Document:

Exhibit 10.1

 

Amendments

 

The purpose of the First Amendment is to
enable the grant of shares of restricted stock to non-employee members of the
Board.

 

The following is a summary of the material
terms of the Plan as amended. A copy of the First Amendment is attached hereto
as Appendix A.

 

New Plan Benefits

 

The Company currently has nine non-employee
directors who would be eligible to receive awards under the 2005 Plan if the
First Amendment is adopted. As of the date of this proxy statement, no director
has been granted any restricted stock subject to stockholder approval of the
First Amendment. The benefits to be received by our non-employee directors
pursuant to the 2005 Plan are not determinable at this time.

 

General

 

The 2005 Plan provides for the grant of stock
options, including both nonqualified and incentive options, to full and
part-time employees and for the grant of restricted stock to full and part-time
employees and non-employee directors. An employee or non-employee director who
at the time of the award owns 10% or more of the combined voting power of all
classes of our stock is not eligible for any award under the 2005 Plan. Subject
to certain adjustments, the 2005 Plan would permit total equity awards over the
life of the 2005 Plan of up to 4,000,000 shares of common stock, subject to the
following limits:

 

	
  •             Aggregate
  limit on shares designated for stock options

  	
   

  	
  2,500,000
  shares

  
	
  •             Aggregate
  limit on shares designated for restricted stock

  	
   

  	
  1,500,000
  shares

  

 

Options or restricted stock cannot be awarded
to any eligible individual during a calendar year in excess of 10% of either of
these limits. If any outstanding award expires, is no longer exercisable, is
forfeited or is repurchased by us, the shares subject to the award continue to
be available under the 2005 Plan.

 

The Board will administer the 2005 Plan
unless and until such administration is delegated to a committee of the Board.
The Board, or the designated committee, determines and designates from time to
time (a) those employees to whom awards are granted, (b) the size,
form, terms (including vesting) and conditions of awards under the 2005 Plan,
and (c) rules with respect to the administration of the 2005 Plan.

 

Stock Options

 

The purchase price of the stock under each
option will be no less than the fair market value of the stock at the time such
option is granted, and no options will be

 

 

repriced. The Plan
administrator determines the duration of any option, except that options may
not be exercised after the earlier of five years following the date such option
vests or seven years from the date of grant. An employee may pay the exercise
price in cash or, upon approval of the Plan administrator, in our common stock.
A stock option will terminate and may not be exercised 90 days after an
employee ceases to be employed for any reason other than for cause, disability,
or death. If an employee ceases employment due to death or disability, all
outstanding vested options will be exercisable for one year after such employee
ceases employment or, if earlier in the case of disability, until 30 days
after the employee no longer has a disability. If an employee ceases employment
for cause or if the employee breaches any covenant not to compete or
nondisclosure agreement, unless otherwise provided in the individual option
agreement, all options will cease vesting and terminate.

 

Restricted Stock

 

Restricted stock granted under the Plan may
be subject to a vesting schedule and, if so, the participant’s right to fully
vest in a restricted stock award is subject to continuous service. If the
employee or non-employee director terminates continuous service for any reason,
including disability, any unvested restricted stock as of the date of
termination of continuous service will be forfeited to us. A purchase price may
be required, at the Plan administrator’s discretion, to be paid for the
restricted stock. If a purchase price is established the restricted stock may
not be repriced.

 

Valuation

 

For purposes of the 2005 Plan, fair market
value for stock options shall mean the New York Stock Exchange Composite
Transactions average closing price for the stock reflected in The Wall Street
Journal or another publication selected by the Board for the ten trading days
preceding the day an award is granted. As of the close of business on
March 14, 2006, the closing price of our common stock was $46.17.

 

Change in Control

 

If a change of control event occurs, as
defined in the 2005 Plan, then the vesting of all stock options and shares of
restricted stock will be accelerated in full. In anticipation of a change in
control event, the Plan administrator may provide that all unexercised options
must be exercised upon the change in control event or within a specified number
of days thereafter or such options will terminate. Any option not exercised
prior to the time frame stated in the notice will terminate.

 

Amendment and Termination of the 2005 Plan

 

Except for early termination of the Plan, the
Board cannot make any material change or amendment to the 2005 Plan without
further approval of the stockholders.

 

 

The 2005 Plan terminates ten years after the
effective date (which was May 6, 2005), but the Board may suspend or
terminate the 2005 Plan at any time. No incentive stock options or restricted
stock may be granted any time after ten years after the effective date of the
2005 Plan.

