Priceline represents and warrants
to Delta as follows:
3.1 Organization and Qualification. Priceline is a duly organized and validly
existing corporation in good standing under the laws of the State of Delaware
and has the corporate power and authority to own, operate and lease the
properties and assets it now owns, operates or leases and to conduct its
business as it is now being conducted.
3.2 Authority Relative to this Agreement. Priceline has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Priceline. This Agreement has been duly and
validly executed and delivered by Priceline and is, assuming due execution and
delivery thereof by Delta and that Delta has full legal power and right to enter
into this Agreement, a valid and binding obligation of Priceline, enforceable
against Priceline in accordance with its terms, except as enforcement thereof
may be limited by the availability of certain equitable remedies or by
bankruptcy, insolvency or similar laws affecting creditors' rights generally.
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3.3 Broker. Priceline has not retained or agreed to pay any broker or finder
with respect to this Agreement and the transactions contemplated hereby, the
fees for which Delta may be responsible.
3.4 Shares Held by Delta. Priceline represents that, as of the date of the
Warrant Agreement, after giving effect to the Stock Purchase Agreement of
November 16, 1999, pursuant to which Jay S. Walker purchased from Delta
2,085,767 shares of Priceline common stock at a price of $59.93 per share, the
remaining 14,440,067 shares of Priceline common stock held by Delta represent
approximately eight and eighty five hundredths percent (8.85%) of the
outstanding common stock of Priceline.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF DELTA
Representations and Warranties of Delta. Delta represents to Priceline
as follows:
4.1 Organization and Qualification. Delta is a duly incorporated and validly
existing corporation in good standing under the laws of the State of Delaware
and has the corporate power and authority to own, operate and lease the
properties and assets it now owns, operates or leases and to conduct its
business as it is now being conducted.
4.3 Authority Relative to this Agreement. Delta has the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Delta. This Agreement has been duly and
validly executed and delivered by Delta and is, assuming due execution and
delivery thereof by Priceline and that Priceline has full legal power and right
to enter into this Agreement, a valid and binding obligation of Delta,
enforceable against Delta in accordance with its terms, except as enforcement
thereof may be limited by the availability of certain equitable remedies or by
bankruptcy, insolvency or similar laws affecting creditors' rights generally.
4.3 Purchase for Investment.
(a) Delta understands that the shares of Convertible Preferred Stock to be
issued to Delta hereunder (the "Shares") have not been registered
under the Securities Act of 1933, as amended (the "Act"), or under
applicable
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state securities laws, in reliance upon exemptions contained in the
Act and such laws and any applicable regulations promulgated
thereunder or interpretations thereof, and cannot be offered for sale,
sold or otherwise transferred unless all or any portion of the Shares
subsequently are so registered or qualify for exemption from
registration under the Act and such laws and unless such offer, sale
or transfer is made in compliance with the terms of this Agreement and
that the certificate(s) representing the Shares shall bear the
following legends:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID ACT."
(b) The Shares are being acquired under this Agreement by Delta
in good faith solely for its own account, for investment and not with
a view toward resale or other distribution within the meaning of the
Act; and such Shares will not be offered for sale, sold or otherwise
transferred without either registration or exemption from registration
under the Act.
(c) Delta is an "Accredited Investor" within the meaning of rule
501 of Regulation D under the Act, as presently in effect. Delta has
such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of its investment in
the Shares; and understands and is able to bear any economic risks
associated with such investment.
(d) Delta understands that the Shares will be considered
"restricted securities" within the meaning of Rule 144 under the Act;
that Rule 144 may not be available to exempt from the registration
requirements of the Act sales of such restricted securities; that if
Rule 144 is available, sales may be made in reliance upon Rule 144
only in accordance with the terms and conditions of Rule 144, which
among other things generally requires that the securities be held for
at least one year and that sales be made in limited amounts (which
amounts are subject to certain exceptions depending upon whether the
seller is an "affiliate" within the meaning of Rule 144 and how long
the securities have been held); and that, if the exemption for such
sales
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is not available, registration of the Shares under the Act and state
securities laws may be required.
4.4 Broker. Delta has not retained or agreed to pay any broker or finder with
respect to this Agreement and the transactions contemplated hereby, the fees for
which Priceline may be responsible.
ARTICLE 5 - FURTHER AGREEMENTS OF THE PARTIES
5.1 Governmental Filings. In connection with the consummation of the
transactions contemplated hereby, Priceline and Delta shall promptly file with
the SEC any required materials relating to the transactions contemplated by this
Agreement.
5.2 Reasonable Business Efforts. Upon the terms and subject to the conditions
of this Agreement, Delta and Priceline agree to use reasonable business efforts
to take, or cause to be taken, and to assist and cooperate with each other in
doing, all things reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
5.3 Expenses; Payments. Each party hereto agrees to bear its own expenses
(including, without limitation, the reasonable fees and disbursements of
counsel) in connection with the negotiation and preparation of this Agreement
and its performance hereunder.
5.4 Warrant. On November 17, 1999, Priceline shall execute and deliver to Delta
a Participation Warrant Agreement in the form of Exhibit D attached hereto.
ARTICLE 6 - CONDITIONS TO OBLIGATIONS OF DELTA
Delta shall not be obligated to consummate the transactions contemplated by this
Agreement, unless the following conditions shall have been satisfied or, if
applicable, waived by Delta prior to or at the Closing.
6.1 Representations and Warranties. The representations and warranties of
Priceline contained herein shall be true, complete and accurate in all material
respects as of the Closing Date.
