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INDEX TO FINANCIAL STATEMENTS OF KAYAK SOFTWARE CORPORATION
INDEX TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
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Table of Contents

As filed with the Securities and Exchange Commission on February 1, 2013

Registration No. 333-185465

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT No. 2
to

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

priceline.com Incorporated
(Exact Name of Registrant as Specified in Its Charter)



Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  4541
(Primary Standard Industrial
Classification Code Number)
  04-3692546
(I.R.S. Employer
Identification Number)

800 Connecticut Avenue
Norwalk, Connecticut 06854
(203) 299-8000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)



Peter J. Millones
Executive Vice President and General Counsel
800 Connecticut Avenue
Norwalk, Connecticut 06854
(203) 299-8000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



Copies to:

Keith A. Pagnani
Brian E. Hamilton
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
(212) 558-4000

 

Michael A. Conza
Laurie A. Cerveny
Bingham McCutchen LLP
1 Federal Street
Boston, Massachusetts 02110
(617) 951-8000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as possible after this Registration Statement is declared effective.

          If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o

          If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

          Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o

          Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to
be Registered

  Proposed Maximum
Offering Price
Per Share

  Proposed Maximum
Aggregate Offering
Price(1)

  Amount of
Registration Fee(2)

 

Common Stock, par value $0.008 per share

  2,564,611 shares   $574.92   $1,474,440,496   $201,114

 

(1)
Calculated in accordance with Rule 457(f) under the Securities Act of 1933. The proposed maximum offering price is estimated solely for the purpose of calculating the registration fee.

(2)
Previously paid in connection with the initial filing of this registration statement on December 13, 2012.

          The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this proxy statement/prospectus is not complete and may be changed. Priceline.com has filed a registration statement relating to these securities with the Securities and Exchange Commission. Priceline.com may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION. DATED FEBRUARY 1, 2013.

LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders:

           On November 8, 2012, KAYAK Software Corporation ("KAYAK") entered into a merger agreement (the "merger agreement") with priceline.com Incorporated ("priceline.com") and Produce Merger Sub Inc. ("Merger Sub") as a result of which KAYAK will be acquired by priceline.com. If the merger is approved and the other conditions to completion of the merger that are described in the attached proxy statement/prospectus are satisfied or waived, KAYAK will merge with and into Merger Sub with Merger Sub continuing as the surviving corporation and a wholly owned subsidiary of priceline.com (the "merger"). Merger Sub will be renamed "KAYAK Software Corporation" upon completion of the merger.

           Upon completion of the merger, each issued and outstanding share of KAYAK Class A common stock and KAYAK Class B common stock (together, the "KAYAK common stock"), other than shares owned by priceline.com, KAYAK, or any of their subsidiaries, or by stockholders that have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the Delaware General Corporation Law, will be converted into the right to receive, at the election of the stockholder, either $40.00 in cash, which we refer to as the cash consideration, or a fraction of a share of priceline.com common stock, par value $0.008 per share ("priceline.com common stock"), which we refer to as the stock consideration, in each case subject to the pro ration mechanism provided in the merger agreement and described below. We refer to shares as to which appraisal rights have been perfected and not withdrawn as dissenter shares. Shares of KAYAK common stock as to which the holder elects to receive cash consideration are referred to as cash election shares, shares of KAYAK common stock as to which the holder elects to receive stock consideration are referred to as stock election shares and shares of KAYAK common stock as to which no election has been made, other than dissenter shares, are referred to as no election shares.

           The number of shares of KAYAK common stock that will be converted into the right to receive the cash consideration (the "total cash number"), will equal 33% of the number of shares of KAYAK common stock outstanding on October 31, 2012 plus 33% of the number of shares of KAYAK common stock issued thereafter pursuant to KAYAK stock options and KAYAK restricted stock units outstanding on such date, minus the number of dissenter shares, and the remainder of the shares of KAYAK common stock (other than dissenter shares) will be converted into the right to receive the stock consideration. In the event that the number of cash election shares exceeds the total cash number, then a portion of the cash election shares equal to such excess will be converted into the right to receive stock consideration rather than cash consideration, with such adjustment being made on a pro-rata basis among the cash election shares. In the event that the number of cash election shares is less than the total cash number, then such cash election share shortfall amount will be made up by first converting no election shares into the right to receive cash consideration (on a pro-rata basis among such shares, in the event less than all such shares are so converted), and then any remaining cash election share shortfall will be made up by converting a portion of the stock election shares into the right to receive cash consideration rather than stock consideration, with such adjustment being made on a pro-rata basis among the stock election shares. As a result, KAYAK stockholders may receive a different combination of consideration than elected, depending on the elections made by other KAYAK stockholders.

