Stock Purchase Agreement - priceline.com Inc., Vulcan Ventures Inc., Liberty PL Inc., GAP Coinvestment Partners LP, General Atlantic Partners 50 LP, Quantum Industrial Partners LDC, SFM Domestic Investments LLC, Internet Investors I LLC and Allen & Company Inc.
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STOCK PURCHASE AGREEMENT
by and between
PRICELINE.COM INCORPORATED
and
THE INVESTORS LISTED ON SCHEDULE 2.1 HERETO
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Dated: December 8, 1998
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS..............................................................1
1.1 Definitions..........................................................1
1.2 Accounting Terms; Financial Statements...............................9
1.3 Knowledge of the Company.............................................9
ARTICLE 2
PURCHASE AND SALE OF SERIES B PREFERRED STOCK............................9
2.1 Purchase and Sale of Series B Preferred Stock to the Purchaser.......9
2.2 Certificate of Designations..........................................9
2.3 Closing..............................................................9
2.4 Conversion Price Adjustment.........................................10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................10
3.1 Corporate Existence and Power......................................10
3.2 Authorization; No Contravention....................................10
3.3 Governmental Authorization; Third-Party Consents...................11
3.4 Binding Effect.....................................................11
3.5 Litigation.........................................................11
3.6 Compliance with Laws...............................................11
3.7 Capitalization.....................................................12
3.8 No Default or Breach; Contractual Obligations......................13
3.9 Title to Properties................................................13
3.10 FIRPTA.............................................................14
3.11 Financial Statements...............................................14
3.12 Taxes..............................................................14
3.13 No Material Adverse Change; Ordinary Course of Business ...........14
3.14 Investment Company.................................................15
3.15 Private Offering...................................................15
3.16 Labor Relations....................................................15
3.17 Employee Benefit Plans.............................................15
3.18 Title to Assets....................................................16
3.19 Liabilities........................................................16
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3.20 Intellectual Property..............................................16
3.21 Year 2000 Compliance...............................................18
3.22 Network Redundancy and Computer Back-Up............................18
3.23 Privacy of Customer Information....................................18
3.24 Potential Conflicts of Interest....................................19
3.25 Trade Relations....................................................19
3.26 Outstanding Borrowing..............................................19
3.27 Insurance..........................................................19
3.28 Environmental Matters..............................................20
3.29 Broker's, Finder's or Similar Fees.................................20
3.30 WAMP Assets........................................................20
3.31 Affiliate Payments.................................................20
3.32 Employees..........................................................20
3.33 Financial Projections..............................................20
3.34 Disclosure; Material Adverse Effects...............................21
3.35 Certain Events.....................................................21
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ........................22
4.1 Existence and Power.................................................22
4.2 Authorization; No Contravention.....................................22
4.3 Governmental Authorization; Third-Party Consents....................22
4.4 Binding Effect......................................................22
4.5 Purchase for Own Account............................................23
4.6 Restricted Securities...............................................24
4.7 Broker's, Finder's or Similar Fees..................................24
4.8 Accredited Investor.................................................24
4.9 Litigation..........................................................24
ARTICLE 5
CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE .................24
5.1 Secretary's Certificate.............................................25
5.2 Filing of Certificate of Designations...............................25
5.3 Stockholders Agreement..............................................25
5.4 Registration Rights Agreement.......................................25
5.5 Opinion of Counsel..................................................25
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5.6 Purchased Shares...................................................26
5.7 No Material Judgment or Order......................................26
5.8 No Litigation......................................................26
5.9 Preemptive Rights..................................................26
5.10 Side Agreement.....................................................26
ARTICLE 6
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE ...................27
6.1 Stockholders Agreement..............................................27
6.2 Registration Rights Agreement.......................................27
6.3 No Material Judgment or Order.......................................27
6.4 Payment of Purchase Price...........................................28
6.5 Qualifications......................................................28
ARTICLE 7
INDEMNIFICATION.........................................................28
7.1 Indemnification.....................................................28
7.2 Indemnification by Purchaser........................................29
7.3 Seller's Limitation of Liability....................................30
7.4 Notification........................................................30
7.5 Exclusivity of Remedies.............................................31
ARTICLE 8
AFFIRMATIVE COVENANTS...................................................31
8.1 Preservation of Existence...........................................31
8.2 PriceLine Travel Reorganization.....................................31
8.3 Financial Statements and Other Information..........................32
8.4 Annual Budget.......................................................32
8.5 Reservation of Common Stock.........................................32
8.6 Insurance...........................................................33
8.7 Books and Records...................................................33
8.8 Back-Ups of Computer Software.......................................33
8.9 Confidentiality. ..................................................33
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ARTICLE 9
MISCELLANEOUS...........................................................33
9.1 Survival of Representations and Warranties........................33
9.2 Notices...........................................................34
9.3 Successors and Assigns; Third-Party Beneficiaries.................34
9.4 Amendment and Waiver..............................................35
9.5 Counterparts......................................................35
9.6 Headings..........................................................35
9.7 Governing Law.....................................................35
9.8 Severability......................................................35
9.9 Entire Agreement..................................................35
9.10 Publicity.........................................................36
9.11 Further Assurances................................................36
EXHIBITS
A-1 Certificate of Incorporation........................................
A-2 By-laws.............................................................
B Form of Certificate of Designations.................................
C Form of Registration Rights Agreement...............................
D Form of Stockholders Agreement......................................
SCHEDULES
3.3 Governmental Authorizations; Third Party Consents
3.5 Litigation..........................................................
3.7(a) List of Stockholders and Capital Stock and Stock
Equivalents.........................................................
3.8 Defaults or Breaches of Contractual Obligations;
Contractual Obligations.............................................
3.12 Taxes...............................................................
3.13 Dividends and Distributions.........................................
3.17 Employee Benefit Plans..............................................
3.18 Title to Assets of the Company......................................
3.20(a)(ii) Intellectual Property Owned by the Company or the Subsidiary and
Applications therefor...............................................
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3.20(a)(iii) Intellectual Property Licenses under which the Company or the
Subsidiary is a Licensor or Licensee ..............................
3.20(a)(iv) Infringements of the Company or the Subsidiary ....................
3.20(a)(v) Intellectual Property Litigation ..................................
3.20(b) Infringement or Violations of Intellectual Property Rights ........
3.20(d) License Agreements which require a Material Royalty Payment .......
3.22 Network Redundancy and Computer Back-up............................
3.24 Potential Conflicts of Interests...................................
3.26 Outstanding Borrowing..............................................
3.27 Insurance..........................................................
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated December 8, 1998 (the "Agreement"),
among priceline.com Incorporated, a Delaware corporation (the "Company"), and
the investors listed on Schedule 2.1 hereto (each a "Purchaser").
WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to the Purchasers, for an aggregate
purchase price of $55,350,000 (subject to adjustment as more specifically
provided herein), an aggregate of 13,837,500 shares of Series B Convertible
Preferred Stock, par value $0.01 per share, of the Company (the "Series B
Preferred Stock"); and
WHEREAS, each share of Series B Preferred Stock is convertible
(subject to adjustment) into one share of common stock, par value $.01 per
share, of the Company (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" has the meaning ascribed to such term in the
Stockholders Agreement.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Assets" has the meaning set forth in Section 3.18 of this
Agreement.
"Balance Sheets" has the meaning set forth in Section 3.11 of this
Agreement.
"Board of Directors" means the Board of Directors of the Company.
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"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"By-laws" means the by-laws of the Company in effect on the Closing
Date substantially in the form attached hereto as Exhibit A-2, as the same may
be amended from time to time.
"Capital Lease Obligations" of any Person shall mean, as of the date
of determination, the obligations of such Person to pay rent or other amounts
under any lease (or other arrangement conveying the right to use) of real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP consistently applied.
"Certificate of Designations" means the Certificate of Designations
with respect to the Series B Preferred Stock adopted by the Board of Directors
and filed with the Secretary of State of the State of Delaware on or before the
Closing Date substantially in the form attached hereto as Exhibit B.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company substantially in the form attached hereto as
Exhibit A-1, as the same may be amended from time to time.
"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Closing" has the meaning set forth in Section 2.3 of this
Agreement.
"Closing Date" has the meaning set forth in Section 2.3 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the recitals to this
Agreement.
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"Company Indemnified Party" has the meaning set forth in Section 7.1
of this Agreement.
