Exhibit 10.2
GOLDMAN, SACHS & CO. | 85
BROAD STREET | NEW YORK, NEW YORK 10004 |TEL: (212)
902-1000
Opening Transaction
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To:
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priceline.com Incorporated
800 Connecticut Avenue
Norwalk, Connecticut 06854
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A/C:
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028515567
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From:
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Goldman, Sachs & Co.
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Re:
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Issuer Capped Share Call Option Transaction
(5-Year)
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Ref. No:
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SDB1622458070
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Date:
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September 21, 2006
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Dear Sir(s):
The purpose of this communication
(this “ Confirmation ”) is to set forth the
terms and conditions of the above-referenced transaction entered
into on the Trade Date specified below (the “
Transaction ”) between Goldman, Sachs & Co.
(“ Dealer ”) and priceline.com Incorporated
(“ Counterparty ”). This communication
constitutes a “Confirmation” as referred to in the ISDA
Master Agreement specified below.
1. This
Confirmation is subject to, and incorporates, the definitions and
provisions of the 2000 ISDA Definitions (including the Annex
thereto) (the “ 2000 Definitions ”) and the
definitions and provisions of the 2002 ISDA Equity Derivatives
Definitions (the “ Equity Definitions ”, and
together with the 2000 Definitions, the “ Definitions
”), in each case as published by the International Swaps and
Derivatives Association, Inc. (“ ISDA ”).
In the event of any inconsistency between the 2000 Definitions and
the Equity Definitions, the Equity Definitions will
govern.
Each party is hereby advised, and
each such party acknowledges, that the other party has engaged in,
or refrained from engaging in, substantial financial transactions
and has taken other material actions in reliance upon the
parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth
below.
This Confirmation evidences a
complete and binding agreement between Dealer and Counterparty as
to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement
(the “ Agreement ”) in the form of the 1992 ISDA
Master Agreement as if Dealer and Counterparty had executed an
agreement in such form on the date hereof (but without any Schedule
except for (i) the election of Loss and Second Method, New
York law (without regard to the conflicts of law principles) as the
governing law and US Dollars (“ USD ”) as the
Termination Currency, (ii) the election that
subparagraph (ii) of Section 2(c) will not apply to
Transactions and (iii) the election that the “Cross
Default” provisions of Section 5(a)(vi) will apply to
Counterparty with a “Threshold Amount” of USD 50
million). The parties hereby agree that no Transactions other
than the Transaction to which this Confirmation relates and the
other transaction between the parties with the same trade date
regarding options on Shares expiring in 2013 (the “ Other
Transaction ”) shall be governed by the
Agreement.
All provisions contained in, or
incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the
event of any inconsistency between this Confirmation and the
Definitions or the Agreement, as the case may be, this Confirmation
shall govern.
1
2.
This Transaction constitutes a Share Option Transaction for
purposes of the Equity Definitions. The terms of the
particular Transaction to which this Confirmation relates are as
follows:
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General Terms:
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Trade Date:
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September 21, 2006
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Components:
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The Transaction will be divided into individual
Components, each with the terms set forth in this Confirmation,
and, in particular, with the Number of Options and Expiration Date
set forth in this Confirmation. The payments and deliveries to be
made upon settlement of the Transaction will be determined
separately for each Component as if each Component were a separate
Transaction under the Agreement.
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Option Style:
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European
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Option Type:
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Call
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Seller:
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Dealer
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Buyer:
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Counterparty
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Shares:
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Common Stock (par value $0.008 per Share) of
Counterparty (Ticker: “PCLN”)
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Number of Options:
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For each Component, as provided in Annex A to
this Confirmation.
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Option Entitlement:
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One Share per Option
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Strike Price 1:
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40.38
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Strike Price 2:
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50.47
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Premium:
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USD 11,182,500
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Premium Payment Date:
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September 27, 2006
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Exchange:
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NASDAQ Global Select Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in Annex A to this Confirmation (or,
if such date is not a Scheduled Trading Day, the next following
Scheduled Trading Day that is not already an Expiration Date for
another Component); provided that, notwithstanding
anything to the contrary in the Equity Definitions, if that date is
a Disrupted Day, the Calculation Agent may determine that the
Expiration Date for such Component is a Disrupted Day in whole or
in part, in which case the Calculation Agent shall, in its
discretion, determine the number of Options for which such day
shall be the Expiration Date and (i) allocate the remaining Options
for such Expiration Date to one or more of the remaining Expiration
Dates, (ii) designate the
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2
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first succeeding Scheduled Trading Day that is
not a Disrupted Day and is not or is not deemed to be an Expiration
Date in respect of any other Component of the Transaction hereunder
as the Expiration Date for such remaining Options, or (iii) a
combination thereof; provided further that if the
Expiration Date for a Component (including any portion of a
Component whose Expiration Date was postponed as a result of clause
(ii) or (iii) above) has not occurred as of the Final Disruption
Date, (a) the Final Disruption Date shall be deemed to be the
Expiration Date and Valuation Date for each such Component, and (b)
the Calculation Agent shall determine the VWAP Price on the basis
of its good faith estimate of the trading value for the relevant
Shares. Section 6.6 of the Equity Definitions shall not apply to
any Valuation Date occurring on an Expiration Date.