           KAYAK stockholders who receive the merger consideration as stock will receive for each share of KAYAK common stock a fraction of a share of priceline.com common stock determined by dividing $40.00 by the aggregate volume weighted average price per share of priceline.com common stock for the 30 day trading period ending on the second full trading day prior to the effective date (the "priceline.com average trading price"), provided that the priceline.com average trading price is between (or including) $571.35 and $698.32 per share. If the priceline.com average trading price is below $571.35 then the exchange ratio will be fixed at 0.07001 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. If the priceline.com average trading price is above $698.32 then the exchange ratio will be fixed at 0.05728 shares of priceline.com common stock to be delivered for each share of KAYAK common stock and the value of the stock consideration delivered to holders of KAYAK common stock who receive stock consideration will be higher or lower than $40.00 per share, as applicable.

           For example, if the priceline.com average trading price is $672.72 (which was the closing price per share of priceline.com common stock on NASDAQ on January 18, 2013), the exchange ratio will be 0.05946 shares of priceline.com common stock to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock. Accordingly, a holder of 100 shares of KAYAK common stock who elects the stock consideration would be entitled to receive 5 shares of priceline.com common stock and cash consideration in lieu of a fraction of a share of priceline.com stock of $636.39. Because, in this example, the priceline.com average trading price is between $571.35 and $698.32, the value of the stock consideration to be delivered to the KAYAK stockholder would be $40.00 (assuming the closing price per share of priceline.com common stock on the effective date of the merger also is $672.72), which is equal to the cash consideration. As noted above, if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both below $571.35, then the value of the stock consideration to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock will be less than $40.00, and if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both above $698.32, the value of such stock consideration will be greater than $40.00.

           Priceline.com common stock is traded on the NASDAQ Global Select Market under the trading symbol "PCLN." Based on the number of shares of priceline.com common stock and KAYAK common stock outstanding as of January 18, 2013, KAYAK stockholders will hold less than 4% in the aggregate of the issued and outstanding shares of priceline.com common stock immediately after consummation of the merger.

           KAYAK is holding a special meeting of stockholders (the "special meeting") in order to obtain the approval necessary to complete the merger as more fully described in the attached proxy statement/prospectus. At the special meeting, KAYAK stockholders will be asked to vote to approve the adoption of the merger agreement as described in the attached proxy statement/prospectus.

           The KAYAK board of directors has (1) reviewed and considered the terms and conditions of the merger agreement, (2) unanimously determined that the terms of the merger agreement and the merger are fair to, and in the best interests of, KAYAK and its stockholders and (3) unanimously approved and declared advisable the merger agreement, the merger and all of the transactions contemplated by the merger agreement. The KAYAK board of directors unanimously recommends that KAYAK stockholders vote FOR the proposal to adopt the merger agreement.

           The merger will not be completed unless stockholders holding a majority of the outstanding voting power of KAYAK approve the proposal to adopt the merger agreement. Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please take the time to vote all proxy cards that you receive as soon as possible to ensure that your shares are represented at the special meeting.

           The attached proxy statement/prospectus provides you with detailed information about priceline.com, KAYAK, the merger agreement and the merger. We encourage you to read the entire proxy statement/prospectus carefully, including the "Risk Factors" section beginning on page 31.

Yours sincerely,    


LOGO


Daniel Stephen Hafner
Chief Executive Officer and Cofounder
KAYAK Software Corporation

 

 

           Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if the accompanying proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

           This proxy statement/prospectus is dated                    , 2013, and is first being mailed to KAYAK stockholders on or about                    , 2013.


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SOURCES OF ADDITIONAL INFORMATION

        This proxy statement/prospectus incorporates important business and financial information about priceline.com from documents that are not included in or delivered with this proxy statement/prospectus. Documents relating to priceline.com which are incorporated by reference are available from priceline.com without charge. For a more detailed description of the information incorporated by reference into this proxy statement/prospectus, see "Where You Can Find More Information" on page 169.