"Company Indemnifying Party" has the meaning set forth in Section
7.1 of this Agreement.
"Condition of the Company" means the assets, business, properties,
operations or financial condition of the Company.
"Contingent Obligation" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof.
"Contractual Obligations" means as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Conversion Price" has the meaning ascribed to such term in the
Certificate of Designations.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Defined Benefit Plan" means a defined benefit plan within the
meaning of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded
or unfunded, quali fied or nonqualified (whether or not subject to ERISA or the
Code).
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"Environmental Laws" means federal, state, local and foreign laws,
principles of common law, civil law, regulations and codes, as well as orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution or protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any Person that is treated as a single
employer with the Company under Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Financial Statements" has the meaning set forth in Section 3.11 of
this Agreement.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Indebtedness" means, as to any Person, (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business, (d) all interest rate
and currency swaps, caps, collars and similar agreements or hedging devices
under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (e) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (f) all obligations of
such Person under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (g) all indebtedness secured by any Lien (other than
Liens in favor of lessors under leases other than leases included in
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clause (f)) on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is non-recourse to the credit of that Person, and (h) any Contingent
Obligation of such Person.
"Indemnified Party" has the meaning set forth in Section 7.4 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.4 of
this Agreement.
"Initial Public Offering" means the first underwritten public
offering of the Common Stock pursuant to an effective Registration Statement
filed under the Securities Act with a per share purchase price equal to or
greater than the Conversion Price (as defined in the Certificate of
Designations) then in effect and resulting in aggregate net proceeds (after
expenses and underwriting commissions and discounts) to the Company and any
selling stockholder of at least $50,000,000.
"Intellectual Property" has the meaning set forth in Section 3.20 of
this Agreement.
"Internet Assets" means any internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"Liabilities" has the meaning set forth in Section 3.19 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding Series B Preferred Stock and equity related
preferences), including, without limitation, those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease Obligation, or any financing lease
having substantially the same economic effect as any of the foregoing.
"Losses" has the meaning set forth in Section 7.1 of this Agreement.
"Orders" has the meaning set forth in Section 3.2 of this Agreement.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions
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or reissues thereof, whether or not patents are issued on such applications and
whether or not such applications are modified, withdrawn or resubmitted.
"Permits" has the meaning set forth in Section 3.6(b)(i) of this
Agreement.
"Permitted Liens" means (i) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business with respect to liabilities that are not yet due or delinquent, (ii)
Liens for Taxes, assessments and other governmental charges which are not due
and payable or which may hereafter be paid without penalty or which are being
contested in good faith by appropriate proceedings and (iii) other imperfections
of title or encumbrances, if any, which imperfections of title or other
encumbrances, individually or in the aggregate, would not reasonably be expected
to impair the ability of the Company to use the property or asset to which it
relates in substantially the same manner as it was used on the Closing Date.
"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"PISA" has the meaning set forth in Section 3.31 of this Agreement.
"Plans" has the meaning set forth in Section 3.17 of this Agreement.
"Priceline LLC" means priceline.com LLC, a Delaware limited
liability company.
"PriceLine Travel" means PriceLine Travel, Inc., a Delaware
corporation.
"PriceLine Travel Option" has the meaning set forth in Section
5.10(c) of this Agreement.
"Purchase Price" has the meaning set forth in Section 2.1 of this
Agreement.
"Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Purchaser" has the meaning set forth in the recitals to this
Agreement.
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"Purchaser Indemnified Party" has the meaning set forth in Section
7.2 of this Agreement.
"Purchaser Indemnifying Party" has the meaning set forth in Section
7.2 of this Agreement.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement substantially in the form attached hereto as
Exhibit C.
"Registration Statement" means a registration statement filed
pursuant to the Securities Act.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock, par value $.01 per share, of the Company.
"Series B Preferred Stock" has the meaning set forth in the recitals
to this Agreement.
"Side Agreement" has the meaning set forth in Section 5.10 of this
Agreement.
"Side Parties" has the meaning set forth in Section 5.10 of this
Agreement.
"Software" means any computer software program, source code, object
code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.
"Statements of Operations" has the meaning set forth in Section 3.11
of this Agreement.
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"Stock Equivalents" means any security or obligation which is by its
terms convertible into or exchangeable for shares of common stock or other
capital stock or securities of the Company, and any option, warrant or other
subscription or purchase right with respect to common stock or such other
capital stock or securities.
"Stockholders" means Jay Walker and certain other stockholders of
the Company, including General Atlantic Partners 48, L.P. and GAP Coinvestment
Partners, L.P.
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement, substantially in the form attached hereto as Exhibit D.
"Subsidiary" of any Person means any limited liability company,
corporation, partnership, association, joint venture or other entity of which
such Person (either alone or through any other Person pursuant to any agreement,
arrangement, contract or other commitment) owns, directly or indirectly, 50% or
more of the capital stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such entity.
"Subsidiary Date" has the meaning set forth in Section 5.10(a) of
this Agreement.
"Taxes" has the meaning set forth in Section 3.12 of this Agreement.
"Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
"Transaction Documents" means collectively, this Agreement, the
Stockholders Agreement and the Registration Rights Agreement.
"WAMP" means Walker Asset Management Limited Partnership, a
Connecticut limited partnership.
"WDC" means Walker Digital Corporation, a Delaware corporation.
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1.2 Accounting Terms; Financial Statements. All accounting terms
used herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" shall mean such accounting practice as, in the
opinion of the independent certified public accountants regularly retained by
the Company, conforms at the time to GAAP applied on a consistent basis except
for changes with which such accountants concur.
1.3 Knowledge of the Company. All references to the knowledge of the
Company shall mean the knowledge of Richard Braddock, Chairman and Chief
Executive Officer of the Company, Jay Walker, Vice Chairman of the Company,
Jesse Fink, Chief Operating Officer of the Company, Paul E. Francis, Chief
Financial Officer of the Company, and Timothy Brier, Executive Vice President of
the Company.
ARTICLE 2
PURCHASE AND SALE OF SERIES B PREFERRED STOCK
2.1 Purchase and Sale of Series B Preferred Stock to the Purchaser.
Subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Purchasers, and each of the Purchasers agrees that
it will purchase from the Company, on the Closing Date, the aggregate number of
shares of Series B Preferred Stock set forth opposite such Purchaser's name on
Schedule 2.1 hereto for the purchase price of $4.00 per share, or the aggregate
purchase price set forth opposite such Purchaser's name on Schedule 2.1 hereto
(the "Purchase Price"), subject to the terms of Section 2.4 below (all of the
shares of Series B Preferred Stock being purchased by the Purchasers are
collectively referred to herein as the "Purchased Shares").
2.2 Certificate of Designations. The Purchased Shares shall have the
preferences and rights set forth in the Certificate of Designations.
2.3 Closing. The closing of the sale and purchase of the Purchased
Shares (the "Closing") shall take place via facsimile no later than 2:00 p.m.,
New York time, on the date hereof, or at such other time, place and date that
the Company and the Purchasers may agree in writing (the "Closing Date"). At the
Closing, each of the Purchasers shall deliver to the Company by wire transfer of
immediately available funds an amount equal to such Purchaser's Purchase Price.
Upon receipt of such wire transfer, the Company shall promptly deliver to each
of the Purchasers by overnight delivery a stock certificate representing such
Purchaser's Purchased Shares.
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2.4 Conversion Price Adjustment. If the Company has not consummated
the Initial Public Offering on or prior to the first anniversary of the Closing
Date, then, pursuant to the terms of the Certificate of Designations, the
Conversion Price shall be adjusted in a manner that will result in an adjusted
purchase price of $2.46 per share of Common Stock issuable upon the conversion
of each share of Series B Preferred Stock (subject to such other adjustments, if
any, as may be provided by the Certificate of Designations) purchased by the
Purchaser pursuant to this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers as of
the date hereof as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite corporate power and
authority to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently, or is proposed to
be, engaged; (c) is duly qualified as a foreign corporation, licensed and in
good standing under the laws of each jurisdiction in which its ownership, lease
or operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to do so would not have a
material adverse effect on the Condition of the Company; and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents to which it is
a party. The Company has not received notice from any jurisdiction, other than
those referred to in clause (c) above, in writing or otherwise, that the Company
is required to qualify as a foreign corporation therein, and the Company does
not file any franchise, income or other tax returns in any other jurisdiction
based upon its ownership or use of property therein or its derivation of income
therefrom. The Company does not own or lease property in any jurisdiction other
than its jurisdiction of incorporation and the jurisdictions referred to in
clause (c) above.