6.2 Morgan Stanley shall have issued to Delta a letter in the form of Exhibit B
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<PAGE> 8
attached hereto in which Morgan Stanley releases the Market Sale Shares from the
Lock-Up that expires on February 7, 2000 (the "Lock-Up").
6.3 Jay S. Walker, Walker Digital, Richard Braddock, Paul Francis and Timothy
Brier each shall have signed a letter agreement with Delta, in the form of
Exhibit C attached hereto, in which each agrees, during the period from the date
hereof until the Release Date, not to sell or transfer, directly or indirectly,
any Priceline securities.
6.4 Priceline shall have executed a Participation Warrant Agreement in the form
of Exhibit D attached hereto.
ARTICLE 7 - CONDITIONS TO OBLIGATIONS OF PRICELINE
Priceline shall not be obligated to consummate the transactions contemplated by
this Agreement unless the following conditions shall have been satisfied or, if
applicable, waived by Priceline prior to or at the Closing.
7.1 Representations and Warranties. The representations and warranties of Delta
contained herein shall be true, complete and accurate in all material respects
as of the Closing Date.
7.2 Amendments. Delta shall have executed and delivered the Amendment to the GA
and APA, substantially in the form of Exhibit A attached hereto.
ARTICLE 8 - TERMINATION
8.1 Certain Terminations. This Agreement may be terminated at any time prior to
the occurrence of the Closing: (a) by written agreement by Delta and Priceline;
or (b) by the party not in breach in the event of a material breach by the other
which is not cured within fifteen (15) days after written notice thereof.
8.2 Effect of Termination. In the event of the termination of this Agreement by
either Delta or Priceline, as provided above, this Agreement shall thereafter
become void and of no further force and effect and there shall be no liability
on the part of any party hereto or its directors, officers, stockholders,
employees or agents, except for any liability for any willful breach of this
Agreement causing or permitting such termination and except that the provisions
of Sections 5.3 and this Section 8.2 shall survive such termination. The
representations and warranties made herein shall survive the Closing.
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ARTICLE 9 - MISCELLANEOUS
9.1 Further Assurances. From time to time hereafter, each party shall, using
reasonable business efforts, execute and deliver such other instruments of
transfer and assumption and take such further action including providing access
to necessary books and records as the other may reasonably request to carry out
the transfer of the Assets and as otherwise may be reasonably required in
connection with effecting or carrying out the provisions of this Agreement.
9.2 No Waiver. Except as expressly provided in this Agreement, nothing
contained in this Agreement shall cause the failure of either party to insist
upon strict compliance with any covenant, obligation, condition or agreement
contained herein to operate as a waiver of, or estoppel with respect to, any
such or any other covenant, obligations, condition or agreement by the party
entitled to the benefits thereto.
9.3 Severability. If any provisions hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and,
subject to applicable law, shall not affect the validity or effect of any other
provisions hereof.
9.4 No Third Party Beneficiary. Nothing herein expressed or implied is intended
to or shall be construed to confer upon or give to any person or corporation
other than the parties hereto and their successors any rights or remedies under
or by reason of this Agreement.
9.5 Entire Agreement; Amendments. This Agreement contains and is intended as, a
complete statement of the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersedes all prior statements,
representations, discussions, agreements, draft agreements and undertakings,
whether written or oral, express or implied, of any and every nature with
respect thereto. This Agreement cannot be changed or terminated orally. This
Agreement may only be amended by written agreement of Priceline and Delta.
9.6 Assignment. This Agreement shall be binding upon the successors and assigns
of the parties hereto, although no party shall be permitted to assign any of its
rights or delegate any of its duties under this Agreement without the consent of
the other party hereto.
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9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed in the State of Delaware.
9.8 Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be delivered personally (including
by courier) or mailed by registered mail, return receipt requested, or given by
facsimile transmission to the parties at the following addresses (or to such
other address as a party may have specified by notice given to the other
pursuant to this provision) and shall be deemed given when so received:
(a) if to Priceline, to:
priceline.com Incorporated
5 High Ridge Park,
Stamford, Connecticut 06905
Attn: - General Counsel
Facsimile number: (203) 595-8344.
(b) if to Delta, to:
Delta Air Lines, Inc.
1030 Delta Boulevard Atlanta, GA 30320
Attn: Senior Vice President - General Counsel
Facsimile number: (404) 715-2106.
9.9 Headings. The section headings of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation of this
Agreement. All references herein to sections, unless otherwise identified, are
to sections of this Agreement.
9.10 Counterparts; Facsimile Signature. This Agreement may be executed by the
parties hereto in two or more counterparts, by facsimile or otherwise, each of
which shall be deemed to constitute an original, but together which shall
constitute one and the same instrument.
9.11 Indemnity Each party (the "Indemnifying Party") shall indemnify, defend,
compensate, and hold harmless the other, and the other's officers, directors,
employees, and representatives, to the fullest extent permitted by law, from and
against all
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damages, claims, liabilities, losses and attorneys' fees, arising out of or
relating to any breach of any representation, warranty, covenant or agreement in
this Agreement or any agreement signed by Delta or Priceline pursuant to
Article 6.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as
of the date first above written.
PRICELINE.COM DELTA AIR LINES, INC.
INCORPORATED
/s/ PAUL E. FRANCIS /s/ M. MICHELE BURNS
----------------------- --------------------------
By: Paul E. Francis By: M. Michele Burns
Title: Chief Financial Officer Title: Vice President & Treasurer
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EXHIBIT A
Amendment to the Airline Participation Agreement and the General Agreement
This Amendment ("Amendment"), dated the 17th day of November, 1999, amends the
Airline Participation Agreement ("APA") and the General Agreement ("GA"), dated
August 31, 1998, as amended, between and among Delta Air Lines, Inc. ("Delta")
and priceline.com Incorporated and PriceLine Travel, Inc. which merged with and
into priceline.com Incorporated on March 24, 1999 ("Priceline"). Unless
otherwise defined herein, capitalized terms shall have the meanings set forth in
the APA and the GA, as applicable.