        Priceline.com will provide you with copies of such documents relating to priceline.com without charge, following a request in writing or by telephone to the following address and telephone number:

Attention: Investor Relations
priceline.com Incorporated
800 Connecticut Avenue
Norwalk, Connecticut 06854
(203) 299-8000

        In addition, if you have any questions about the special meeting, the merger or this proxy statement/prospectus or need additional copies of this proxy statement/prospectus or need to obtain proxy cards or any other information relating to the proxy solicitation, please send your request in writing or by telephone to the following address and telephone number:

Attention: Investor Relations
KAYAK Software Corporation
55 North Water Street, Suite 1
Norwalk, Connecticut 06854
(203) 899-3100

        If you have any questions about your cash/stock election form, questions on how to make your election or if you need to obtain a cash/stock election form, please contact KAYAK's information agent, Georgeson, by contacting them at the following address and phone number:

199 Water Street, 26th Floor
New York, NY 10038
(888) 293-6908 (Toll Free)
Banks and Brokerage Firms please call:
(212) 440-9800

        In order for you to receive timely delivery of the documents in advance of the special meeting of KAYAK stockholders, you must request the information no later than 5 business days before the date of the special meeting, which is scheduled for March 4, 2013.


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ABOUT THIS PROXY STATEMENT/PROSPECTUS

        This document, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission, which we refer to as the SEC, by priceline.com (File No. 333-185465), constitutes a prospectus of priceline.com under Section 5 of the Securities Act of 1933, as amended, which we refer to as the Securities Act, with respect to the priceline.com common stock to be issued to KAYAK stockholders pursuant to the merger agreement. This document also constitutes a proxy statement of KAYAK under Section 14(a) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. It also constitutes a notice of meeting with respect to the special meeting of KAYAK stockholders, at which KAYAK's stockholders will be asked to consider and vote upon the proposal to adopt the merger agreement.

        Priceline.com has supplied all information contained or incorporated by reference in this proxy statement/prospectus relating to priceline.com, and KAYAK has supplied all such information relating to KAYAK. Priceline.com and KAYAK have not authorized anyone to provide you with information that is different from what is contained in this proxy statement/prospectus.

        You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated        , 2013. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to KAYAK stockholders nor the issuance by priceline.com of shares of common stock pursuant to the merger will create any implication to the contrary.


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LOGO

KAYAK Software Corporation
55 North Water Street, Suite 1
Norwalk, Connecticut 06854
(203) 899-3100

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 4, 2013

To all KAYAK stockholders:

        Notice is hereby given that a special meeting of stockholders of KAYAK Software Corporation, a Delaware corporation, which we refer to as KAYAK, will be held at the offices of Bingham McCutchen LLP, 13th Floor, One Federal Street, Boston, Massachusetts 02110 on March 4, 2013 at 10:00 a.m. Eastern Standard Time for the following purposes:

    1.
    To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of November 8, 2012, by and among KAYAK, priceline.com Incorporated, a Delaware corporation, and Produce Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of priceline.com;

    2.
    To approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and

    3.
    To conduct any other business that properly comes before the special meeting of stockholders of KAYAK.

        The merger agreement is described in detail in the accompanying proxy statement/prospectus, which you should read carefully in its entirety before voting. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement/prospectus.

        Only holders of record of KAYAK Class A common stock and Class B common stock at the close of business on January 24, 2013, which we refer to as the record date, are entitled to vote at the special meeting. A majority of the voting power of the outstanding shares of KAYAK Class A common stock and Class B common stock, voting together as a single class, must be voted in favor of the adoption of the merger agreement in order for the merger to be completed. Your vote is very important and a failure to vote your shares has the same effect as voting against the adoption of the merger agreement.

        Under the General Corporation Law of the State of Delaware, which we refer to as the DGCL, holders of record of KAYAK Class A common stock and Class B common stock who do not vote in favor of the adoption of the merger agreement have the right to seek appraisal of the fair value of their KAYAK shares if the merger is completed. To exercise your appraisal rights, you must strictly follow the procedures prescribed by the DGCL, including, among other things, submitting a written demand for appraisal to KAYAK before the vote is taken on the adoption of the merger agreement, and you must not vote in favor of the adoption of the merger agreement. These procedures are summarized in the accompanying proxy statement/prospectus in the section entitled "Appraisal Rights of KAYAK Stockholders" beginning on page 154 and the text of the applicable provisions of the DGCL is included as Annex C to the accompanying proxy statement/prospectus.