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Final Disruption Date:
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October 28, 2011
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is
hereby amended by deleting the words “during the one hour
period that ends at the relevant Valuation Time, Latest Exercise
Time, Knock-in Valuation Time or Knock-out Valuation Time, as the
case may be,” in clause (ii) thereof.
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Automatic Exercise:
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Applicable; and means that the Number of Options
for the corresponding Expiration Date will be deemed to be
automatically exercised at the Expiration Time on such Expiration
Date if at such time such Options are In-the-Money, as determined
by the Calculation Agent, unless Buyer notifies Seller (by
telephone or in writing) prior to the Expiration Time on such
Expiration Date that it does not wish Automatic Exercise to occur,
in which case Automatic Exercise will not apply to such Expiration
Date. “ In-the-Money ” means that the VWAP Price
is greater than Strike Price 1.
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Seller’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
Giving Notice:
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To be provided by Dealer.
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Settlement Terms:
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In respect of any
Component:
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Settlement Currency:
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USD
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Settlement Method:
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Net Share Settlement
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Settlement Date:
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For all Components, the Settlement Date shall be
the third Scheduled Trading Day after the final Expiration Date
(or, in respect of all or part of its obligation to deliver the
Number of Shares to be Delivered, such other earlier date or dates
(or, if Section 14 below is applicable, such later dates) as the
Dealer shall determine in its sole discretion).
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Net Share Settlement:
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On the Settlement Date, Dealer shall deliver to
Counterparty a number of Shares equal to the sum of the Number of
Shares to be Delivered for all Components to the account specified
by
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Counterparty and cash in lieu of any fractional
shares for any Component valued at the VWAP Price on the Expiration
Date for such Component.
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Number of Shares to be
Delivered:
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In respect of any Exercise Date for any
Component, subject to the last sentence of Section 9.5 of the
Equity Definitions:
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(i) if the VWAP Price for such Component exceeds
Strike Price 1 but is less than Strike Price 2, a number of Shares
equal to (i) the product of (A) the excess of such VWAP Price over
Strike Price 1, (B) the Number of Options for such Component and
(C) the Option Entitlement, divided by (ii) such VWAP
Price;
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(ii) if the VWAP Price for such Component equals
or exceeds Strike Price 2, a number of Shares equal to (i) the
product of (A) the excess of Strike Price 2 over Strike Price 1,
(B) the Number of Options for such Component and (C) the Option
Entitlement, divided by (ii) such VWAP Price; or
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(iii) if the VWAP Price for such Component is
less than or equal to Strike Price 1, a number of Shares equal to
zero.
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VWAP Price:
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For any Expiration Date, as determined by the
Calculation Agent based on the NASDAQ Volume Weighted Average Price
per share of the Shares for the regular trading session (including
any extensions thereof) of the Exchange on such Expiration Date
(without regard to pre-open or after hours trading outside of such
regular trading session) as published by Bloomberg at or around
4:15 p.m. New York time on such date, on Bloomberg page
“PCLN.Q <Equity> AQR_SEC” (or any successor
thereto).
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Other Applicable
Provisions:
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The provisions of Sections 9.1(c), 9.8, 9.9,
9.10, 9.11 and 9.12 of the Equity Definitions will be applicable,
except that all references in such provisions to “Physical
Settlement” shall be read as references to “Net Share
Settlement”; provided that the Representation and
Agreement contained in Section 9.11 of the Equity Definitions shall
be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under
applicable securities laws as a result of the fact that Buyer is
the issuer of any Shares.
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Share Adjustments:
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Events:
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New Shares:
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In the definition of “New Shares” in
Section 12.1(i) of the Equity Definitions, the text in subsection
(i) shall be deleted in its entirety and replaced with:
“publicly quoted, traded or listed on any of the New York
Stock Exchange, the American Stock Exchange, the NASDAQ Global
Select Market or the NASDAQ Global Market (or their respective
successors)”.