3.2 Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (a) have been
duly authorized by all necessary corporate or other comparable action of the
Company; (b) do not contravene the terms of the Certificate of Incorporation or
the By-laws; (c) do not violate (and will not violate with or without the
passage of time or the giving of notice),
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conflict with or result in any breach or contravention of, or the creation of
any Lien under, any material Contractual Obligation of the Company, or any
material Requirement of Law applicable to the Company; and (d) do not violate
any judgment, injunction, writ, award, decree or order of any nature
(collectively, "Orders") of any Governmental Authority against, or binding upon,
the Company.
3.3 Governmental Authorization; Third-Party Consents. Except as set
forth in Schedule 3.3, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the sale, issuance and
delivery of the Purchased Shares) by, or enforcement against, the Company of
this Agreement and the other Transaction Documents or the transactions
contemplated hereby and thereby.
3.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms, except as enforceability may be limited by
applicable bank ruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general prin ciples of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
3.5 Litigation. Except as set forth on Schedule 3.5, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations (collectively, "Claims") pending or, to the knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company. No Order has been issued by any
court or other Governmental Authority against the Company purporting to enjoin
or restrain the execution, delivery or performance of this Agreement or any of
the other Transaction Documents.
3.6 Compliance with Laws.
(a) The Company is in compliance with all Requirements of Law
including, without limitation, any general consumer protection statutes and any
state travel agent registration requirements, and all Orders issued by any court
or Governmental Authority against the Company that are not expressly covered by
any other representation or warranty of the Company set forth in Article 3
hereof in all respects, except to the extent that the failure to comply with
such Requirements of Law or Orders would not have a material adverse effect on
the Condition of the Company.
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(b) (i) The Company has all material licenses, permits and
approvals of any Governmental Authority (collectively, "Permits") that are
necessary for the conduct of the business of the Company; (ii) such Permits are
in full force and effect; and (iii) no violations are or have been recorded in
respect of any Permit.
(c) No material expenditure is presently required by the
Company to comply with any existing Requirement of Law or Order.
3.7 Capitalization.
(a) On the Closing Date, after giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Company shall consist of (i) 300,000,000 shares of Common Stock, of which
73,793,954 shares are issued and outstanding, and (ii) 150,000,000 shares of
preferred stock, par value $.01 per share, of the Company, of which 17,288,684
shares of Series A Preferred Stock are issued and outstanding and an aggregate
of 13,837,500 shares of Series B Preferred Stock are being issued to the
Purchasers pursuant to this Agreement. Schedule 3.7(a) sets forth, as of the
Closing Date, a true and complete list of (x) the stockholders of the Company
(including any trust or escrow agent arrangement created in connection with any
employee stock option plan) and, opposite the name of each stockholder, the
amount of all outstanding capital stock and Stock Equivalents owned by such
stockholder and (y) the holders of Stock Equivalents (other than the
stockholders set forth in clause (x) above) and, opposite the name of each such
holder, the amount of all Stock Equivalents owned by such holder. As of the date
of this Agreement, (i) options to purchase a total of 17,100,000 shares of
Common Stock have been granted, or are reserved for grant under the Company's
existing stock option plan, and (ii) warrants to purchase a total of 15,264,083
shares of Common Stock are issued and outstanding. The Company has reserved an
aggregate of 17,288,684 shares of Common Stock for issuance upon conversion of
the Series A Preferred Stock and 13,837,500 shares of Common Stock for issuance
upon the conversion of the Series B Preferred Stock. Except as set forth on
Schedule 3.7(a), there are no options, warrants, conversion privileges,
subscription or purchase rights or other rights presently outstanding to
purchase or otherwise acquire (i) any authorized but unissued, unauthorized or
treasury shares of the Company's capital stock, (ii) any Stock Equivalents or
(iii) other securities of the Company. The Purchased Shares are duly authorized,
and when issued and sold to the Purchaser after payment therefor, will be
validly issued, fully paid and non-assessable and will be free from any
restrictions on transfer imposed by the Company other than as set forth in the
Stockholders Agreement and the Registration Rights Agreement, and, subject to
the truth and accuracy of the respective Purchaser's representations and
warranties set forth in Article 4 hereof, will be issued in compliance with the
registration and qualification requirements of all applicable federal, state and
foreign securities laws or pursuant to a valid exemption therefrom. The shares
of
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Common Stock issuable upon conversion of the Purchased Shares are duly
authorized and reserved for issuance and, when issued in compliance with the
provisions of the Certificate of Incorporation and the Certificate of
Designations, will be validly issued, fully paid and nonassessable. The issued
and outstanding shares of Common Stock and Series A Preferred Stock are all duly
authorized, validly issued, fully paid and nonassessable, and were issued in
compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws or pursuant to a valid
exemption therefrom.
(b) The Company does not, directly or indirectly, own and has
not made any investment in any of the capital stock of, or any other proprietary
interest in, any Person.
3.8 No Default or Breach; Contractual Obligations. Except as set
forth on Schedule 3.8, the Company has not received written notice of any
default under, and is not in default under, any Contractual Obligation listed on
Schedule 3.8. Schedule 3.8 lists all of the Contractual Obligations to which the
Company is a party, whether written or oral, (i) which involve an amount in
excess of $25,000, (ii) which the Company has entered into with any airline or
airline reservation system or any automobile manufacturer, distributor or
dealership, or (iii) which are otherwise material to the Condition of the
Company, and identifies with an asterisk each such Contractual Obligation that
is oral. All such Contractual Obligations are valid, subsisting, in full force
and effect and binding upon the Company and, to the knowledge of the Company,
the other parties thereto, 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 and by general principles of equity relating to enforceability, and
the Company has paid in full or accrued all amounts due thereunder and has
satisfied in full or provided for all of its liabilities and obligations
thereunder to the extent such payment, liabilities or obligations were due, or
required performance, as applicable, from or by the Company. To the knowledge of
the Company, no other party to any such Contractual Obligation is in default
thereunder, nor does any condition exist that with notice or lapse of time or
both would constitute a default thereunder.
3.9 Title to Properties. The Company has good, record and marketable
title in fee simple to, or holds interests in as lessee or sublessee under
leases or subleases in full force and effect, all real property used in
connection with its business or otherwise owned or leased or subleased by it,
except for such defects in title and leasehold interests as would not,
individually or in the aggregate, have a material adverse effect on the
Condition of the Company, or a material adverse effect on the ability of the
Company to perform its obligations under this Agreement or the other Transaction
Documents.
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3.10 FIRPTA. The Company is not a "foreign person" within the
meaning of Section 1445 of the Code.
3.11 Financial Statements. The Company has delivered to each of the
Purchasers unaudited combined balance sheets of Priceline LLC and PriceLine
Travel as of December 31, 1997 and September 30, 1998 (the "Balance Sheets"),
and the related combined income statements and statements of cash flows for the
period from July 18, 1997 (Date of Inception) to December 31, 1997 and the nine
months ended September 30, 1998 (collectively, the "Statements of Operations,"
and, together with the Balance Sheets, the "Financial Statements"). Each of (i)
the Financial Statements has been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated; (ii) the Balance Sheets
fairly presents the financial position of the Company and PriceLine Travel as of
the date thereof; and (iii) the Statements of Operations fairly presents, in all
material respects, the results of operations and changes in stockholders' equity
and cash flows of the Company and PriceLine Travel, for the period then ended,
except for normal and recurring year-end audit adjustments and the absence of
footnote disclosure. The Financial Statements consist of all the financial
statements of the Company since its inception.