        All holders of KAYAK Class A common stock and Class B common stock are cordially invited to attend the special meeting in person. However, to assure your representation at the special meeting, please submit your proxy as promptly as possible by filling in the accompanying proxy card and


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returning it in the enclosed pre-addressed postage-paid envelope or by following the instructions on the proxy card to vote by telephone or internet. The presence of a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum at the special meeting of stockholders.

        THE BOARD OF DIRECTORS OF KAYAK UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT AND "FOR" THE PROPOSAL TO APPROVE THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY.

    By order of the Board of Directors of
KAYAK Software Corporation

 

 


LOGO


Daniel Stephen Hafner
Chief Executive Officer and Cofounder

Norwalk, Connecticut
                        , 2013


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        REGARDLESS OF THE NUMBER OF SHARES OF KAYAK COMMON STOCK YOU OWN OR WHETHER YOU PLAN TO ATTEND THE MEETING, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED. THE MERGER CANNOT BE COMPLETED UNLESS THERE IS A QUORUM PRESENT OR REPRESENTED AT THE SPECIAL MEETING AND THE HOLDERS OF A MAJORITY OF THE VOTING POWER OF THE OUTSTANDING SHARES OF KAYAK CLASS A COMMON STOCK AND CLASS B COMMON STOCK, VOTING TOGETHER AS A SINGLE CLASS, ENTITLED TO VOTE AT THE SPECIAL MEETING, VOTE TO ADOPT THE MERGER AGREEMENT. THEREFORE, WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED PRE-ADDRESSED, POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR INTERNET. RETURNING THE PROXY CARD DOES NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE MEETING AND TO VOTE YOUR SHARES IN PERSON. YOUR VOTE IS VERY IMPORTANT.

        A CASH/STOCK ELECTION FORM WILL BE MAILED SEPARATELY FROM THIS PROXY STATEMENT/PROSPECTUS. PLEASE FOLLOW THE INSTRUCTIONS ON THAT FORM TO ELECT THE CONSIDERATION YOU WOULD LIKE TO RECEIVE IF THE MERGER IS APPROVED (SUBJECT TO THE PRO RATION MECHANISM DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS).


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  Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MATTERS TO BE ADDRESSED AT THE SPECIAL MEETING

    1  

SUMMARY

    12  

SELECTED HISTORICAL FINANCIAL DATA OF PRICELINE.COM INCORPORATED

    24  

SELECTED HISTORICAL FINANCIAL DATA OF KAYAK SOFTWARE CORPORATION

    25  

UNAUDITED SUMMARY PRO FORMA COMBINED FINANCIAL DATA

    26  

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

    28  

COMPARATIVE PER SHARE MARKET PRICE DATA

    30  

RISK FACTORS

    31  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

    38  

INFORMATION ABOUT KAYAK

    39  

Overview of the Business

    39  

KAYAK Brands—KAYAK, swoodoo and checkfelix.com

    39  

KAYAK's Distribution and Advertising Platform

    40  

Concentration of Customers

    41  

Technology and Infrastructure

    41  

Intellectual Property

    42  

Marketing

    43  

Strategic Relationships

    43  

Competition

    44  

Employees

    45  

Government Regulation

    45  

KAYAK's Legal Proceedings

    45  

Facilities

    47  

Trademarks

    47  

Risks Relating to KAYAK's Business

    47  

Changes and Disagreements with Accountants on Accounting and Financial Disclosure

    60  

Corporate Information

    60  

KAYAK MANAGEMENT'S DISCUSSION AND ANALYSIS OF KAYAK'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    61  

MARKET PRICE OF AND DIVIDENDS ON KAYAK'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    80  

