-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Syl9jSR0ZkiwqT0SAc7nMlOEfF6grmi86pIOwXFDsvkFS6UkaQJWzjzSb/Elabjw 0lhZw99YTPd/Fstkn1TwSw== 0000950133-99-003705.txt : 19991119 0000950133-99-003705.hdr.sgml : 19991119 ACCESSION NUMBER: 0000950133-99-003705 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19991118 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRICELINE COM INC CENTRAL INDEX KEY: 0001075531 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 061528493 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-56083 FILM NUMBER: 99760663 BUSINESS ADDRESS: STREET 1: FIVE HIGH RIDGE PARK CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2037053000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DELTA AIR LINES INC /DE/ CENTRAL INDEX KEY: 0000027904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 580218548 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30320-6001 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: 1030 DELTA BLVD STREET 2: DEPT 971 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 SC 13D/A 1 SCHEDULE 13D AMENDMENT 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 4)* priceline.com Incorporated - -------------------------------------------------------------------------------- (Name of Issuer) common stock, par value $.008 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 741503106 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- (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) 2 SCHEDULE 13D CUSIP NO. 741503106 PAGE 2 OF 5 PAGES ----------- ----- ----- (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Delta Air Lines, Inc. --------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] --------------------------------------------------------------------- (3) SEC USE ONLY --------------------------------------------------------------------- (4) SOURCE OF FUNDS* 00 --------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 00 --------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware --------------------------------------------------------------------- (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 -------------------------------------------------------- (10) SHARED DISPOSITIVE POWER 0 -------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 14,440,067 --------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] --------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.8% --------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON* CO --------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 3 CUSIP NO. 741503106 PAGE 3 OF 5 PAGES ----------- ----- ----- 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 4 CUSIP NO. 741503106 PAGE 4 OF 5 PAGES ----------- ----- ----- - - 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
Exhibit Description - ------- ----------- 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
- ------------------------------- ** 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. 5 CUSIP NO. 741503106 PAGE 5 OF 5 PAGES ----------- ----- ----- 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 ------------------------------- M. Michele Burns Vice President and Treasurer EX-15 2 LOCK-UP AGREEMENT, DATED NOVEMBER 17,1999 1 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 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] 3 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 ----------------------------- Name: Jay S. Walker Richard S. Braddock ----------------------- Title: Vice Chairman ---------------------- /s/ PAUL E. FRANCIS ----------------------------- Paul E. Francis /s/ TIMOTHY BRIER ----------------------------- Timothy Brier EX-16 3 MASTER AGREEMENT, DATED NOVEMBER 17, 1999 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"). 2 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 -2- 3 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. -3- 4 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. -4- 5 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 -5- 6 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 -6- 7 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 -7- 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. -8- 9 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. -9- 10 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 -10- 11 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 -11- 12 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 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. -2- 14 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: -3- 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 -4- 16 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 -5- EX-17 4 PARTICIPATION WARRANT AGREEMENT 1 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 -1- 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 -2- 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 -3- 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: -4- 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 -5- 6 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. -6- 7 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. -7- 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. -8- 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. -9- 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 -10- 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:_____________________ -11- 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:_____________________ 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: -2- -----END PRIVACY-ENHANCED MESSAGE-----