3.12 Taxes. Except as set forth on Schedule 3.12, (a) the Company
has paid all federal, state, county, local, foreign and other taxes, including,
without limitation, income taxes, estimated taxes, excise taxes, sales taxes,
use taxes, gross receipts taxes, franchise taxes, employment and payroll related
taxes, property taxes and import duties, whether or not measured in whole or in
part by net income (hereinafter, "Taxes" or, individually, a "Tax") which have
come due and are required to be paid by it through the date hereof, and all
deficiencies or other additions to Tax, interest and penalties owed by it in
connection with any such Taxes; (b) the Company has timely filed or caused to be
filed all returns for Taxes that it is required to file on and through the date
hereof (including all applicable extensions), and all such Tax returns are
accurate and complete; (c) the Company has not received any notice of deficiency
with respect to any Tax return and, to the knowledge of the Company, no audit is
in progress with respect to any return for Taxes, no extension of time is in
force with respect to any date on which any return for Taxes was or is to be
filed and no waiver or agreement is in force for the extension of time for the
assessment or payment of any Tax; (d) all liabilities for Taxes of the Company
attributable to periods prior to or ending on the date of the Financial
Statements have been provided for on the Financial Statements in accordance with
GAAP; and (e) there are no Liens for Taxes on the assets of the Company except
for Liens for current Taxes not yet due or with respect to Taxes being disputed
in good faith by the Company.
3.13 No Material Adverse Change; Ordinary Course of Business. Since
June 30, 1998, (a) there has not been any material adverse change nor, to the
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knowledge of the Company, is any such material adverse change threatened, in the
Condition of the Company, (b) the Company has not declared, paid or made any
dividend or any distribution to its stockholders except as set forth on Schedule
3.13 and (c) the Company has not increased the compensation of any of its
officers or the rate of pay of any of its employees, except as part of regular
compensation increases in the ordinary course of business and in connection with
hiring Richard Braddock as Chairman and Chief Executive Officer of the Company.
3.14 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.15 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. Subject in part to the truth and
accuracy of each of the Purchasers' representations and warranties set forth in
Article 4 hereof, no registration of the Purchased Shares, pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws,
will be required by the offer, sale or issuance of the Purchased Shares. The
Company agrees that neither it, nor anyone acting on its behalf, shall offer to
sell the Purchased Shares or any other securities of the Company so as to
require the registration of the Purchased Shares pursuant to the provisions of
the Securities Act or any state securities or "blue sky" laws, unless such
Purchased Shares or other securities are so registered.
3.16 Labor Relations. (a) The Company is not engaged in any unfair
labor practice; (b) there is (i) no grievance or arbitration proceeding arising
out of or under collective bargaining agreements pending or, to the knowledge of
the Company, threa tened against the Company, and (ii) no strike, labor dispute,
slowdown or stoppage pending or, to the knowledge of the Company, threatened
against the Company; (c) the Company is not a party to any collective bargaining
agreement; (d) there is no union repre sentation question existing with respect
to the employees of the Company; and (e) to the knowledge of the Company, no
union organizing activities are taking place at any facility of the Company.
3.17 Employee Benefit Plans. Neither the Company nor any of its
ERISA Affiliates has any actual or contingent, direct or indirect, liability in
respect of any employee benefit plan or arrangement, including any plan subject
to ERISA, other than to make contributions under or pay benefits pursuant to the
plans listed on Schedule 3.17 (collectively, the "Plans"). All of the Plans are
in material compliance with all applicable Requirements of Law. Except as set
forth on Schedule 3.17, no Plan (a) is subject to Title IV of ERISA, or is
otherwise a Defined Benefit Plan, or is a multiple employer plan (within the
meaning of Section 413(c) of the Code); or (b) provides for post-retirement
welfare benefits or a "parachute payment" (within the
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meaning of Section 280G(b) of the Code). The execution and delivery of this
Agreement and each of the other Transaction Documents, the purchase and sale of
the Purchased Shares and the consummation of the transactions contemplated
hereby and thereby will not result in any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
3.18 Title to Assets. Except as set forth on Schedule 3.18, the
Company owns and has good, valid, and marketable title to all of its properties
and assets used in its business and reflected as owned on the Financial
Statements or so described in Schedule 3.18 (collectively, the "Assets"), in
each case free and clear of all Liens other than Permitted Liens and Liens
specifically described on the notes to the Financial Statements.
3.19 Liabilities. The Company does not have any direct or indirect
obligation or liability (the "Liabilities") other than (a) Liabilities fully and
adequately reflected or reserved against on the Financial Statements and (b)
Liabilities incurred since July 1, 1998 in the ordinary course of business.
3.20 Intellectual Property.
(a) (i) The Company is the owner of, or has the license or
right to use, sell and license, all of the Copyrights, Patents, Trade Secrets,
Trademarks, Internet Assets, Software and other proprietary rights
(collectively, "Intellectual Property") that are used in connection with its
business as presently conducted or contemplated in the Company's confidential
Information Summary dated October 1998.
(ii) Schedule 3.20(a)(ii) sets forth all of the
Intellectual Property owned by the Company, and filings and applications for any
of the above filed by the Company or WAMP. Except as set forth on Schedule
3.20(a)(ii), none of the Intellectual Property listed on Schedule 3.20(a)(ii) is
subject to any outstanding Order, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or, to the
knowledge of the Company, threatened, which challenges the validity,
enforceability, use or ownership of any item of the Intellectual Property.
(iii) Schedule 3.20(a)(iii) sets forth all Intellectual
Property licenses, sublicenses, distributor agreements and other agreements
under which the Company is either a licensor, licensee or distributor, except
such licenses, sublicenses and other agreements relating to off-the-shelf
software which are commercially available on a retail basis and used solely on
the computers of the Company. The Company has substantially performed all
obligations imposed upon it thereunder, and the Company is not, and to the
knowledge of the Company no other party thereto is, in breach of or default
thereunder in any respect, nor is there any event
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which with notice or lapse of time or both would constitute a default
thereunder. All of the Intellectual Property licenses listed on Schedule
3.20(a)(iii) are valid, enforceable and in full force and effect against the
Company and, to the knowledge of the Company, against the other parties to such
licenses, and will continue to be so on identical terms immediately following
the Closing 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 and by
general principles of equity relating to enforceability.
(iv) To the knowledge of the Company, other than as set
forth on Schedule 3.20(a)(iv), none of the Intellectual Property currently sold
or licensed by the Company to any Person or used by or licensed to the Company
infringes upon or otherwise violates any Intellectual Property rights of others.
(v) Except as set forth on Schedule 3.20(a)(v), no
litigation is pending and no Claim has been received by the Company or, to the
knowledge of the Company, is threatened, contesting the right of the Company to
sell or license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company.
(b) Except as set forth on Schedule 3.20(b), to the knowledge
of the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company.
(c) No former employer of any employee of the Company, and no
current or former client of any consultant of the Company, has made a claim
against the Company or, to the knowledge of the Company, against any former
employer of such employee or consultant, that such employee or such consultant
is utilizing for the benefit of the Company Intellectual Property of such former
employer or client.
(d) Except as set forth on Schedule 3.20(d), the Company is
not a party to or bound by, any license or other agreement requiring the payment
of any material royalty payment, excluding such agreements relating to software
licensed for use solely on the computers of the Company.
(e) To the knowledge of the Company, no employee of the
Company is in violation in any material respect of any Requirement of Law
applicable to such employee, or any term of any employment agreement, patent or
invention disclosure agreement or other contract or agreement relating to the
relationship of such employee with the Company.
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(f) To the knowledge of the Company, none of the Trade
Secrets, wherever located, the value of which is contingent upon maintenance of
confiden tiality thereof, has been disclosed to any Person not a party to a
non-disclosure or confidentiality agreement with the Company other than
employees, representatives and agents of the Company, except as required
pursuant to the filing of a patent application by the Company.
(g) It is not necessary for the Company's business to use any
Intellectual Property owned by any director, officer, employee or consultant of
the Company (or persons the Company presently intends to hire). At no time
during the conception or reduction to practice of any of the Company's
Intellectual Property was any developer, inventor or other contributor to such
Intellectual Property operating under any grants from any Governmental Authority
or subject to any employment agreement, invention assignment, nondisclosure
agreement or other Contractual Obligation with any third party that could
adversely affect the Company's rights to its Intellectual Property.
3.21 Year 2000 Compliance. To the knowledge of the Company, the
proprietary Software used by the Company will, and no material expenditure is
required by the Company to make such Software, (a) accurately process date
information before, during and after January 1, 2000, including, but not limited
to, accepting date input, providing date output and performing calculations on
dates or portions of dates; (b) function accurately and without interruption
before, during and after January 1, 2000 without any change in operations
associated with the advent of the new century; (c) respond to two (2) digit year
date input in a way that resolves the ambiguity as to century in a disclosed,
defined and predetermined manner; and (d) store and provide output of date
information in ways that are unambiguous as to century.