1. The following provision replaces Section 3.1 of the GA in its entirety:
3.1 Subject to Section 3.5 below, Delta and Priceline agree that, during the
term of the GA and APA:
(a) Delta consents to the participation in Priceline by the U.S. carriers
identified in the attached Schedule 3.1; subject to the following
restrictions:
(i) Priceline shall not issue tickets on Northwest Airlines to or from
ATL, except for the following O&D markets: DTW-ATL, MSP-ATL, and MEM-ATL;
(ii) Priceline shall not issue tickets on Continental Airlines to or
from ATL, except for the following O&D markets: EWR-ATL, CLE-ATL,
HOU-ATL and IAH-ATL;
(iii) Priceline shall not issue tickets on United Airlines to or from
ATL, except for the following O&D markets: ORD-ATL, DEN-ATL, SFO-ATL,
and IAD-ATL;
(iv) Priceline shall not issue tickets on USAirways to or from ATL, BOS
or LGA except for the following O&D markets: PIT-ATL/BOS/LGA,
PHL-ATL/BOS/LGA, and CLT-ATL/BOS/LGA. Notwithstanding the above
restriction, Priceline may issue tickets on USAirways to or from BOS or
LGA in O&D markets not served by nonstop flights operated by Delta or a
carrier operating a flight under Delta's two letter "DL" designator
code, provided, that Priceline shall restrict its ticket BOS or LGA
sales on USAirways within thirty (30) days of any new nonstop BOS or
LGA service offered by Delta or a carrier operating a flight under
Delta's two letter "DL" designator code; and
(v) Priceline shall not issue tickets on American Airlines to or from
ATL, except for the following O&D markets: ORD-ATL, DFW-ATL and
MIA-ATL. In the event that American Airlines (or an affiliate of
American Airlines), merges with or acquires substantial assets of
USAirways in Boston, then, in addition to the ATL market restriction,
Priceline shall not issue tickets on American Airlines to or from BOS,
except for the following O&D markets: ORD- BOS, DFW- BOS
<PAGE> 13
and MIA- BOS; provided, that Priceline may issue tickets on American
Airlines to or from BOS in O&D markets not served by nonstop flights
operated by Delta or a carrier operating a flight under Delta's two
letter "DL" designator code subject to; provided, further, that
Priceline shall restrict its BOS ticket sales on American within
thirty (30) days of any new nonstop BOS service offered by Delta or a
carrier operating a flight under Delta's two letter "DL" designator
code. In the event that American acquires or operates a hub airport in
PIT, PHL or CLT as a result of the acquisition of substantially all of
the assets of USAirways in PIT, PHL or CLT, then Priceline may issue
tickets on American Airlines, respectively, in the PIT-ATL, PHL-ATL,
or CLT-ATL markets, respectively.
(b) Delta consents to the participation in Priceline by the International
Carriers identified in the attached Schedule 3.1; subject to the following
restrictions:
(i) Priceline shall not issue tickets for international travel on
Austrian Airlines, Sabena, Swissair, AeroMexico, Air Jamaica, Korean
Airlines, Air Canada, All Nippon Airways, El Al Israel Airlines,
Qantas, Japan Airlines, Alitalia and Aerolineas Argentinas to or from
ATL or BOS, except for offers originating from O&D markets not served
by Delta or a carrier operating a flight under Delta's two letter
("DL") designator code.
(c) Notwithstanding the restrictions set forth in Section 3.1(a) and
3.1(b), Priceline may, in addition to other rights set forth in this
Amendment issue tickets (i) on Turkish Airlines solely in the New York
(JFK) - Istanbul, Turkey O&D market, (ii) on flights operated by
Participating Airlines in O&D markets not served by Delta or a carrier
operating a flight under Delta's two letter designator code, and (iii) on
code share flights operated by third party carriers (including commuter
carriers) where the Participating Carrier's two letter designator code used
to identify its flights (as published and used in the Official Airline
Guide (OAG), computer reservation systems (CRS's) and internal reservations
systems) appears in the carrier code box of the flight coupon; provided,
that the market restrictions set forth in Section 3.1(a) and 3.1(b) are
applicable to such code share flights.
(d) Priceline shall not issue tickets on carriers that are not listed on
Schedule 3.1. The participation of other domestic and international
carriers in Priceline, and the sale of tickets on such carriers, is subject
to Delta's prior written consent. Delta agrees to meet with Priceline to
discuss objective criteria by which new international participants could be
added.
(e) For purposes of Section 3.1, an O&D market shall be considered to be
served by Delta or a carrier operating a flight under Delta's two letter
designator code at any time scheduled service is offered for sale by one or
more such carriers.
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2. The following test is added as Section 7.15 (f) of the GA:
Reporting Audit Rights:
The General Agreement will be amended to state that Priceline will make
available (at no cost to Delta) to all Participating Airlines, on an agreed
production schedule, the following information for all Domestic and
International markets in which such Participating Airlines provide fares and
availability ("Applicable O&D's"):
- - Methodology for determination of "Reasonable Demand" where "Reasonable
Demand" denotes offers acceptable to Priceline for possible fulfillment
- - Notification of changes to "Reasonable Demand" methodology
- - O&D routing, number of passengers, revenue, and average fare data for
all Priceline tickets for each Participating Airline
The above data will be made available to each Participating Airline no later
than 30 days following the end of each calendar month in the case of segment
data and each calendar quarter in the case of data relating to number of
passengers, revenue and average fare data.