 

Federal Income Tax Consequences

 

The rules governing the tax treatment of
stock options and restricted stock depend largely on the surrounding facts and
circumstances. Generally, under current federal income tax laws, an employee
will recognize income, and we will be entitled to a deduction as follows:

 

Stock Options

 

If an employee does not dispose of the shares
acquired pursuant to the exercise of an incentive option within one year after
the transfer of the shares to the employee and not within two years from the
grant of the option, the employee will not realize taxable income as a result
of the grant or exercise of the option (except for purposes of the alternative
minimum tax upon the exercise of the option), and any gain or loss that is
subsequently realized may be treated as a long term capital gain or loss,
depending on the circumstances. We will not be able to deduct any amount for
the grant of the incentive stock option or the transfer of shares upon
exercise. If the employee disposes of the stock prior to one year after the
transfer of the shares (or prior to two years from the option grant date), the
employee will realize ordinary income in an amount equal to the lesser of (a) the
excess of the fair market value of the common stock acquired on the date of
exercise over the exercise price, and (b) the gain recognized on such
disposition. In such event, we will be entitled to a deduction for the amount
of ordinary income (which is treated as compensation) realized by the employee.
Upon the exercise of a nonqualified stock option, the employee will generally
realize ordinary income equal to the excess of the fair market value of the
shares on the date of exercise over the exercise price. We will be able to
deduct an amount equal to the ordinary income realized by the employee.

 

Restricted Stock

 

A participant who receives an award of
restricted stock will realize ordinary income (on a per share basis) at the
time any restrictions lapse equal to the difference between the fair market
value of the common stock at the time such restrictions lapse and the amount
paid, if any, for the stock. Alternatively, under Section 83 of the
Internal Revenue Code, the participant may elect to accelerate the tax event
and realize ordinary income (on a per share basis) equal to the difference
between the amount paid, if any, for the common stock and the fair market value
of the common stock on the date of grant upon the receipt of an award of
restricted stock. When the participant recognizes ordinary income, we will be
able to deduct an amount equal to the ordinary income recognized by the
employee.

 

 

Section 409A

 

Section 409A, a section added to the
Code in 2004, covers the tax treatment of certain types of deferred
compensation. Failure to comply with the requirements of Section 409A
results in recognition in current income of amounts deferred, along with
interest and a significant tax penalty. Certain types of equity-based
compensation are exempt from Section 409A. We intend to operate the 2005
Plan so that all grants under the 2005 Plan are exempt from Section 409A.

 

Other Equity Compensation Plan Information

 

The following table summarizes all of our
existing equity compensation plans under which securities may be issued as of
December 31, 2005. The only types of equity compensation plans that we
have are plans that authorize the granting of shares of restricted stock and
the granting of options to purchase shares of our common stock.

 

	
  Plan

  Category

  	
   

  	
  Number of securities

  to

  be issued upon

  exercise

  of outstanding options

  (a)

  	
   

  	
  Weighted-average per

  share exercise price

  of outstanding options

  (b)

  	
   

  	
  Number of securities

  remaining available for

  future issuance under

  equity compensation

  plans (excluding

  securities

  reflected in column(a))

  (c)

  	
   

  
	
  Equity compensation plans approved by
  security holders

  	
   

  	
  3,230,697

  	
   

  	
  $

  	
  25.19

  	
   

  	
  3,762,502

  	
  *

  
	
  Equity compensation plans not approved by
  security holders

  	
   

  	
  501,600

  	
   

  	
  $

  	
  12.38

  	
   

  	
  —

  	
   

  
	
  Total

  	
   

  	
  3,732,297

  	
   

  	
  $

  	
  23.47

  	
   

  	
  3,762,502

  	
   

  

 

*                                         Includes
options covering 745,204 shares that are available to be granted under our 1997
stock option plan. Our Board has determined that no further options will be
granted under this plan.

 

A description of the equity compensation
plans that were not approved by the security holders is as follows.

 

1999 Non-Employee
Directors Stock Option Plan

 

Effective March 1999, our Board adopted
a stock option plan that authorized the granting of options to purchase 30,000
shares of our common stock to non-employee directors. During 1999, the Board
approved grants of options covering a total of 30,000 shares of our common
stock to several Board members. The exercise price of the common stock
underlying each option was the average closing price for the ten days prior to
the grant. Under this plan, options covering up to 33(1)¤3%
of the underlying shares are exercisable on each anniversary from the date of
grant and the director must exercise the option within five years of the date
each option vests. This plan terminates on the earlier of March 12, 2009
or the date on which all options granted under the plan have been exercised in
full.