3.22 Network Redundancy and Computer Back-Up. Except as set forth on
Schedule 3.22:
(a) The server hardware and supporting equipment (including
communications equipment, terminals and hook-ups that interface with airline
computer reservation systems) used in the Company's services network provide
redundancy and meet industry standards relating to high availability; and
(b) The Company has made back-ups of all material computer
Software and databases utilized by it and maintain such Software and databases
at a secure off-site location.
3.23 Privacy of Customer Information. The Company does not use any
of the customer information it receives through its website in an unlawful
manner or in a
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manner violative of the rights of privacy of its customers. The Company has
reasonably adequate security measures in place to protect the customer
information it receives through its website from illegal use by third parties or
use by third parties in a manner violative of the rights of privacy of its
customers. The Company represents to its customers that it keeps secure the
customer information its receives through its website, but does not guarantee
security.
3.24 Potential Conflicts of Interest. Except as set forth on
Schedule 3.24, no officer, director or stockholder of the Company, no spouse of
any such officer, director or stockholder, and, to the knowledge of the Company,
no relative of such spouse or of any such officer, director or stockholder and
no Affiliate of any of the foregoing (a) owns, directly or indirectly, any
interest in (excepting less than 1% stock holdings for investment purposes in
securities of publicly held and traded companies), or is an officer, director,
employee or consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent or customer of,
or lender to or borrower from, the Company; (b) owns, directly or indirectly, in
whole or in part, any tangible or intangible property that the Company has used,
or that the Company will use, in the conduct of business; or (c) has any cause
of action or other claim whatsoever against, or owes or has advanced any amount
to, the Company, except for claims in the ordinary course of business such as
for accrued vacation pay, accrued benefits under employee benefit plans, and
similar matters and agreements existing on the date hereof.
3.25 Trade Relations. There exists no actual or, to the knowledge of
the Company, threatened termination, cancellation or limitation of, or any
adverse modifi cation or change in, the business relationship of the Company, or
the business of the Company, with any customer or supplier or any group of
customers or suppliers including, without limitation, Delta Airlines, Northwest
Airlines, Transworld Airlines or America West Airlines, whose purchases or
inventories provided to the Company's business are individually or in the
aggregate material to the Condition of the Company, and there exists no present
condition or state of fact or circumstances that would materially adversely
affect the Condition of the Company or materially prevent the Company from
conducting such business relationships or such business with any such customer,
supplier or group of customers or suppliers in substantially the same manner as
heretofore conducted by the Company.
3.26 Outstanding Borrowing. Schedule 3.26 sets forth (a) the amount
of all Indebtedness of the Company as of the date hereof, (b) the Liens that
relate to such Indebtedness and that encumber the Assets and (c) the name of
each lender thereof.
3.27 Insurance. Schedule 3.27 lists all of the insurance policies
held by or on behalf of the Company, with the effective date and coverage
amounts indicated
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thereon. Such policies and binders are valid and enforceable in accordance with
their terms and are in full force and effect and covers all risks associated
with the Company's business that are customarily insured against in the industry
in such amounts as are customary in the industry. None of such policies will be
affected by, or terminate or lapse by reason of, any transaction contemplated by
this Agreement or any of the other Transaction Documents.
3.28 Environmental Matters. The Company is in compliance in all
material respects with all applicable Environmental Laws. There is no civil,
criminal or administrative judgment, action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter pending
or, to the knowledge of the Company, threatened against the Company pursuant to
Environmental Laws which would reasonably be expected to result in a fine,
penalty or other obligation, cost or expense that would have a material adverse
affect on the Condition of the Company; and, to the knowledge of the Company,
there are no past or present events, conditions, circumstances, activities,
practices, incidents, agreements, actions or plans of or relating to the Company
which may prevent compliance with, or which have given rise to or will give rise
to liability under, Environmental Laws that would have a material adverse affect
on the Condition of the Company.
3.29 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by any such
Person.
3.30 WAMP Assets. WAMP owns no assets used by, or necessary for the
conduct of business of, the Company.
3.31 Affiliate Payments. All payments made by the Company to WDC
pursuant to the Purchase and Intercompany Services Agreement (the "PISA"), dated
as of April 6, 1998, among WAMP, WDC, the Company and PriceLine Travel, for
services provided by WDC are made on the same basis as if the Company were
paying an unaffiliated third party for similar services pursuant to an
arm's-length transaction.
3.32 Employees. The Company employs, or contracts with consultants
for, all personnel necessary for the operation of its business.
3.33 Financial Projections. The financial projections provided to
the Purchasers by the Company regarding airline ticket sales were reasonably
prepared based upon the best available information and the Company's financial
statements.
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3.34 Disclosure; Material Adverse Effects. There is no fact known to
the Company, which the Company has not disclosed to each Purchaser either orally
or in writing, which materially adversely affects the Condition of the Company
or the ability of the Company to perform its obligations under this Agreement,
any of the other Transaction Documents or any document contemplated hereby or
thereby.
3.35 Certain Events. To the best of the Company's knowledge and
except as set forth on Schedule 3.35, since June 30, 1998 there has not been:
(a) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Condition of the Company (as
such business is presently conducted and as it is presently proposed to be
conducted);
(b) any waiver or compromise by the Company of a material debt
owed to it;
(c) any satisfaction or discharge of any Lien by the Company,
except in the ordinary course of business and that is not material to the
Condition of the Company (as such business is presently conducted and as it is
presently proposed to be conducted);
(d) any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets, or other intangible assets;
(e) any resignation or termination of employment of any
executive officer of the Company that would materially and adversely affect the
Condition of the Company and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer that would materially and adversely affect the Condition of the Company;
(f) receipt of written notice that there has been a loss of,
or material order cancellation by, any major customer of the Company;
(g) any loans or guarantees made by the Company to or for the
benefit of its employees, stockholders, officers, or directors, or any members
of their immediate families, other than travel advances and other advances made
in the ordinary course of its business; or
(h) any agreement or commitment by the Company to do any of
the things described in this Section 3.35.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
Each of the Purchasers hereby represents and warrants (severally as
to itself and not jointly) to the Company as follows:
4.1 Existence and Power. Such Purchaser (a), if not an individual,
is duly organized and validly existing under the laws of the jurisdiction of its
formation and (b) has the requisite power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other Transaction
Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, including, without limitation, the purchase of the Purchased
Shares, (a) have been duly authorized by all necessary action, (b) do not
contravene the terms of such Purchaser's organizational documents, or any
amendment thereof, if applicable, (c) do not violate, conflict with or result in
any breach or contravention of or the creation of any Lien under, any
Contractual Obligation of such Purchaser, or any Requirement of Law applicable
to such Purchaser and (d) do not violate any Order of any Governmental Authority
against, or binding upon, such Purchaser.
4.3 Governmental Authorization; Third-Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Shares by such Purchaser) by, or
enforcement against, such Purchaser of this Agreement and each of the other
Transaction Documents to which such Purchaser is a party or the transactions
contemplated hereby and thereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which such Purchaser is a party have been duly executed and
delivered by such Purchaser and constitute the valid and binding obligations of
such Purchaser, enforce able 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
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generally or by equitable principles relating to enforceability (regardless of
whether considered in a proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Shares to be acquired by
such Purchaser pursuant to this Agreement, and the Common Stock acquired upon
conversion of the Series B Preferred Stock, are being or will be acquired for
its 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. If such
Purchaser should in the future decide to dispose of any of such Purchased
Shares, such Purchaser understands and agrees that it may do so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of legends on certificates representing all of the Purchased Shares and shares
of Common Stock issuable upon conversion of the Purchased Shares to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF DECEMBER 8, 1998, AMONG
PRICELINE.COM INCORPORATED, GENERAL ATLANTIC PARTNERS 48, L.P., GAP
COINVESTMENT PARTNERS, L.P., GENERAL ATLANTIC PARTNERS 50, L.P. AND THE
OTHER STOCKHOLDERS NAMED THEREIN. THE COMPANY WILL NOT REGISTER THE
TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL
THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE
STOCKHOLDERS AGREEMENT. THE COMPANY WILL MAIL A COPY OF SUCH AGREEMENT,
TOGETHER WITH A COPY OF THE EXPRESS TERMS OF THE SECURITIES AND THE OTHER
CLASS OR CLASSES AND SERIES OF SHARES, IF ANY, WHICH THE COMPANY IS
AUTHORIZED TO ISSUE, TO THE RECORD HOLDER OF THIS CERTIFICATE,
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WITHOUT CHARGE, WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR.