- - With respect to Delta only
- Weekly frequency distribution of offer price demand by applicable O&D to
include mode, range, minimum/maximum level, mean, median, standard
deviation and bid price trends
- As soon as practical but in any case within six months, make available to
Delta with weekly detail and summary report that identifies rejected
offers and the reasons leading to the rejections (e.g., "bid was too low
by $20, no "L" inventory LGA-ATL Nov 1)
- - Priceline will continue to provide to Delta all the data it currently
submits on a regular basis (i.e., Delta Air Lines' Weekly Ticket Report -
Summaries of Ticket Sales by O&D - Domestic and International), including
data routinely submitted in response to Delta ad hoc requests.
Priceline will disclose bookings through Priceline in a format comparable to the
CRS MIDT data on a weekly basis and Priceline shall make available such data to
all Participating Carriers.
Priceline agrees to make available to Delta the audit plan and the report
prepared by priceline's auditors concerning Priceline's compliance with the
Participation Agreement and Delta General Agreement. In addition, Delta will
have the right to audit Priceline for compliance on all contractual market,
product, and other agreements and to receive regular reports measuring
compliance to such contractual terms.
3. The following provision replaces Section 7.11 of the General Agreement in its
entirety:
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<PAGE> 15
7.11 All Participating Carriers will be given the first opportunity to
fill a customer ticket request based on a formula which allocates such
requests in proportion to the aggregate domestic or international
market share (as applicable) of each Participating Carrier for each O&D
requested. If a Participating Carrier fails to respond to a ticket
request on its designated first look, then Priceline will allocate the
request through a second round of preferred looks, which will be
allocated in proportion to the aggregate domestic or international
market shares (as applicable) of all remaining Participating Carriers
for each O&D requested (but excluding the Participating Carrier that
failed to fulfill the ticket request on the first look).
4. The following provision replaces Article III of the Airline Participation
Agreement in its entirety:
III. Priceline Ticket Allocation Methodology
All Participating Carriers will be given the first opportunity to fill
a customer ticket request based on a formula which allocates such
requests in proportion to the aggregate domestic or international
market share (as applicable) of each Participating Carrier for each O&D
requested. If a Participating Carrier fails to respond to a ticket
request on its designated first look, then Priceline will allocate the
request through a second round of preferred looks, which will be
allocated in proportion to the aggregate domestic or international
market shares (as applicable) of all remaining Participating Carriers
for each O&D requested (but excluding the Participating Carrier that
failed to fulfill the ticket request on the first look).
5. Except as provided herein, all other terms and conditions of the APA and
the GA shall remain in full force and effect. In the event any term or
provision of the APA or the GA is contrary to or inconsistent with this
Amendment, the terms of this Amendment shall control.
PRICELINE.COM DELTA AIR LINES, INC.
INCORPORATED
-------------------------- -----------------------------------
By: Paul E. Francis By: M. Michele Burns
Title: Chief Financial Officer Title: Vice President & Treasurer
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SCHEDULE 3.1
US CARRIERS
Alaska Airlines
American Airlines
America West Airlines
Continental Airlines
Hawaiian Airlines
Midway Airlines
Northwest Airlines
Sky West
Trans World Airlines
Trans States
USAirways
United Airlines
INTERNATIONAL CARRIERS
Air Jamaica
Aer Lingus
Aerolineas Argentinas
Aeromexico
Air Canada
Air France
Air New Zealand
Alitalia
All Nippon Airways
Austrian Airlines
Cathay Pacific Airways
El Al Israel Airlines
Iberia
Icelandair
Korean Air Lines
Japan Airlines
Lufthansa
Malaysia Airlines
Qantas
SAS (Scandinavian Airlines)
Singapore Airlines
Sabena
South African Airways
Swissair
Varig
Virgin Atlantic
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EXHIBIT 17
THE WARRANT ISSUED PURSUANT TO THIS PARTICIPATION WARRANT AGREEMENT HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED TO EFFECTUATE SUCH TRANSACTION.
PARTICIPATION WARRANT AGREEMENT
To Purchase Shares of Common Stock
Dated as of November 17, 1999
PRICELINE.COM INCORPORATED
a Delaware Corporation
Issue Date: November 17, 1999
THIS CERTIFIES THAT, Delta Air Lines, Inc. (the "Warrant Holder"), with a place
of business at 1030 Delta Boulevard, Hartsfield Atlanta International Airport,
Atlanta Georgia 30320, for value received, is entitled, upon the terms and
subject to the conditions of this Participation Warrant Agreement (this "Warrant
Agreement"), to subscribe for and purchase fully-paid and non-assessable shares
of common stock, par value $.008 per share (the "Common Stock"), of
priceline.com Incorporated, a Delaware corporation (the "Company").
1. Issuance of Warrants. On the Issue Date, the Company will issue to
the Warrant Holder warrants (the "Warrants") to acquire Five Million Five
Hundred Thousand (5,500,000) shares of the Common Stock (the "Shares"), subject
to adjustment as hereinafter provided pursuant to Section 10 herein.
2. Exercise Price. The Warrants have an exercise price of $56.625 per
share of Common Stock, as adjusted pursuant to the provisions of Section 10 of
this Warrant Agreement (the "Exercise Price").