 

 

Chief Executive
Officer and President’s Plan

 

Pursuant to the employment agreement, dated
October 15, 2001, and the stock option agreement, dated as of
November 1, 2001, between the Company and Peter A. Dea, our CEO and
President, we granted non-qualified stock options to Mr. Dea for the
purchase of 600,000 shares of our common stock. The exercise price of the
options was equal to $2.50 below the closing price per share on the effective
date of his employment agreement. The stock options are subject to the
conditions of the agreements and vest equally over four years and must be
exercised within five years of the date on which they vest. The difference
between the closing price on the effective date and the exercise price is being
amortized over four years as compensation expense. This option plan will
terminate on the earlier of October 15, 2010 or the date on which all
options granted under the plan have been exercised in full. On August 1,
2005, we entered into a new employment agreement with Mr. Dea, which due
to recent changes in the tax laws required that he exercise, on or before
March 15, 2006, 150,000 of the options to purchase shares of our common
stock, which vested on November 15, 2005. Otherwise, per this agreement,
these options will expire if not exercised.Exhibit 10.1

priceline.com
incorporated 1999 omnibus plan

PERFORMANCE SHARE AGREEMENT

THIS PERFORMANCE SHARE AGREEMENT (“Agreement”) is made
as of the 28th day of February 2006 by and between
priceline.com Incorporated, a Delaware corporation, with its principal United
States office at 800 Connecticut Avenue, Norwalk, Connecticut 06854 (the “Company”),
and                        (the
“Participant”).

W I T N E S S E T H:

Pursuant to terms of the priceline.com Incorporated
1999 Omnibus Plan (the “Plan”), the Board of Directors of the Company has
authorized this Agreement. The Participant has been granted on February 28, 2006 (the “Grant Date”), subject to
execution of this Agreement, the number of performance shares (the “Performance
Shares”) set forth below. Unless otherwise indicated, any capitalized term used
herein, but not defined herein, shall have the meaning ascribed to such term in
the Plan. The Performance Shares comprising
this award may be recorded in an unfunded Performance Share account in the Participant’s
name maintained by the Company. The Participant will have no rights as a stockholder of the Company by virtue of any
Performance Share awarded to him until shares of Stock (as defined below), if
any, are issued to the Participant as described in this Agreement.

1.             Definitions

(a)                                  “Annual EPS Percentage” shall mean for
each of the Company and each member of the Peer Group, the annual increase or
decrease in the EPS from the immediately preceding Plan Year expressed as a
percentage.

(b)                                 “Cause” shall mean (i) if the
Participant is employed pursuant to an employment agreement which defines “cause”
in such agreement, “cause” as defined in such agreement and (ii) if the
Participant is not described in (i) it shall mean “cause” as defined in
the Plan.

(c)                                  “Change in Control” shall have the
meaning given such term under Section 3(g).

(d)                                 “Change in Control Period” shall mean the
period commencing six (6) months prior to the effective date of the Change
in Control and ending on the date immediately prior to the date which is six (6) months
after the effective date of the Change in Control.

(e)                                  “Continuous Service” shall mean the
Participant’s service with the Company or any Subsidiary or Affiliate whether
as an employee, director or consultant, which is not interrupted or terminated.

(f)                                    “Determination Date” shall mean February 28,
2009.

(g)                                 “Disability” shall have the meaning given
such term under the Plan.

(h)                                 “Division” shall mean Cendant Corporation’s
Travel Distribution Services division.

(i)                                     “EPS” shall mean (i) for the
Company, pro forma net income applicable to common stockholders per diluted
share as publicly disclosed annually in connection with annual earnings
announcements, (ii) for Expedia, Inc. and Sabre Holdings Corporation,
adjusted earnings per share as publicly disclosed annually in connection with
annual earnings announcements, and (iii) for the Division, the publicly
disclosed annual non-GAAP financial measure which is similar to the EPS of the
Company; in each case calculated based upon the past practice and subject
to  adjustment as permitted under Section 2(z) of
the Plan. In the event the Company or any member of the Peer Group changes the
way EPS is calculated, EPS for such entity shall mean the publicly disclosed
annual non-GAAP financial measure which is intended to replace (or which is
substantially similar to) the EPS prior to such change.

(j)                                     “EPS Ratio” shall mean a fraction equal
to the average Annual EPS Percentage for the Company during the Performance
Period divided by the average of the average Annual EPS Percentage for each
member of the Peer Group during the Performance Period; provided,
however, that (i) in no event will the EPS Ratio exceed 3.0, (ii) if
the numerator of the EPS Ratio is negative and the denominator is positive, the
EPS Ratio will be deemed to be zero, (iii) if the numerator of the EPS
Ratio is positive and the denominator is negative, the EPS Ratio will be deemed
to be 3.0, (iv) if both the numerator and denominator of the EPS Ratio are
negative, but the denominator is closer to zero than the numerator, then the
numerator and denominator will be inverted for purposes of determining the EPS
Ratio, and (v) if any member is added to or removed from the Peer Group,
the fraction described herein will be calculated on a weighted average basis
based on the time the member was in the Peer Group.