4.6 Restricted Securities. Such Purchaser understands that the
Purchased Shares 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 the reliance of
the Company on such exemption is predicated in part on such Purchaser's
representations set forth herein. Such Purchaser 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 its investment. Such Purchaser further represents that it has had the
opportunity to conduct due diligence on the Company, to ask questions of and
receive answers from the Company concerning the terms and conditions of the
offering and to obtain additional information to such Purchaser's satisfaction.
4.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by such
Purchaser, in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser or any action taken
by such Purchaser.
4.8 Accredited Investor. Such Purchaser is an "Accredited Investor"
within the meaning of Rule 501 of Regulation D under the Securities Act, as
presently in effect.
4.9 Litigation. No action, suit, proceeding, claim, complaint,
dispute, arbitration or investigation has been instituted or, to the knowledge
of such Purchaser, is threatened to restrain or prohibit or otherwise challenge
the legality or validity of the transactions contemplated by this Agreement or
any of the other Transaction Documents. No Order has been issued by any court or
other Governmental Authority against such Purchaser purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any of the
other Transaction Documents.
ARTICLE 5
CONDITIONS TO THE OBLIGATION OF
THE PURCHASER TO CLOSE
The obligation of each Purchaser to purchase the number of Purchased
Shares set forth opposite such Purchaser's name on Schedule 2.1 hereto, to pay
the
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<PAGE>
Purchase Price set forth opposite such Purchaser's name on Schedule 2.1 hereto
at the Closing and to perform any obligations hereunder shall be subject to the
satisfaction as determined by, or waiver by, such Purchaser of the following
conditions on or before the Closing Date.
5.1 Secretary's Certificate. Such Purchaser shall have received a
certificate from the Company, in form and substance reasonably satisfactory to
such Purchaser, dated the Closing Date and signed by the Secretary or an
Assistant Secretary of the Company, certifying that the attached copies of the
Certificate of Incorporation (including the Certificate of Designations with
respect to the Series A Preferred Stock), the By-laws, the Certificate of
Designations and resolutions of the Board of Directors approving this Agreement
and each of the other Transaction Documents to which the Company is a party and
the transactions contemplated hereby and thereby, are all true, complete and
correct and remain unamended and in full force and effect.
5.2 Filing of Certificate of Designations. The Certificate of
Designations shall have been duly filed by the Company with the Secretary of
State of the State of Delaware and the Certificate of Designations with respect
to the Series A Preferred Stock shall have been duly amended to provide for the
automatic conversion of the Series A Preferred Stock into shares of Common Stock
upon consummation of the Initial Public Offering, in each case in accordance
with the General Corporation Law of the State of Delaware.
5.3 Stockholders Agreement. The Company and the Stockholders shall
have duly executed and delivered the Stockholders Agreement, substantially in
the form attached hereto as Exhibit D and the Company shall have taken such
actions as may be necessary to cause (i) the Purchasers set forth in items 3 and
4 of Schedule 2.1 hereto to be General Atlantic Stockholders thereunder and (ii)
all other Purchasers to be Additional Stockholders thereunder, including
approval by the Board of Directors.
5.4 Registration Rights Agreement. The Company and the Stockholders
shall have duly executed and delivered the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C and the Company shall
have taken such actions as may be necessary to cause (i) the Purchasers set
forth on items 1 and 2 of Schedule 2.1 hereto to be Demand Stockholders
thereunder, (ii) the Purchasers set forth on items 3 and 4 of Schedule 2.1
hereto to be General Atlantic Stockholders thereunder and (iii) the Purchasers
set forth on items 5 through 10 to be Piggy-Back Stockholders thereunder,
including approval by the Board of Directors.
5.5 Opinion of Counsel. Such Purchaser shall have received an
opinion of counsel to the Company, dated the Closing Date, relating to the
transactions
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<PAGE>
contemplated by or referred to herein, in form and substance reasonably
satisfactory to such Purchaser.
5.6 Purchased Shares. The Company shall be prepared to deliver to
such Purchaser certificates in definitive form representing the number of
Purchased Shares set forth opposite such Purchaser's name on Schedule 2.1
hereto, registered in the name of such Purchaser.
5.7 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or such condition imposed under any Requirement of Law
which would, in the judgment of such Purchaser, (a) prohibit or restrict (i) the
purchase of the Purchased Shares being purchased by such Purchaser or (ii) the
consummation of the transactions contemplated by this Agreement, (b) subject
such Purchaser to any penalty or onerous condition under or pursuant to any
Requirement of Law if the Purchased Shares being purchased by such Purchaser
were to be purchased hereunder, or (c) restrict the operation of the business of
the Company as conducted on the date hereof in a manner that would have a
material adverse effect on the Condition of the Company.
5.8 No Litigation. No action, suit, proceeding, claim or dispute
shall have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Company which would, if adversely
determined, (a) have a material adverse effect on the Condition of the Company
or (b) have a material adverse effect on the ability of the Company to perform
its obligations under this Agreement or each of the other Transaction Documents.
5.9 Preemptive Rights. The Company shall have provided such
Purchaser with evidence reasonably satisfactory to such Purchaser's counsel that
all preemptive or other similar rights applicable to the transactions
contemplated hereby have been waived.
5.10 Side Agreement. PriceLine Travel and Jay Walker (the "Side
Parties") shall have executed a side agreement (the "Side Agreement") pursuant
to which:
(a) The Side Parties shall agree to cause PriceLine Travel by
the earlier to occur of (i) December 31, 1998 and (ii) the effective date of the
Initial Public Offering (such date, the "Subsidiary Date") to either (x) become
a wholly owned Subsidiary of the Company, (y) merge or consolidate with or into
the Company; or (z) transfer all of its assets to the Company, for nominal
consideration;
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(b) PriceLine Travel shall agree not to issue any equity
securities or securities convertible into equity securities to any Person on or
before the Subsidiary Date;
(c) Jay Walker shall grant a call option (the "PriceLine
Travel Option") to the Company, such option to be exercisable at any time prior
to the Subsidiary Date, to purchase all of Jay Walker's interests in PriceLine
Travel for nominal consideration; and
(d) Jay Walker shall agree not to transfer any of his
interests in PriceLine Travel prior to the Subsidiary Date other than in
connection with the transactions contemplated in Section 5.10(a).
ARTICLE 6
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell to each Purchaser
the Purchased Shares set forth opposite such Purchaser's name on Schedule 2.1
hereto and the obligation of the Company to perform its other obligations
hereunder with respect to each such Purchaser shall be subject to the
satisfaction as determined by, or waiver by, the Company of the following
conditions on or before the Closing Date:
6.1 Stockholders Agreement. Such Purchaser shall have duly executed
and delivered the Stockholders Agreement substantially in the form attached
hereto as Exhibit D as an Additional Stockholder or with respect to the
Purchasers listed on items 3 and 4 of Schedule 2.1 hereto as a General Atlantic
Stockholder thereunder.
6.2 Registration Rights Agreement. Such Purchaser shall have duly
executed and delivered the Registration Rights Agreement substantially in the
form attached hereto as Exhibit C, (i) with respect to the Purchasers listed on
items 1 and 2 of Schedule 2.1 hereto, as a Demand Stockholder thereunder, (ii)
with respect to the Purchasers listed on items 3 and 4 of Schedule 2.1 hereto,
as a General Atlantic Stockholder thereunder, or (iii) with respect to the
Purchasers listed on items 5 through 11 of Schedule 2.1 hereto, as a Piggy-Back
Stockholder thereunder.
6.3 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which would, in the judgment of the Company, (a) prohibit or restrict (i) the
sale of Purchased
27
<PAGE>
Shares to such Purchaser or (ii) the consummation of the transactions
contemplated by this Agreement, or (b) subject the Company to any penalty or
onerous condition under or pursuant to any Requirement of Law if Purchased
Shares were to be sold to such Purchaser hereunder.
6.4 Payment of Purchase Price. Such Purchaser shall have delivered
the Purchase Price opposite such Purchaser's name on Schedule 2.1 hereto.