3. Term. The Warrants are fully vested on the Issue Date. Except as
otherwise provided herein, the term of the Warrants and the right to purchase
Shares as granted herein shall be exercisable on the fifth (5th) anniversary of
the Issue Date; provided, further, that if any of the Warrants first become
exercisable on the fifth (5th) anniversary of the Issue Date, the Warrant Holder
will have an additional six months thereafter to exercise its purchase rights in
respect of those Warrants (the end of such five year period and additional six
months, if applicable, being referred to herein as the "Termination Date").
4. Exercise Events.
(a) General. Unless otherwise exercisable at an earlier date, in
accordance with this Section 4, all of the Warrants shall be fully exercisable
commencing of the fifth anniversary of the Issue Date. Notwithstanding any
provision of Section 4(b) to the contrary, no Warrants granted hereunder shall
be exercisable prior to March 16, 2000.
(b) Early Exercise Rights.
(i) If, at any point during the period between November 17, 1999
and November 16, 2000 (the "First Measuring Period"), the
Company receives Net Revenue (as defined in Section 4(c)) of
at least $180 million (the "First Measuring Period Net
Revenue Benchmark") from tickets sold during the First
Measuring Period for travel on the Warrant Holder, its
subsidiaries and/or on the Warrant Holder's code share
partners using Warrant Holder's code (collectively, "Warrant
Holder and its Code Share
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<PAGE> 2
Partners"), the Warrant Holder will thereupon and thereafter
have the right to exercise Warrants, subject to adjustment
as provided in Section 10 hereof, equal to 50% of the
Shares. In the event that the Company does not achieve the
First Measuring Period Net Revenue Benchmark during the
First Measuring Period, the Warrant Holder will still be
entitled to exercise Warrants, subject to adjustment as
provided in Section 10 hereof, equal to 50% of the Shares
upon the expiration of the First Measuring Period and
thereafter if, during the entire term of the First Measuring
Period, Warrant Holder does not voluntarily participate in
any name-your-price airline ticket service other than the
Company's and its affiliates' airline ticket services.
(ii) In addition to Warrant Holder's early exercise rights under
Section 4(b)(i), if during the period between January 1,
2000 and December 31, 2000 (the "Second Measuring Period"),
the Company receives Net Revenue (as defined in Section
4(c)) of at least $80 million (the "Second Measuring Period
Net Revenue Benchmark") from tickets sold during the Second
Measuring Period for travel on the Warrant Holder and its
Code Share Partners, the Warrant Holder will on January 1,
2001 and thereafter have the right to exercise Warrants,
subject to adjustment as provided in Section 10 hereof,
equal to 100% of the Shares.
(c) Net Revenue. As used in this Warrant Agreement, the term "Net
Revenue" shall mean the total ticket revenue received by the Company from
tickets sold for travel on the Warrant Holder and its Code Share Partners, net
of federal excise and segment taxes, passenger facility charges and related
fees. The parties acknowledge that credit card processing fees, and any
processing fees or similar fees charged by the Company to the consumer in
connection with the sale of a ticket shall not be included in the calculation of
Net Revenue. Attached hereto as Exhibit D is an example of the calculation of
Net Revenue.
5. Exercise of Purchase Rights.
(a) Subject to the provisions of Section 4 of this Warrant
Agreement, the purchase rights represented by this Warrant Agreement are
exercisable by the Warrant Holder, in whole or in part, at any time, or from
time to time during the period set forth in Section 3 above, by tendering to the
Company at its principal office a duly completed and executed notice of exercise
in the form attached hereto as Exhibit A (the "Notice of Exercise"), the
Warrants and the Exercise Price. Upon receipt of such items, the Company shall
issue to the Warrant Holder a certificate for the number of shares of Common
Stock purchased. The Warrant Holder, upon exercise of the Warrants, shall be
deemed to have become the holder of the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which the Warrants are exercised. In the
event of any exercise of the rights represented by the Warrants, certificates
for the Shares so purchased shall be delivered to the Warrant Holder or its
designee as soon as practical and in any event within ten (10) business days
after receipt of such notice and, unless the Warrants have been fully exercised
or expired, new Warrants representing the remaining portion of the Warrants and
the underlying Shares, if any, with respect to which this Warrant Agreement
shall not then have been exercised shall also be issued to the Warrant Holder as
soon as possible and in any event within such ten-day period.
(b) Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising the Warrants for cash, the Warrant Holder may elect to
receive shares of Common Stock equal to the value (as determined below) of the
Warrants (or portion thereof being exercised) by surrender of the Participation
Warrant Agreement at the principal office of the Company
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<PAGE> 3
together with the duly executed Notice of Exercise in which event the Company
shall issue to the Warrant Holder a number of shares of Common Stock computed
using the following formula: X=Y(A-B)/ A WHERE X= the number of shares of Common
Stock to be issued to the Warrant Holder; Y= the number of shares of the Common
Stock purchasable under the Warrants or, if only a portion of the Warrants is
being exercised, the portion of the Warrants being exercised; A= the fair market
value of one share of the Company's Common Stock (at the date of such
calculation); and B= Exercise Price (at the date of such calculation). For
purposes of this Section 5(b), the calculations contemplated by this Section
5(b) shall be made as of the close of business on the trading day immediately
preceding the date of the delivery of this Warrant Agreement and the related
Notice of Exercise and the fair market value of one share of the Common Stock
shall be equal to the sales price, regular way, as reported on Nasdaq or if no
such reported sale takes place, the average of the closing bid and asked prices,
regular way, as reported on Nasdaq or if no such bid or ask prices are reported,
the average of the bid and ask prices of a New York Stock Exchange member. The
Company shall deliver, or cause to be delivered, the shares of Common Stock
issuable upon a net issue exercise pursuant this Section 5(b) within two
business days of the surrender of this Warrant Agreement and related Exercise
Notice.