(k)                                  “Peer Group” shall mean Expedia, Inc.
and Sabre Holdings Corporation and shall include the Division if, and only if,
the Division is a separate entity which publicly discloses a non-GAAP financial
measure 

 A-1
 

 

similar to EPS of
the Company and shall include any successor entity or successor division to
such companies provided such successor entity or division continues to publicly
disclose EPS for the business carried on by such member of the Peer Group as of
the Grant Date.

(m)                               “Performance Period” shall mean the
period commencing on the January 1, 2006 and ending on December 31,
2008.

(n)                                 “Plan Year” shall mean the calendar year.

(o)                                 “Quarterly EPS Ratio” shall mean a
fraction determined in the same manner as the EPS Ratio but with the following
modifications: (i) for the year in which the Participant’s Continuous
Service terminates (or for purposes of Section 3(e), the year in which the
Change in Control occurs), EPS shall be based on EPS as publicly disclosed
quarterly (rather than annually) in connection with quarterly (rather than
annual) earnings announcements, (ii) for the year in which the Participant’s
Continuous Service terminates (or for purposes of Section 3(e), the year
in which the Change in Control occurs), the Annual EPS Percentage for both the
Company and the Peer Group for such year shall be the increase or decrease in
the EPS through the most recently completed calendar quarter occurring prior to
the Participant’s termination of Continuous Service from the EPS for the
identical period occurring in the immediately preceding Plan Year (e.g., if the Participant terminated Continuous Service in November of
2008, (A) the EPS for the year ending December 31, 2006 would be
compared to the EPS for the year ending December 31, 2005 to determine the
Annual EPS Percentage for 2006, (B) the EPS for the year ending December 31,
2007 would be compared to the EPS for the year ending December 31, 2006 to
determine the Annual EPS Percentage for 2007 and (C) the EPS for the three
quarters of 2008 ending September 30, 2008 would be compared to the EPS
for the three quarters of 2007 ending September 30, 2007 to determine the
Annual EPS Percentage for 2008), (iii) the determination of the average
Annual EPS Percentage shall not include any period after the Participant ceases
Continuous Service and (iv) the average Annual EPS Percentage shall be
calculated on a weighted average basis.

(q)                                 “Stock” shall mean shares of common
stock, par value $0.008, of the Company.

2.             The Grant

(a)           Subject
to the terms and conditions set forth herein, the Participant is granted
(________) Performance Shares as of the Grant Date.

3.             Vesting; Effect of Termination of Continuous Service;
Change in Control

(a)           If
the Participant remains in Continuous Service through and including the
Determination Date, then the Participant shall be entitled to receive a number
of shares of Stock determined by multiplying the Performance Share number by
the EPS Ratio; provided, however, that (i) if the EPS Ratio is less
than 0.75, the Participant shall receive no shares of Stock under this
Agreement, (ii) if both the numerator and denominator of the EPS Ratio are
negative, but the numerator is closer to zero than the denominator, then the
Participant shall be entitled to receive a number of shares of Stock determined
by multiplying the Performance Share number by seventy percent (70%) without
regard to the EPS Ratio, and (iii) if both the numerator and denominator
of the EPS Ratio are negative, but the denominator is closer to zero than the
numerator, then (subject to (i) above) the Participant shall be entitled
to receive a number of shares of Stock determined by multiplying the
Performance Share number by seventy percent (70%) and then multiplying the
product so obtained by the EPS Ratio. All shares of Stock to be issued to the
Participant under this Section 3(a), if any, shall be issued to the
Participant as soon as practicable after the Determination Date but in no event
later than March 15, 2010. If the Participant becomes entitled to any
shares of Stock under this Section 3(a), he shall not be entitled to
receive any shares of Stock under any other subsection of this Section 3.

(b)           Subject
to Section 3(f), if, on or prior to December 31, 2006, the
Participant’s Continuous Service is terminated for any reason, then the
Participant shall receive no shares of Stock under this Agreement.

(c)           If,
prior to the Determination Date, the Participant’s Continuous Service is (i) terminated
by the Company for Cause or (ii) voluntarily terminated by the Participant
for any reason, then the Participant shall receive no shares of Stock under
this Agreement.