Market Information

    80  

Holders of Common Equity

    80  

Dividends

    80  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF KAYAK

    81  

KAYAK GOLDEN PARACHUTE COMPENSATION

    86  

INFORMATION ABOUT THE SPECIAL MEETING OF KAYAK STOCKHOLDERS

    89  

INFORMATION ABOUT PRICELINE.COM

    94  

Overview of the Business

    94  

Risks Relating to priceline.com's Business

    95  

THE MERGER

    96  

General

    96  

Merger Consideration

    96  

Schedule of Important Dates

    97  

Background of the Merger

    98  

Priceline.com's Reasons for the Merger

    106  

Recommendation of KAYAK's Board of Directors and KAYAK's Reasons for the Merger

    107  

Opinion of KAYAK's Financial Advisor

    109  

Certain Forecasts

    117  

Interests of Certain Persons in the Merger

    120  

Regulatory Matters

    124  

Federal Securities Laws Consequences

    125  

NASDAQ Market Listing

    125  

Litigation Related to the Merger

    125  

Appraisal Rights

    126  

Material United States Federal Income Tax Consequences

    126  

Accounting Treatment of the Merger

    129  

THE MERGER AGREEMENT

    130  

APPRAISAL RIGHTS OF KAYAK STOCKHOLDERS

    154  

COMPARISON OF RIGHTS OF PRICELINE.COM STOCKHOLDERS AND KAYAK STOCKHOLDERS

    159  

VALIDITY OF COMMON STOCK

    166  

VOTE ON ADJOURNMENT PROPOSAL

    166  

STOCKHOLDERS SHARING THE SAME ADDRESS

    166  

EXPERTS

    166  

LEGAL MATTERS

    167  

FUTURE STOCKHOLDER PROPOSALS

    168  

WHERE YOU CAN FIND MORE INFORMATION

    169  

INDEX TO FINANCIAL STATEMENTS OF KAYAK SOFTWARE CORPORATION

    F-1  

INDEX TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

    F-68  

ANNEX A AGREEMENT AND PLAN OF MERGER

       

ANNEX B OPINION OF HOULIHAN LOKEY FINANCIAL ADVISORS, INC.

       

ANNEX C SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

       

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

    II-1  

SIGNATURES AND POWER OF ATTORNEY

       

EXHIBIT INDEX

       

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MATTERS TO BE ADDRESSED AT THE SPECIAL MEETING

        The following questions and answers are intended to address briefly some commonly asked questions regarding the merger and the matters to be addressed at the special meeting. These questions and answers may not address all questions that may be important to you as a stockholder. To better understand these matters, and for a description of the legal terms governing the merger, you should carefully read this entire proxy statement/prospectus, including the attached appendices, as well as the documents that have been incorporated by reference in this proxy statement/prospectus. See "Where You Can Find More Information" beginning on page 169.

        All references in this proxy statement/prospectus to "priceline.com" refer to priceline.com Incorporated, a Delaware corporation; all references in this proxy statement/prospectus to "KAYAK" refer to KAYAK Software Corporation, a Delaware corporation; unless otherwise indicated or as the context requires, all references in this proxy statement/prospectus to "we" refer to priceline.com and KAYAK collectively; all references in this proxy statement/prospectus to "Merger Sub" refer to Produce Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of priceline.com; and all references to the "merger agreement" refer to the Agreement and Plan of Merger, dated as of November 8, 2012, as it may be amended from time to time, by and among KAYAK, priceline.com and Merger Sub, a copy of which is attached as Annex A to this proxy statement/prospectus.

Q:
WHY AM I RECEIVING THIS PROXY STATEMENT/PROSPECTUS?

A:
Priceline.com has agreed to acquire KAYAK under the terms of the merger agreement that is described in this proxy statement/prospectus. As a result, assuming the conditions to closing under the merger agreement are satisfied or waived, KAYAK will be merged with and into Merger Sub, a wholly owned subsidiary of priceline.com, with Merger Sub continuing as the surviving corporation and a wholly owned subsidiary of priceline.com. Merger Sub will be renamed "KAYAK Software Corporation" upon completion of the merger.

    KAYAK is holding a special meeting of stockholders, which we refer to as the special meeting, in order to obtain the stockholder approval necessary to adopt the merger agreement. KAYAK stockholders also will be asked to approve the adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

    Priceline.com and KAYAK will be unable to complete the merger unless the KAYAK stockholder approval is obtained at the special meeting and the other conditions to completion of the merger set forth in the merger agreement are satisfied or waived.