6. Reservation of Shares. The Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights to purchase the Shares as provided in this Warrant
Agreement. All of the Shares shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, and free and
clear of all preemptive rights.
7. No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the Warrant Holder's
rights to purchase the Shares.
8. No Rights as Shareholder. This Warrant Agreement does not entitle
the Warrant Holder to any voting rights or other rights as a shareholder of the
Company with respect to the underlying Shares prior to the exercise of the
Warrant Holder's rights to purchase the Shares as provided for herein.
9. Redemption. The Warrants represented by this Warrant Agreement are
not redeemable by the Company.
10. Adjustment Rights. The Exercise Price and the number of shares of
Common Stock purchasable hereunder are subject to adjustment from time to time,
as follows:
(a) Merger. If at any time there shall be a merger or consolidation
of the Company with or into another corporation when the Company is not the
surviving corporation, then, as part of such merger or consolidation, lawful
provision shall be made so that the holder of the Warrants evidenced hereby
shall thereafter be entitled to immediately exercise the Warrants upon payment
of the aggregate Exercise Price, the number of shares of stock or other
securities or property of the successor corporation resulting from such merger
or consolidation, to which a holder of the stock deliverable upon exercise of
the rights granted in this Warrant Agreement would have been entitled in such
merger or consolidation if such rights had been exercised immediately before
such merger or consolidation. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Warrant Agreement with respect
to the rights and interests of the holder after the merger or consolidation. The
Company will not effect any such merger or consolidation unless, prior to the
consummation thereof, the successor corporation shall assume, by written
instrument reasonably satisfactory in form and substance to the Warrant Holder,
the obligations of the Company under the Warrants and this Warrant Agreement.
(b) Reclassification, Etc. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise, change
any of the securities as to which purchase rights under this Warrant Agreement
exist into the same or a different number of securities of any other class or
classes, this Warrant Agreement shall thereafter represent the right to acquire
such number and kind of
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<PAGE> 4
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
Agreement immediately prior to such subdivision, combination, reclassification
or other change.
(c) Split, Subdivision or Combination of Shares. If the Company at
any time shall split or subdivide its Common Stock, the Exercise Price shall be
proportionately decreased and the number of Shares issuable pursuant to this
Warrant Agreement shall be proportionately increased. If the Company at any time
shall combine or reverse split its Common Stock, the Exercise Price shall be
proportionately increased and the number of Shares issuable pursuant to this
Warrant Agreement shall be proportionately decreased.
(d) Stock Dividends. If the Company at any time shall pay a
dividend payable in Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend and (ii) the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
after such dividend. The Warrant Holder shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest whole share) obtained by
multiplying (i) the Exercise Price in effect immediately prior to such
adjustment by (ii) the number of shares of Common Stock issuable upon the
exercise hereof immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(e) Other Changes. If any change in the outstanding Common Stock of
the Company or any other event occurs as to which the other provisions of this
Section 10 are not strictly applicable or if strictly applicable, would not
fairly protect the purchase rights of the Warrant Holder in accordance with such
provisions, then the Board of Directors of the Company shall make an adjustment
in the number of and class of shares available under the Warrants, the Exercise
Price or the application of such provisions, so as to protect the purchase
rights of the Warrant Holder. The adjustment shall be such as will give the
Warrant Holder upon exercise for the same aggregate Exercise Price the total
number, class and kind of shares or other property as the Warrant Holder would
have owned had the Warrants been exercised prior to the event and had the
Warrant Holder continued to hold such shares until after the event requiring
adjustment.
(f) Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer or Chief Financial Officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment, and shall cause a
copy of such certificate to be mailed (by first class mail, postage prepaid) to
the holder of this Warrant. The Company shall give written notice to the Warrant
Holder at least 10 days prior to the date on which the Company closes its books
or takes a record for determining rights to receive any dividends or
distributions. The Company shall also give written notice to the Warrant Holder
at least 30 business days prior to the date on which a merger or consolidation
of the Company with or into another corporation when the Company is not the
surviving corporation shall take place.
(g) No Change of Warrant Necessary. Irrespective of any adjustment
in the Exercise Price or in the number or kind of securities issuable upon
exercise of the Warrant, unless the Warrant Holder otherwise requests, this
Warrant Agreement may continue to express the same price and number and kind of
shares of Common Stock as are stated in this Warrant Agreement as initially
executed.
11. Representations and Warranties of the Warrant Holder.
The Warrant Holder hereby represents and warrants to the Company as
follows:
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<PAGE> 5
(a) Existence and Power. The Warrant Holder is a (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and (ii) has the corporate power and
authority to execute, deliver and perform its obligations under this Warrant
Agreement.
(b) Authorization; No Contravention. The execution, delivery and
performance by the Warrant Holder of this Warrant Agreement and the transactions
contemplated hereby (i) have been duly authorized by all necessary corporate
action of the Warrant Holder and (ii) do not contravene the terms of the
Certificate of Incorporation or By-laws of the Warrant Holder, each as amended
as of and through the Issue Date.
(c) Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption or authorization of any governmental authority or
agency, or of any other person or entity, is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the
Warrant Holder of this Warrant Agreement or the transactions contemplated
hereby.
(d) Binding Effect. This Warrant Agreement has been duly executed
and delivered by the Warrant Holder and constitutes the valid and binding
obligations of the Warrant Holder, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(e) Purchase for Own Account. The Warrants issued to the Warrant
Holder pursuant to this Warrant Agreement, and the Shares to be issued upon
vesting and exercise thereof, are being or will be acquired for the Warrant
Holder's own account and with no intention of distributing or reselling such
securities or any part thereof in any transaction that would be in violation of
the securities laws of the United States of America, or any state.