(d)           Subject
to Section 3(f), if, after December 31, 2006 but prior to the
Determination Date, the Participant’s Continuous Service is (i) terminated
by the Company for any reason other than Cause or (ii) terminated as the
result of the Participant’s death or Disability, then the Participant (or the
Participant’s designated beneficiary in the event of the

 A-2
 

 

 

Participant’s death) shall receive a number of shares
of Stock determined by multiplying the Performance Share number by the
Quarterly EPS Ratio and multiplying the product thereof by a fraction the
numerator of which is the number of full calendar months the Participant was in
Continuous Service during the Performance Period and the denominator of which
is 36; provided, however, that (i) if the Quarterly EPS Ratio is
less than 0.75, the Participant shall receive no shares of Stock under this
Agreement, (ii) if both the numerator and denominator of the Quarterly EPS
Ratio are negative, but the numerator is closer to zero than the denominator,
then the Participant shall be entitled to receive a number of shares of Stock
determined by multiplying the Performance Share number by seventy percent (70%)
without regard to the Quarterly EPS Ratio and then multiplying the product so
obtained by a fraction the numerator of which is the number of full calendar
months the Participant was in Continuous Service during the Performance Period
and the denominator of which is 36, and (iii) if both the numerator and
denominator of the Quarterly EPS Ratio are negative, but the denominator is
closer to zero than the numerator, then (subject to (i) of this proviso above)
the Participant shall be entitled to receive a number of shares of Stock
determined by multiplying the Performance Share number by seventy percent (70%)
and then multiplying the product so obtained by the Quarterly EPS Ratio and
then multiplying the product so obtained by a fraction the numerator of which
is the number of full calendar months the Participant was in Continuous Service
during the Performance Period and the denominator of which is 36. All shares of
Stock to be issued to the Participant under this Section 3(d), if any,
shall be issued to the Participant as soon as practicable after the Participant’s
Continuous Service ceases but in no event later than March 15 of the
calendar year following the calendar year in which the Participant’s Continuous
Service ceases. If the Participant becomes entitled to any shares of Stock
under this Section 3(d), he shall not be entitled to receive any shares of
Stock under any other subsection of this Section 3.

(e)           If
there is a Change in Control on or prior to December 31, 2006 and the
Participant remains in Continuous Service through the date which is six (6) months
after the effective date of the Change in Control, then the Participant shall
receive a number of shares of Stock equal to the Performance Share number. If
there is a Change in Control after December 31, 2006 but prior to the
Determination Date and the Participant remains in Continuous Service through
the date which is six (6) months after the effective date of the Change in
Control, then the Participant shall receive a number of shares of Stock
determined by multiplying the Performance Share number by the Quarterly EPS
Ratio; provided, however, that (i) if the Quarterly EPS Ratio is
less than 0.75, the Participant shall receive no shares of Stock under this
Agreement, (ii) if both the numerator and denominator of the Quarterly EPS
Ratio are negative, but the numerator is closer to zero than the denominator,
then the Participant shall be entitled to receive a number of shares of Stock
determined by multiplying the Performance Share number by seventy percent (70%)
without regard to the Quarterly EPS Ratio, and (iii) if both the numerator
and denominator of the Quarterly EPS Ratio are negative, but the denominator is
closer to zero than the numerator, then (subject to (i) above) the
Participant shall be entitled to receive a number of shares of Stock determined
by multiplying the Performance Share number by seventy percent (70%) and then
multiplying the product so obtained by the Quarterly EPS Ratio. All shares of
Stock to be issued to the Participant under this Section 3(e), if any,
shall be issued to the Participant as soon as practicable after the date which
is six (6) months after the effective date of the Change in Control occurs
but in no event later than March 15 of the calendar year following the
calendar year in which the date which is six (6) months after the
effective date of the Change in Control occurs. If the Participant becomes
entitled to any shares of Stock under this Section 3(e), he shall not be
entitled to receive any shares of Stock under any other subsection of this Section 3.

(f)            If
there is a Change in Control on or prior to December 31, 2006 and the
Participant’s Continuous Service is terminated by the Company for any reason
other than Cause during the Change in Control Period, then the Participant
shall receive a number of shares of Stock equal to the Performance Share number.
If there is a Change in Control after December 31, 2006 but prior to the
Determination Date and the Participant’s Continuous Service is terminated by
the Company for any reason other than Cause during the Change in Control
Period, then the Participant shall receive a number of shares of Stock
determined by multiplying the Performance Share number by the Quarterly EPS
Ratio; provided, however, that (i) if the Quarterly EPS Ratio is
less than 0.75, the Participant shall receive no shares of Stock under this
Agreement, (ii) if both the numerator and denominator of the Quarterly EPS
Ratio are negative, but the numerator is closer to zero than the denominator,
then the Participant shall be entitled to receive a number of shares of Stock
determined by multiplying the Performance Share number by seventy percent (70%)
without regard to the Quarterly EPS Ratio, and (iii) if both the numerator
and denominator of the Quarterly EPS Ratio are negative, but the denominator is
closer to zero than the numerator, then (subject to (i) above) the
Participant shall be entitled to receive a number of shares of Stock determined
by multiplying the Performance Share number by seventy percent (70%) and then
multiplying the product so obtained by the Quarterly EPS Ratio. All shares of
Stock to be issued to the Participant under this Section 3(f) as a
result of the Participant’s termination of Continuous Service on or prior to
the Change in Control, if any, shall be issued to the Participant no later than
March 15 of the calendar year following the calendar year in which the
effective date of the Change in Control occurs. All shares of Stock to be
issued to the Participant under this Section 3(f) as a result of the
Participant’s termination of Continuous 