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Consequences of Merger Events:
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(a) Share-for-Share:
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Calculation Agent Adjustment
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(b) Share-for-Other:
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Cancellation and Payment (Agreed Model) on that
portion of the Other Consideration that consists of cash;
Calculation Agent Adjustment on the remainder of the Other
Consideration.
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(c) Share-for-Combined:
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Component Adjustment
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Stock Loan Rate:
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USD-LIBOR-BBA
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Tender Offer:
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Applicable; provided that (a) Section
12.1(d) of the Equity Definitions is hereby amended by adding
“, or of the outstanding Shares,” before “of the
Issuer” in the fourth line thereof and (b) Sections 12.1(e)
and 12.1(l)(ii) of the Equity Definitions are hereby amended by
adding “or Shares, as applicable,” after “voting
shares”.
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Consequences of Tender Offers:
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(a) Share-for-Share:
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Calculation Agent Adjustment
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(b) Share-for-Other:
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Cancellation and Payment (Agreed Model) on that
portion of the Other Consideration that consists of cash;
Calculation Agent Adjustment on the remainder of the Other
Consideration.
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(c) Share-for-Combined:
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Component Adjustment
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Stock Loan Rate:
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USD-LIBOR-BBA
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Nationalization, Insolvency or
Delisting:
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Cancellation and Payment (Agreed Model);
provided that in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it shall also constitute a
Delisting if the Exchange is located in the United States and the
Shares are not immediately re-listed, re-traded or re-quoted on any
of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market or the NASDAQ Global Market (or their
respective successors); if the Shares are immediately re-listed,
re-traded or re-quoted on any such exchange or quotation system,
such exchange or quotation system shall be deemed to be the
Exchange.
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Stock Loan Rate:
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USD-LIBOR-BBA
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Additional Disruption Events:
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(a) Change in Law:
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Applicable; provided that Section
12.9(a)(ii) of the Equity Definitions is hereby amended by adding
“other than increased cost due to Securities Act registration
requirements relating to sales by Dealer of the Shares acquired by
Dealer for the purpose of hedging its obligations pursuant to the
Transaction” after the parenthetical in the last line
thereof.
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(b) Failure to Deliver:
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Applicable
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(c) Insolvency Filing:
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Applicable
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(d) Hedging Disruption:
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Applicable
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Hedging Party:
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Dealer
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Determining Party:
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Dealer
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Non-Reliance:
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Applicable
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Agreements and Acknowledgements
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgements:
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Applicable
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Dealer Payment Instructions:
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To be provided by Dealer.
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Counterparty Payment and Delivery
Instructions:
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To be provided by Counterparty.
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3.
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Calculation Agent : Dealer
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4.
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Offices :
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(a)
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The Office of Dealer for this Transaction is:
One New York Plaza, New York, New York 10004.
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(b)
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The Office of Counterparty for this Transaction
is: 800 Connecticut Avenue, Norwalk, Connecticut 06854.
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5.
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Notices : For purposes of this Confirmation:
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(a)
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Address for notices or communications to
Counterparty:
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To:
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priceline.com Incorporated
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800 Connecticut Avenue
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Norwalk, Connecticut 06854
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Attn:
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Robert J. Mylod, Jr.
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Chief Financial Officer
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Telephone:
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(203) 299-8301
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Facsimile:
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(203) 299-8975
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With a copy to:
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Attn:
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Peter J. Millones
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General Counsel
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Facsimile:
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(203) 299-8915
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(b)
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Address for notices or communications to
Dealer:
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To:
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Goldman, Sachs & Co.
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One New York Plaza
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New York, NY 10004
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Attn:
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Equity Operations: Options and
Derivatives
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Telephone:
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(212) 902-1981
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Facsimile:
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(212) 428-1980/1983
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With a copy to:
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Attn:
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Vijay Culas
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Equity Capital Markets
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Telephone:
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(212) 357-0428
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Facsimile:
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(212) 902-3000
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6.
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Representations, Warranties and
Agreements :
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(a)
In addition to the representations and warranties in the Agreement
and those contained elsewhere herein, Counterparty represents and
warrants to and for the benefit of, and agrees with, Dealer as
follows:
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(i)
On the Trade Date, (A) none of Counterparty and its officers and
directors is aware of any material nonpublic information regarding
Counterparty or the Shares and (B) all reports and other documents
filed by Counterparty with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”), when considered as a whole
(with the more recent such reports and documents deemed to amend
inconsistent statements contained in any earlier such reports and
documents), do not contain any untrue statement of a material fact
or any omission of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.