(f) Restricted Securities. The Warrant Holder understands that the
Warrants and the Shares issuable upon vesting and exercise of the Warrants, will
not be registered at the time of their issuance under the Securities Act for the
reason that the sale provided for in this Agreement is exempt pursuant to
Section 4(2) of the Securities Act and that reliance of the Company on such
exemption is predicated in part on such Warrant Holder's representations set
forth herein. The Warrant Holder represents that it is experienced in evaluating
companies such as the Company, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment and has the ability to suffer the total loss of the investment. The
Warrant Holder further represents that it has had the opportunity to ask
questions of and receive answers from the Company concerning the terms and
conditions of the Warrants, the business of the Company, and to obtain
additional information to such Warrant Holder's satisfaction.
(g) Accredited Investor. The Warrant Holder is an "Accredited
Investor" within the meaning of Rule 501 of Regulation D under the Securities
Act, as presently in effect.
12. Compliance with Securities Act; Transferability of Warrant or
Shares of Common Stock.
(a) Compliance with Securities Act. The Warrant Holder, by
acceptance hereof, agrees that the Warrants, and the shares of Common Stock to
be issued upon exercise of the Warrants, are being acquired for investment and
that such Warrant Holder will not offer, sell or otherwise dispose of the
Warrants, or any shares of Common Stock to be issued upon exercise of the
Warrants except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Securities Act"), or any applicable
state securities laws. The Warrants and all shares of Common Stock issued upon
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exercise of the Warrants (unless registered under) the Securities Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THEY MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED TO EFFECTUATE SUCH TRANSACTION."
(b) Exchange, Transfer, Assignment. The Warrants cannot be
exchanged, transferred or assigned otherwise than in accordance with applicable
law. Upon compliance with applicable law and surrender of the Warrants to the
Company with the Assignment Form annexed hereto as Exhibit B duly executed, and
funds sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new Warrant Agreement in the name of the heir, devisee or
assignee named in such instrument of assignment and this Warrant Agreement shall
promptly be canceled. Subject to the terms hereof, the Warrants may be assigned
in whole or in part.
13. Registration Rights. Upon the parties' execution of this Warrant
Agreement and the Acknowledgment and Agreement to the Amended and Restated
Registration Rights Agreement attached hereto as Exhibit C, Warrant Holder shall
be made a party to that certain Amended and Restated Registration Rights
Agreement, dated as of December 8, 1998, by and among the Company, the
stockholders of the Company named therein and such other stockholders and
warrant holders of the Company made a party thereto. In addition, within 30 days
of the execution of this Warrant Agreement, the Company agrees to enter into an
agreement with Warrant Holder, in form and substance reasonably satisfactory to
Warrant Holder, which shall grant Warrant Holder the right to transfer its
registration rights pursuant to such Amended and Restated Registration Rights
Agreement dated as of December 8, 1998 to any assignee or assignees of all or
any part of this Warrant or the Shares issuable upon exercise hereof, which
assignees, upon their execution and delivery of an Acknowledgment and Agreement
to the Amended and Restated Registration Rights Agreement substantially in the
form of Exhibit C hereto (with appropriate changes therein) shall each have all
the rights and obligations of a Demand Stockholder (as defined in such
Agreement) under such Agreement; provided that no registration statement with
respect to less than a minimum of 250,000 Shares shall be required to be
effected by the Company thereunder for the benefit of any such assignee.
14. Miscellaneous.
(a) No Consequential Damages. No party hereto shall be entitled to
consequential damages as a result of any breach of a covenant, representation or
warranty contained herein.
(b) Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(i) if to the Company, to:
priceline.com Incorporated
Five High Ridge Park
Stamford, CT 06905
Telecopy: (203) 595-8345
Attention: Melissa M. Taub, Esq.
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and to:
Skadden, Arps, Slate, Meagher, & Flom, L.L.P.
One Rodney Square
Wilmington, DE 19801
Telecopy: (302) 651-3001
Attention: Patricia Moran Chuff, Esq.
(ii) if to the Warrant Holder, to:
Delta Air Lines, Inc.
1030 Delta Boulevard
Hartfield Atlanta International Airport
Atlanta, GA 30320
Telecopy: (404) 715-2233
Attention: Executive Vice President -
Chief Financial Officer
and to:
Delta Air Lines, Inc.
1030 Delta Boulevard
Hartfield Atlanta International Airport
Telecopy: (404) 715-2233
Attention: Senior Vice President -
General Counsel
All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial courier service; five (5) business days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is mechanically acknowledged, if telecopied.
(d) Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. No person, other than the parties
hereto and their successors and permitted assigns, is intended to be a
beneficiary of this Agreement.
(e) Amendment and Waiver.
(i) No failure or delay on the part of the Company, or the
Warrant Holder in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company and the Warrant Holder at law, in equity or otherwise.
(ii) Any amendment, supplement or modification of or to
any provision of this Warrant Agreement, any waiver of any provision of this
Warrant Agreement, and any consent to any departure by the Company or the
Warrant Holder from the terms of any provision of this Agreement, shall be
effective only if it is made or given in writing and signed by the Company and
the Warrant Holder.
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<PAGE> 8
(f) Counterparts. This Warrant Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Warrant Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS WARRANT AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.