 A-3
 

 

 

Service after the effective date of the Change in
Control, if any, shall be issued to the Participant as soon as practicable
after the Participant’s Continuous Service ceases but in no event later than March 15
of the calendar year following the calendar year in which the Participant’s
Continuous Service ceases. If the Participant becomes entitled to any shares of
Stock under this Section 3(f), he shall not be entitled to receive any
shares of Stock under any other subsection of this Section 3.

(g)           For
purposes of this Agreement, the term “Change in Control” shall mean the
occurrence of any one of the following events:

(i)            any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing thirty-five percent (35%) or more of the combined voting power of
the Company’s then outstanding securities eligible to vote for the election of
the Board (the “Company Voting Securities”); provided, however, that the event
described in this paragraph (i) shall not be deemed to be a Change in
Control if such event results from the acquisition of Company Voting Securities
pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii) below);

(ii)           individuals who, on the Grant Date,
constitute the Board (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any person
becoming a director subsequent to the Grant Date, whose election or nomination
for election was approved (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) by a vote of at least
two-thirds of the directors who were, as of the date of such approval,
Incumbent Directors, shall be an Incumbent Director; provided, further, that no
individual initially appointed, elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to the
election or removal of directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be an Incumbent Director;

(iii)          the consummation of a merger,
consolidation, statutory share exchange or similar form of corporate
transaction involving (A) the Company or (B) any of its wholly owned
subsidiaries pursuant to which, in the case of this clause (B), Company Voting
Securities are issued or issuable (any event described in the immediately
preceding clause (A) or (B), a “Reorganization”) or the sale or other
disposition of all or substantially all of the assets of the Company to an
entity that is not an Affiliate of the Company (a “Sale”), unless immediately
following such Reorganization or Sale: (1) more than 50% of the total
voting power (in respect of the election of directors, or similar officials in
the case of an entity other than a corporation) of (x) the Company (or, if
the Company ceases to exist, the entity resulting from such Reorganization),
or, in the case of a Sale, the entity which has acquired all or substantially
all of the assets of the Company (in either case, the “Surviving Entity”), or (y) if
applicable, the ultimate parent entity that directly or indirectly has
Beneficial Ownership of more than 50% of the total voting power (in respect of
the election of directors, or similar officials in the case of an entity other
than a corporation) of the Surviving Entity (the “Parent Entity”), is
represented by Company Voting Securities that were outstanding immediately
prior to such Reorganization or Sale (or, if applicable, is represented by
shares into which such Company Voting Securities were converted pursuant to
such Reorganization or Sale), (2) no Person is or becomes the Beneficial
Owner, directly or indirectly, of 35% or more of the total voting power (in
respect of the election of directors, or similar officials in the case of an
entity other than a corporation) of the outstanding voting securities of the
Parent Entity (or, if there is no Parent Entity, the Surviving Entity) and (3) at
least a majority of the members of the board of directors (or similar officials
in the case of an entity other than a corporation) of the Parent Entity (or, if
there is no Parent Entity, the Surviving Entity) following the consummation of
the Reorganization or Sale were, at the time of the approval by the Board of
the execution of the initial agreement providing for such Reorganization or
Sale, Incumbent Directors (any Reorganization or Sale which satisfies all of
the criteria specified in (1), (2) and (3) above being deemed to be a
“Non-Qualifying Transaction”); or

(iv)          the stockholders of the Company
approve a plan of complete liquidation or dissolution of the Company.