6.5 Qualifications. All authorizations, approvals or permits of any
Governmental Authority that are required in connection with the lawful issuance
and sale of the Series B Preferred Stock shall have been obtained and be
effective as of the Closing.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification. Except as otherwise provided in this Article 7,
the Company (the "Company Indemnifying Party") agrees to indemnify, defend and
hold harmless each of the Purchasers and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, a "Company Indemnified Party") to the fullest extent
permitted by law from and against any and all losses, Claims (including any
Claim by a third party), damages, expenses (including reasonable fees,
disbursements and other charges of one counsel incurred by the Company
Indemnified Party in any action between the Company Indemnifying Party and the
Company Indemnified Party or between the Company Indemnified Party and any third
party or otherwise) or other liabilities (collectively, "Losses") resulting
from, arising out of or relating to any breach of any representation or
warranty, covenant or agreement by the Company in this Agreement or the other
Transaction Documents, including, without limitation, any legal, administrative
or other actions (including actions brought by the Purchaser or the Company or
any equity holders of the Company or derivative actions brought by any Person
claiming through or in the Company's name), proceedings or investigations
(whether formal or informal), or written threats thereof, based upon, relating
to or arising out of this Agreement or the other Transaction Documents, the
transactions contemplated hereby and thereby, or any Company Indemnified Party's
role therein or in transactions contemplated thereby; provided, that the Company
Indemnifying Party shall not be liable under this Section 7.1 to any Company
Indemnified Party to the extent that it is finally judicially determined that
such Losses resulted primarily from the material breach by any Company
Indemnified Party of any representation, warranty, covenant or other agreement
of a Company Indemnified Party contained in this Agreement; and provided,
further, that if
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<PAGE>
and to the extent that such indemnification is unenforceable for any reason, the
Company Indemnifying Party shall make the maximum contribution to the payment
and satisfaction of such Losses which shall be permissible under applicable
laws. The amount of any payment by the Company to any Company Indemnified Party
herewith in respect of any Loss shall be of sufficient amount to make such
Company Indemnified Party whole, including, without limitation or duplication,
an amount sufficient to make up any diminution in the value of the Purchased
Shares held by such Company Indemnified Party resulting from the payment by the
Company of such indemnification payment. In connection with the obligation of
the Company Indemnifying Party to indemnify for expenses as set forth above, the
Company Indemnifying Party shall, upon presentation of appropriate invoices
containing reasonable detail, reimburse each Company Indemnified Party for all
such expenses (including reasonable fees, disbursements and other charges of
counsel incurred by the Company Indemnified Party in any action between the
Company Indemnifying Party and the Company Indemnified Party or between the
Company Indemnified Party and any third party or otherwise) as they are incurred
by such Company Indemnified Party; provided, however, that if a Company
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Losses in question resulted primarily from the willful misconduct or
gross negligence of such Company Indemnified Party.
7.2 Indemnification by Purchaser. Except as otherwise provided in
this Article 7, each of the Purchasers, severally and not jointly (each a
"Purchaser Indemnifying Party"), agrees to indemnify, defend and hold harmless
the Company, its officers, directors, agents, employees, subsidiaries and
controlling persons (each, a "Purchaser Indemnified Party") to the fullest
extent permitted by law from and against any and all Losses resulting from,
arising out of or relating to any breach of any representation or warranty of
such Purchaser Indemnifying Party set forth in Article 4 hereto; provided, that
such Purchaser Indemnifying Party shall not be liable under this Section 7.2 to
the Purchaser Indemnified Party to the extent that it is finally judicially
determined that such Losses resulted primarily from the material breach by such
Purchaser Indemnified Party of any representation, warranty, covenant or other
agreement of such Purchaser Indemnified Party contained in this Agreement; and
provided, further, that if and to the extent that such indemnification is
unenforceable for any reason, such Purchaser Indemnifying Party shall make the
maximum contribution to the payment and satisfaction of such Losses which shall
be permissible under applicable laws. The aggregate amount of indemnification
payments payable by any such Purchaser Indemnifying Party to the Purchaser
Indemnified Party shall not exceed the aggregate Purchase Price paid by such
Purchaser Indemnifying Party for its Purchased Shares hereunder.
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<PAGE>
7.3 Seller's Limitation of Liability. Anything in this Agreement to
the contrary notwithstanding, the Company Indemnifying Party's maximum liability
to any Company Indemnified Parties for indemnification under Section 7.1 (except
for Losses resulting from, arising out of or relating to a breach of any of the
representations and warranties set forth in Sections 3.1, 3.2, 3.4, 3.7(a) and
3.9) shall not exceed the aggregate Purchase Price paid by such Company
Indemnified Party for its Purchased Shares hereunder (or, if such Company
Indemnified Party is not a Purchaser, the aggregate Purchase Price paid by the
Purchaser whose relationship with such Company Indemnified Party is the reason
such Company Indemnified Party is entitled to indemnification hereunder).
7.4 Notification. Each Company Indemnified Party or Purchaser
Indemnified Party, as the case may be (for purposes of this Section 7.4, an
"Indemnified Party"), under this Article 7 shall, promptly after the receipt of
notice of the commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which indemnity may be
sought from the Company Indemnifying Party or Purchaser Indemnifying Party, as
the case may be (for purposes of this Section 7.4, an "Indemnifying Party")
under this Article 7, notify the Indemnifying Party in writing of the
commencement thereof. The omission of any Indemnified Party so to notify the
Indemnifying Party of any such action shall not relieve the Indemnifying Party
from any liability which it may have to such Indemnified Party (a) other than
pursuant to this Article 7 or (b) under this Article 7 unless, and only to the
extent that, such Indemnifying Party has been prejudiced thereby. In case any
such action, claim or other proceeding shall be brought against any Indemnified
Party, and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to assume the defense thereof at its
own expense, with counsel satisfactory to such Indem nified Party in its
reasonable judgment; provided, however, that any Indemnified Party may, at its
own expense, retain separate counsel to participate in such defense at its own
expense. Notwithstanding the foregoing, in any action, claim or proceeding in
which both the Indemnifying Party, on the one hand, and an Indemnified Party, on
the other hand, are, or are reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel at the expense
of the Indemnifying Party and to control its own defense of such action, claim
or proceeding if, in the reasonable opinion of counsel to such Indemnified
Party, a conflict or potential conflict exists between the Indemnifying Party,
on the one hand, and such Indemnified Party, on the other hand, that would make
such separate representation advisable; provided, however, that the Indemnifying
Party shall not be liable for the fees and expenses of more than one counsel to
all Indemnified Parties. The Indemnifying Party agrees that it will not, without
the prior written consent of the Purchaser, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been actually threatened to be made a
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<PAGE>
party thereto) unless such settlement, compromise or consent includes an
unconditional release of the Purchaser and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding. The
Indemnifying Party shall not be liable for any settlement of any claim, action
or proceeding effected against an Indemnified Party without the Indemnifying
Party's written consent, which consent shall not be unreasonably withheld.
7.5 Exclusivity of Remedies. The indemnities provided in this
Article 7 shall be the exclusive remedy for breach of this Agreement by any
party hereto other than equitable remedies, including in the form of injunctions
and orders for specific performance.
ARTICLE 8
AFFIRMATIVE COVENANTS
Until the effective date of the Initial Public Offering, or earlier,
as applicable, the Company hereby covenants and agrees with each of the
Purchasers as follows:
8.1 Preservation of Existence. The Company shall use its reasonable
commercial efforts to:
(a) preserve and maintain in full force and effect its
existence and good standing under the laws of its jurisdiction of formation or
organization;
(b) preserve and maintain in full force and effect all
material rights, privileges, qualifications, applications, licenses and
franchises necessary in the normal conduct of its business;
(c) preserve its business organization; and
(d) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority and that, if not timely filed, would be reasonably expected to have a
material adverse effect on the Condition of the Company.
8.2 PriceLine Travel Reorganization. The Company shall cause
PriceLine Travel by the Subsidiary Date to either (a) become a wholly owned
Subsidiary of the Company, (b) merge or consolidate with or into the Company, or
(c) transfer all of its assets to the Company, for nominal consideration.