(i) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
(j) Entire Agreement. This Warrant Agreement, together with
the exhibits hereto is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. This Warrant Agreement, together with the exhibits hereto,
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Publicity. Except as may be required by law, none of the
parties hereto shall issue a publicity release or public announcement or
otherwise make any disclosure concerning this Warrant Agreement or the
transactions contemplated hereby, without prior approval by the other party
(which approval shall not be unreasonably withheld); provided, however, that
nothing in this Warrant Agreement shall restrict the Warrant Holder from
disclosing information (a) that is already publicly available and (b) to its
attorneys, accountants, consultants and other advisors to the extent necessary
to obtain their services in connection with the Warrant Holder's investment or
participation in the Company. If any announcement is required by law to be made
by any party hereto concerning this Warrant Agreement or the transactions
contemplated hereby, prior to making such announcement such party will deliver a
draft of such announcement to the other parties and shall give the other parties
an opportunity to comment thereon.
(l) Charges; Taxes and Expenses. Issuance of certificates for
shares upon the exercise of the Warrants shall be made without charge to the
Warrant Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company.
(m) Saturdays, Sundays, Holidays, Etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or a legal holiday.
(n) Lost Warrants. The Company covenants to the Warrant Holder
that, upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant Agreement and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of this Warrant Agreement, the Company will make
and deliver a new Warrant Agreement of like tenor, in lieu of the lost, stolen,
destroyed or mutilated document.
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<PAGE> 9
(o) Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any governmental authority or
any other person, and otherwise fulfilling, or causing the fulfillment of, the
various obligations made herein), as may be reasonably required or desirable to
carry out or to perform the provisions of this Warrant Agreement and to
consummate and make effective as promptly as possible the transactions
contemplated by this Warrant Agreement.
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<PAGE> 10
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed and delivered
by the authorized officers of each of the undersigned.
PRICELINE.COM INCORPORATED
By: /s/ PAUL E. FRANCIS
----------------------------------
Name: Paul E. Francis
Title: Chief Financial Officer
DELTA AIR LINES, INC.
By: /s/ M. MICHELE BURNS
----------------------------------
Name: M. Michele Burns
Title: Vice President and Treasurer
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<PAGE> 11
EXHIBIT A
NOTICE OF EXERCISE
To: priceline.com Incorporated
1. ___ The undersigned hereby elects to purchase __________
shares of the Common Stock of priceline.com Incorporated pursuant to the terms
of the Participation Warrant Agreement, dated as of _________________, 1999, by
and between priceline.com Incorporated and the undersigned (the "Warrant
Agreement"), and tenders herewith payment of the purchase price of such shares
in full.
___ The undersigned hereby elects to convert ___________
percent (____%) of the value of the Warrants pursuant to the provisions of
Section 5(b) of the Warrant Agreement.
2. Please issue a certificate or certificates representing
said shares in the name of the undersigned.
DELTA AIR LINES, INC.
By:________________________________
___________________________________
(Print Name of Signatory)
___________________________________
(Title of Signatory)
Date:_____________________
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<PAGE> 12
EXHIBIT B
ASSIGNMENT FORM
TO: priceline.com Incorporated
The undersigned hereby assigns and transfers unto _____________________________
of _________________________________________________________________
(Please typewrite or print in block letters)
the right to purchase ____________ shares of the common stock of priceline.com
Incorporated subject to the Participation Warrant Agreement, dated as of
________________, 1999, by and between priceline.com Incorporated and the
undersigned (the "Warrant Agreement").
This assignment complies with the provisions of Section 12(b) of the Warrant
Agreement and is accompanied by funds sufficient to pay all applicable transfer
taxes.
DELTA AIR LINES, INC.
By:________________________________
___________________________________
(Print Name of Signatory)
___________________________________
(Title of Signatory)
Date:_____________________
<PAGE> 13
EXHIBIT C
ACKNOWLEDGMENT AND AGREEMENT
TO THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
WHEREAS, pursuant to a Participation Warrant Agreement, the undersigned
received a warrant to purchase 5,500,000 shares of common stock, par value $.008
per share (the "Shares"), of priceline.com Incorporated, a Delaware corporation
(the "Company"); and
WHEREAS, the undersigned wishes to receive certain registration rights
with respect to such Shares; and
WHEREAS, the undersigned has reviewed a copy of that certain Amended
and Restated Registration Rights Agreement, dated as of December 8, 1998 (the
"Agreement"), among the Company, General Atlantic Partners 48, L.P., GAP
Coinvestment Partners, L.P., General Atlantic Partners 50, L.P. and the
stockholders named therein and has been given a copy of the Agreement and
afforded ample opportunity to read and to have counsel review it, and the
undersigned is thoroughly familiar with its terms.
NOW, THEREFORE, in consideration of the mutual premises contained
herein and in the Agreement and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the undersigned hereby
acknowledges and agrees that (i) the undersigned has been given a copy of the
Agreement and afforded ample opportunity to read and to have counsel review it,
and the undersigned is thoroughly familiar with its terms, (ii) the Shares are
subject to terms and conditions set forth in the Agreement, (iii) the
undersigned does hereby agree fully to be bound by the Agreement as a "Demand
Stockholder" (as therein defined), and upon the execution and delivery of this
Acknowledgment and Agreement by the Company, the undersigned shall have all the
rights and obligations under the Agreement as a Demand Stockholder, and (iv) the
undersigned does hereby name _________________to serve as their representative
under the Agreement.
This 17th day of November, 1999.
Acknowledged and agreed:
PRICELINE.COM INCORPORATED DELTA AIR LINES, INC.
By: ______________________________ By:_________________________
Name: Paul E. Francis Name:
Title: Chief Financial Officer Title:
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