Notwithstanding
the foregoing, (I) if any Person becomes the Beneficial Owner, directly or
indirectly, of 35% or more of the combined voting power of Company Voting
Securities solely as a result of the acquisition of Company Voting Securities
by the Company which reduces the number of Company Voting Securities
outstanding, such increased amount shall be deemed not to result in a Change in
Control; provided, however, that if such Person subsequently becomes the
Beneficial Owner, 

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directly or
indirectly, of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities Beneficially Owned by such
Person, a Change in Control of the Company shall then be deemed to occur and (II) the
acquisition following the Effective Date of Company Voting Securities by
Hutchison Whampoa Limited, Cheung Kong (Holdings) Limited or any of their
Affiliates shall be deemed not to result in a Change in Control until such time
as Hutchison Whampoa Limited, Cheung Kong (Holdings) Limited or any of their
Affiliates become the Beneficial Owners in the aggregate of 50% or more of the
combined voting power of Company Voting Securities (and for this purpose the preceding
clause (I) shall not apply).

(h)  For the purposes of Section 3(g) (and
with respect to Section 3(h)(i), for purposes of Section 1(e)), the
following terms shall have the following meanings:

(i)            “Affiliate” shall mean an affiliate of the Company, as defined in Rule 12b-2
promulgated under Section 12 of the Securities Exchange Act of 1934, as
amended from time to time (the “Exchange
Act”);

(ii)           “Beneficial Owner” shall have the meaning set forth in Rule 13d-3
under the Exchange Act;

(iii)          “Person” shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (1) the Company or any of its
subsidiaries, (2) a trustee or other fiduciary holding securities under an
employee benefit plan (or related trust) sponsored or maintained by the Company
or any of its subsidiaries, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, (4) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of shares of Common Stock
or (5) the Participant or any group of persons including the Participant,
or any entity controlled by the Participant or any group of persons including
the Participant; provided the Participant is an executive officer, director or
more than 10% owner of Stock.

4.             Nontransferability of Grant

Except
as otherwise provided herein or in the Plan, no Performance Shares shall be
assigned, negotiated, pledged, or hypothecated in any way or be subject to
execution, attachment or similar process. No transfer of the Participant’s
rights with respect to such Performance Shares, whether voluntary or
involuntary, by operation of law or otherwise, shall be permitted. Immediately
upon any attempt to transfer such rights, such Performance Shares, and all of
the rights related thereto, shall be forfeited by the Participant.

5.             Distribution and Voting Rights

Performance
Shares shall have no distribution or voting rights.

6.             Stock; Adjustment Upon Certain Events

(a)           Stock
to be issued under this Agreement, if any, shall be made available, at the
discretion of the Board, either from authorized but unissued Stock, from issued
Stock reacquired by the Company or from Stock purchased by the Company on the
open market specifically for this purpose.

(b)           The
existence of this Agreement and the Performance Shares granted hereunder shall
not affect in any way the right or power of the Board or the stockholders of
the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its
business, any merger or consolidation of the Company or any affiliate, any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Stock, the authorization or issuance of additional shares of
Stock, the dissolution or liquidation of the Company or any affiliate or sale
or transfer of all or part of the assets or business of the Company or any
affiliate, or any other corporate act or proceeding.

7.             Determinations

Each
determination, interpretation or other action made or taken pursuant to the
provisions of this Agreement by the Committee or the Board in good faith shall
be final, conclusive and binding for all purposes and upon all persons,
including, without limitation, the Participant and the Company, and their
respective heirs, executors, administrators, personal representatives and other
successors in interest.

8.             Other Conditions

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The
transfer of any Stock under this Agreement, if any, shall be effective only at
such time as counsel to the Company shall have determined that the issuance and
delivery of such Stock is in compliance with all applicable laws, regulations
of governmental authority and the requirements of any securities exchange on
which Stock is traded.

9.             Withholding Taxes

The
Participant shall be liable for any and all U.S. federal, state or local taxes
of any kind required by law to be withheld with respect to the delivery of any
shares of Stock under this Agreement. The
Company may withhold from the total number of shares of Stock the Participant
is to receive on a settlement date a number of shares that has a total value
equal to the amount necessary to satisfy any and all such withholding tax
obligations. The value of any fraction of retained shares not necessary
for required withholding shall be applied to the Participant’s federal income
tax withholding by the Company generally. Instead of withholding shares as described
above, the Company may, in its discretion, (a) require the Participant to
remit to the Company on the date on which the Participant becomes the owner of
shares of Stock under this Agreement cash in an amount sufficient to satisfy
all applicable required withholding taxes and social security contributions
related to such vesting, or (b) deduct from his regular salary payroll
cash, on a payroll date following the date on which the Participant becomes the
owner of shares of Stock under this Agreement, in an amount sufficient to
satisfy such obligations. The option described in clause (b) of the
preceding sentence shall not be available if the Participant is an officer subject to Section 16 of
the Exchange Act as amended and/or Rule 144
promulgated under the Securities Act of 1933 as amended.