(ii)
Counterparty intends that this Transaction qualifies as an equity
instrument for it for purposes of EITF Issue No. 00-19.
Notwithstanding the foregoing and without limiting the generality
of Section 13.1 of the Equity Definitions, Counterparty
acknowledges that neither Dealer nor any of its affiliates is
making any representations or warranties with respect to the
treatment of the Transaction under FASB Statements 128, 133, 149 or
150, EITF Issue No. 00-19 (or any successor issue statements) or
under FASB’s Liabilities & Equity Project.
(iii)
Prior to the Trade Date, Counterparty shall deliver to Dealer a
resolution of Counterparty’s board of directors authorizing
the Transaction and such other certificate or certificates as
Dealer shall reasonably request. Any repurchases of Shares
pursuant to the Transaction are pursuant to a Share repurchase
program publicly announced on or before the Trade Date.
(iv)
Counterparty has not received notice that it is the subject of a
tender offer made under Section 14(d)(1) of the Exchange
Act.
(v)
Counterparty is not entering into this Confirmation to create
actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for Shares) or to raise or depress
or otherwise manipulate the price of the Shares (or any security
convertible into or exchangeable for Shares) in violation of the
Exchange Act.
(vi)
Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, an “investment
company” as such term is defined in the Investment Company
Act of 1940, as amended.
(vii)
On the Trade Date (A) the assets of Counterparty at their fair
valuation exceed the liabilities of Counterparty, including
contingent liabilities, (B) the capital of Counterparty is adequate
to conduct the business of Counterparty and (C) Counterparty has
the ability to pay its debts and obligations as such debts mature
and does not intend to, or does not believe that it will, incur
debt beyond its ability to pay as such debts mature.
(viii)
The representations and warranties of Counterparty set forth in
Section 3 of the Agreement and Section 1 of the Purchase Agreement
dated as of the Trade Date between Counterparty and Dealer as
representative of the several purchasers party thereto (the “
Purchase Agreement ”), are true and correct and are
hereby deemed to be repeated to Dealer as if set forth
herein.
(ix)
(A) On the Trade Date and during the period starting on the first
Expiration Date and ending on the last Expiration Date (the “
Settlement Period ”), the Shares or securities that
are convertible into, or exchangeable or exercisable for Shares,
are not, and shall not be, subject to a “restricted
period,” as such term is defined in Regulation M under the
Exchange Act (“ Regulation M ”) and (B)
Counterparty shall not engage in any “distribution,” as
such term is defined in Regulation M, other than a distribution
meeting the requirements of the exceptions set forth in sections
101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Trade Date or the Settlement
Period, as the case may be.
(x)
On the Trade Date and during the Settlement Period, neither
Counterparty nor any “affiliate” or “affiliated
purchaser” (each as defined in Rule 10b-18 under the Exchange
Act (“ Rule 10b-18 ”)) shall directly or
indirectly (including, without limitation, by means of any
cash-settled or other derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase
of, or commence any tender offer relating to, any Shares (or an
equivalent interest, including a unit of beneficial interest in a
trust or
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limited partnership or a depository
share) or any security convertible into or exchangeable or
exercisable for Shares.
(xi)
Without the
consent of Dealer, Counterparty agrees (i) during the Designated
Period, not to purchase or agree to purchase Shares if such
purchase would cause its outstanding Shares to be below 36.35
million and (ii) during the Designated Period, not to purchase or
agree to purchase Shares if such purchase along with all other
purchases during the Designated Period would exceed 3.85 million in
the aggregate. The Share numbers in this provision shall be subject
to adjustment as the Calculation Agent determines appropriate to
account for any Potential Adjustment Event or Extraordinary Event.
“ Designated Period ” means the period from and
including the Trade Date to and including the date that is the 30th
Prospectus Useable Day (or such longer number agreed by the
parties) occurring after the 60th day following the Trade
Date. An Exchange Business Day is a Prospectus Useable Day
unless on such day Dealer determines in its good faith discretion
that the Registration Statement and Prospectus referred to in the
Underwriting Agreement dated September 5, 2006 between, among
others, Dealer, as representative of the several underwriters, and
Counterparty (the “ Underwriting Agreement ”),
is not or may not be available for use in compliance with
applicable law.
(b)
Each of Dealer and Counterparty agrees and represents that it is an
“eligible contract participant” as defined in Section
1a(12) of the U.S. Commodity Exchange Act, as amended.
(c)
Each of Dealer and Counterparty acknowledges t
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