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8.3 Financial Statements and Other Information. The Company shall
deliver to each of the Purchasers, in form and substance satisfactory to the
Purchaser:
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such fiscal year and the related
statements of operations and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous year, all in
reasonable detail and accompanied by a management summary and analysis of the
operations of the Company for such fiscal year accompanied by the report of a
nationally recognized independent certified public accounting firm, which report
shall state that such financial statements present fairly the financial
condition as of such date and results of operations and cash flows for the
periods indicated in conformity with GAAP applied on a consistent basis;
(b) commencing with the fiscal period ending on March 31,
1999, as soon as available, but in any event not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
the unaudited balance sheet of the Company, and the related statements of
operations and cash flows for such quarter and for the period commencing on the
first day of the fiscal year and ending on the last day of such quarter, all
certified by an appropriate officer of the Company as presenting fairly the
financial condition as of such date and results of operations and cash flows for
the periods indicated in conformity with GAAP applied on a consistent basis,
subject to normal year-end adjustments, the absence of a management's discussion
and analysis of financial condition section and the absence of footnotes
required by GAAP; and
(c) notwithstanding anything to the contrary set forth herein,
both before and after the effective date of the Initial Public Offering as
promptly as practicable, but not later than five (5) days after a request by
such Purchaser, a certificate signed by the Chief Executive Officer of the
Company that the Company is not a "foreign person" within the meaning of Section
1445 of the Code.
8.4 Annual Budget. Not less than forty-five (45) days prior to the
end of each fiscal year, the Company shall prepare and submit to its Board of
Directors for its approval an operating budget of the Company for the next
fiscal year.
8.5 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issue or delivery upon conversion of the Purchased Shares as
provided in the Certificate of Incorporation, the maximum number of shares of
Common Stock that may be issuable or deliverable upon such conversion. Such
shares of Common Stock are duly authorized and, when issued or delivered in
accordance with the Certificate of
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Incorporation and against payment therefor, shall be validly issued, fully paid
and non-assessable. The Company shall issue such shares of Common Stock in
accordance with the terms of the Certificate of Incorporation and otherwise
comply with the terms hereof and thereof.
8.6 Insurance. The Company shall use reasonable best efforts to
maintain insurance with insurance companies or associations with a rating of "A"
or better as established by Best's Rating Guide (or an equivalent rating with
such other publication of a similar nature as shall be in current use) in such
amounts and covering such risks as are usually and customarily carried with
respect to similar businesses according to their respective locations.
8.7 Books and Records. The Company shall keep proper books of record
and account, in accordance with GAAP consistently applied.
8.8 Back-Ups of Computer Software. The Company shall make backups of
all material computer software programs and databases and shall maintain such
software programs and databases at a secure off-site location.
8.9 Confidentiality. Each of the Purchasers shall hold, and shall
cause its Affiliates and any of their respective representatives to hold, all
documents, materials and other information they receive or have received
regarding the Company in strict confidence, except (i) as required by law, (ii)
to the extent such information is or has previously been publically available
other than as a result of any action or non-action by Purchaser, its Affiliates
or any of their respective representatives, (iii) to the extent such information
was not acquired or obtained from the Company or any of its representatives or
(iv) to the extent necessary to enforce its rights under the Transaction
Documents in a legal proceeding before any Governmental Authority.
ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. All of the repre
sentations and warranties made herein shall survive the execution and delivery
of this Agreement, any investigation by or on behalf of any of the Purchasers or
acceptance of the Purchased Shares, until 60 days after receipt by the
Purchasers of the Company's audited financial statements for the fiscal year
ended December 31, 1999, and at the end of such period, such representations and
warranties and related indemnification rights and obligations with respect
thereto shall expire; provided, however, that the representations and warranties
set forth in Sections 3.1, 3.2, 3.4, 3.7(a) and 3.9 shall
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<PAGE>
survive without any expiration and Section 3.12 shall survive until the
expiration of the applicable statute of limitations.
9.2 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:
(a) if to the Company, to:
priceline.com Incorporated
4 High Ridge Park
Stamford, CT 06905
Telecopy: (203) 595-8344
Attention: Mr. Paul E. Francis
Melissa M. Taub, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, DE 19801
Telecopy: (302) 651-3001
Attention: Patricia Moran Chuff, Esq.
(b) if to any of the Purchasers, to the address or telecopy
number set forth opposite such Purchaser's name on the signature page hereto.
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 deliv ered 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.
9.3 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. Subject to applicable securities laws,
each Purchaser may assign any of its rights under any of the Transaction
Documents to any of its Affiliates. The Company may not assign any of its rights
under this Agreement without the written consent of the Purchasers. Except as
provided in Article 7, no Person other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of this
Agreement.
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9.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company, or any
Purchaser 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 any of the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or any of the Purchasers 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 Purchasers.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so exe cuted shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles of conflicts of law of any jurisdiction.
9.8 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.
9.9 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, 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 and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein.
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This Agreement, together with the exhibits and schedules hereto and the other
Transaction Documents, supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
9.10 Publicity. Except as may be required by any applicable
Requirement of Law, none of the parties hereto shall issue a publicity release
or public announcement or otherwise make any disclosure concerning this
Agreement or the tran sactions contemplated hereby, without prior approval by
the other parties hereto (which approval shall not be unreasonably withheld);
provided, however, that nothing in this Agreement shall restrict any of the
Purchasers 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 such Purchaser's
investment in the Company. After the Closing, General Atlantic Partners, LLC may
disclose on its worldwide web page, www.gapartners.com, the name of the Company,
its address, the identity of the Company's Chief Executive Officer, a
description of the Company's business and the aggregate amount invested by its
Affiliates in the Company. If any announcement is required by law to be made by
any party hereto concerning this 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.
9.11 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
conditions to Closing set forth in Articles 5 and 6) as may be reasonably
required or desirable to carry out or to perform the provisions of this
Agreement and to consummate and make effective as promptly as possible the
transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
PRICELINE.COM INCORPORATED
By:
-------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
VULCAN VENTURES INCORPORATED
Notice By:
-------------------------------------
Name:
Vulcan Ventures Incorporated Title:
110 110th Avenue NE
Bellevue, WA 98004-5840
Telecopy: (425) 453-1985
Attention: William D. Savoy
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
LIBERTY PL, INC.
Notice By:
-------------------------------------
Name:
Liberty PL, Inc. Title:
c/o Liberty Media Corporation
8101 East Prentice Ave.
Suite 500
Englewood, CO 80111
Telecopy: (303) 721-5434
Attention: Robert R. Bennett
Charles Y. Tanabe, Esq.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
GAP COINVESTMENT PARTNERS, L.P.
Notice By:
-------------------------------------
Name:
GAP Coinvestment Partners, L.P. Title:
c/o General Atlantic Service
Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 622-4098
Attention: William E. Ford
David A. Rosenstein
GENERAL ATLANTIC PARTNERS 50, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC
its General Partner
Notice By:
-------------------------------------
Name:
General Atlantic Partners 50, L.P. Title:
c/o General Atlantic Service
Corporation
3 Pickwick Plaza
Greenwich, CT 06830
Telecopy: (203) 622-4098
Attention: William E. Ford
David A. Rosenstein
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
QUANTUM INDUSTRIAL PARTNERS LDC
Notice By:
-------------------------------------
Name:
Quantum Industrial Partners LDC Title:
c/o Curacao International Trust
Company N.v.
Kaya Flamboyan 9
Curacao, Netherlands Antilles
SFM DOMESTIC INVESTMENTS LLC
Notice By:
-------------------------------------
Name:
SFM Domestic Investments LLC Title:
888 Seventh Avenue, 33rd Floor
New York, NY 10106
Telecopy: (212) 664-05442642
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
INTERNET INVESTORS I, L.L.C.
Notice By:
-------------------------------------
Name:
Internet Investors I, L.L.C. Title:
c/o Starwood Capital Group
Three Pickwick Plaza
Suite 250
Greenwich, CT 06830
Attention: Jonathan D. Eilian
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
Notice
-------------------------------------
James Manzi
Jim Manzi
150 Yarmouth Road
Brookline, MA 02147
Telecopy:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
Notice
-------------------------------------
William D. Savoy
William D. Savoy
677 120th Avenue NE
Suite 184
Bellevue, WA 98005
Telecopy: (425) 456-0453
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this STOCK
PURCHASE AGREEMENT to be executed and delivered by their respective officers
hereunto duly authorized on the date first above written.
ALLEN & COMPANY INCORPORATED
Notice By:
-------------------------------------
Name:
Kim M. Wieland Title:
Managing Director and
Chief Financial Officer
Allen & Company
711 Fifth Avenue
New York, NY 10022
Telecopy: (212) 339-2642