In
lieu of having shares of Stock withheld to cover all applicable required
withholding taxes and social security contributions, the Participant may, by
providing notice to the Company within 30 days of the Grant Date (a) elect
to remit to the Company on the date on which the Participant becomes the owner
of shares of Stock under this Agreement cash in an amount sufficient to satisfy
such obligations, or (b) request the Company to deduct from his regular
salary payroll cash, on a payroll date following the date on which the
Participant becomes the owner of shares of Stock under this Agreement, in an
amount sufficient to satisfy such obligations, which request the Committee may
choose to honor in its sole discretion. The option described in clause (b) of
the preceding sentence shall not be available if the Participant is an officer subject to Section 16 of
the Exchange Act as amended and/or Rule 144
promulgated under the Securities Act of 1933 as amended.

10.           Distribution of Stock

Subject
to Section 8, reasonably promptly after the time the Participant becomes
entitled to receive shares of Stock, if any, under this Agreement, (but in no
event later than the time periods described in Sections 3(a) through 3(f),
as the case may be) the Company shall cause the Participant to be the record
owner of such shares of Stock.

11.           Incorporation of the Plan

The
Plan, as it exists on the date of this Agreement and as amended from time to
time, is hereby incorporated by reference and made a part hereof, and the
Performance Shares and this Agreement shall be subject to all terms and
conditions of the Plan. In the event of any conflict between the provisions of
this Agreement and the provisions of the Plan, the terms of the Plan shall
control, except as expressly stated otherwise.

12.           Electronic Delivery

The
Company may, in its sole discretion, deliver any documents related to the
Performance Shares and the Participant’s participation in the Plan, or future
awards that may be granted under the Plan, by electronic means or to request
the Participant’s consent to participate in the Plan by electronic means. The
Participant hereby consents to receive such documents by electronic delivery
and, if requested, agrees to participate in the Plan through an on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

13.           Miscellaneous

(a)           This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, personal legal representatives, successors,
trustees, administrators, distributees, devisees and legatees. The Company
shall assign to, and require, any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree in
writing to perform this Agreement. Notwithstanding the foregoing, this
Agreement may not be assigned by the Participant.

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(b)           No
modification or waiver of any of the provisions of this Agreement shall be
effective unless in writing and signed by the party against whom it is sought
to be enforced, provided, however, that, notwithstanding any other
provision of this Agreement or the Plan to the contrary, the parties shall in
good faith amend this Agreement to the limited extent necessary to comply with
the requirements under Code Section 409A in order to ensure that any
amounts paid or payable hereunder are not subject to the additional 20% income
tax thereunder while maintaining to the maximum extent practicable the original
intent of this Agreement.

(c)           This
Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one agreement.

(d)           The
failure of any party hereto at any time to require performance by another party
of any provision of this Agreement shall not affect the right of such party to
require performance of that provision, and any waiver by any party of any
breach of any provision of this Agreement shall not be construed as a waiver of
any continuing or succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right under this Agreement.

(e)           The
headings of the sections of this Agreement have been inserted for convenience
of reference only and shall in no way restrict or modify any of the terms or
provisions hereof.

(f)            The
Company shall pay all fees and expenses necessarily incurred by the Company in
connection with this Agreement and will from time to time use its reasonable
efforts to comply with all laws and regulations which, in the opinion of
counsel to the Company, are applicable thereto.

(g)           All
notices, consents, requests, approvals, instructions and other communications
provided for herein shall be in writing and validly given or made when
delivered, or on the second succeeding business day after being mailed by
registered or certified mail, whichever is earlier, to the persons entitled or
required to receive the same, at the addresses set forth at the heading of this
Agreement or to such other address as either party may designate by like notice.
Notices to the Company shall be addressed to its principal office, attention of
the Company’s General Counsel.

(h)           The
Plan and this Agreement constitute the entire Agreement and understanding
between the parties with respect to the matters described herein and supersede
all prior and contemporaneous agreements and understandings, oral and written,
between the parties with respect to such subject matter.

(i)            This
Agreement shall be governed and construed and the legal relationships of the
parties determined in accordance with the laws of the state of Delaware without
reference to principles of conflict of laws.

(j)            The
Company represents and warrants that it is duly authorized by its Board and/or
the Committee (and by any other person or body whose authorization is required)
to enter into this Agreement, that there is no agreement or other legal
restriction which would prevent it from entering into, and carrying out its
obligations under, this Agreement, and that the officer signing this Agreement
is duly authorized and empowered to sign this Agreement on behalf of the
Company.

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

PRICELINE.COM INCORPORATED

Jeffery
Boyd

Chief Executive Officerv

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