    We have included in this proxy statement/prospectus important information about the merger, the merger agreement (a copy of which is attached as Annex A), and the special meeting. You should read this information carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending the special meeting in person.

Q:
WHAT DOES THE KAYAK BOARD RECOMMEND WITH RESPECT TO ADOPTION OF THE MERGER AGREEMENT AND THE ADJOURNMENT PROPOSAL?

A:
The board of directors of KAYAK, which we refer to as the KAYAK board, has unanimously approved and declared advisable the merger agreement and the merger on the terms and conditions set forth in the merger agreement and determined that the terms of the merger agreement and the merger are fair to, and in the best interests of, KAYAK and its stockholders, and unanimously recommends that KAYAK stockholders vote FOR the proposal to adopt the merger agreement. The KAYAK board also unanimously recommends that KAYAK stockholders

1


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    vote FOR the proposal to approve the adjournment of the special meeting. See "The Merger—Recommendation of KAYAK's Board of Directors and KAYAK's Reasons for the Merger" beginning on page 107.

Q:
WHAT WILL KAYAK STOCKHOLDERS RECEIVE IN THE MERGER?

A:
You may elect to receive the merger consideration as either cash or shares of priceline.com common stock (or a combination of both cash and stock), in each case subject to the pro ration mechanism provided in the merger agreement, by indicating your preference on the cash/stock election form, which we refer to as the election form. This proxy statement/prospectus sets out in more detail what amount of cash or priceline.com common stock each KAYAK stockholder is entitled to receive, as well as details of the pro ration and other mechanisms that may apply in respect of your merger consideration.

    You should follow the instructions included on the election form for completing the election form and delivering it to the exchange agent. In order to make a valid election, a KAYAK stockholder must submit a properly completed election form to the exchange agent by 5:00 pm, Eastern Standard Time, on February 26, 2013, which is the date that is 5 business days preceding the business day following the date of the special meeting (which we assume for this purpose will be the closing date of the merger). We refer to this date as the election deadline. In the event that closing does not take place on the date following the special meeting, the election deadline will be the date that is 5 business days preceding the date on which closing occurs.

    Upon completion of the merger, each issued and outstanding share of KAYAK Class A common stock, par value $0.001 per share, which we refer to as KAYAK Class A common stock, and KAYAK Class B common stock, par value $0.001 per share, which we refer to as KAYAK Class B common stock, and which we refer to collectively as KAYAK common stock, other than shares owned by priceline.com, KAYAK, or any of their subsidiaries, or by stockholders that have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the Delaware General Corporation Law, which we refer to as the DGCL, will be converted into the right to receive, at the election of the stockholder, either $40.00 in cash, which we refer to as the cash consideration, or a fraction of a share of priceline.com common stock, which we refer to as the stock consideration, in each case subject to the pro ration mechanism provided in the merger agreement and described below. We refer to shares as to which appraisal rights have been perfected and not withdrawn as dissenter shares. Shares of KAYAK common stock as to which the holder elects to receive cash consideration are referred to as cash election shares, shares of KAYAK common stock as to which the holder elects to receive stock consideration are referred to as stock election shares and shares of KAYAK common stock as to which no election has been made, other than dissenter shares, are referred to as no election shares.

    The number of shares of KAYAK common stock that will be converted into the right to receive the cash consideration, which we refer to as the total cash number, will equal 33% of the number of shares of KAYAK common stock outstanding on October 31, 2012 plus 33% of the number of shares of KAYAK common stock issued thereafter pursuant to KAYAK stock options, which we refer to as an option, and KAYAK restricted stock units, which we refer to as an RSU, outstanding on such date, minus the number of dissenter shares, and the remainder of the shares of KAYAK common stock (other than dissenter shares) will be converted into the right to receive the stock consideration. In the event that the number of cash election shares exceeds the total cash number, then a portion of the cash election shares equal to such excess will be converted into the right to receive stock consideration rather than cash consideration, with such adjustment being made on a pro-rata basis among the cash election shares. In the event that the number of cash election shares is less than the total cash number, then such cash election share shortfall amount will be made up by first converting no election shares into the right to receive cash consideration (on a pro-rata

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    basis among such shares, in the event less than all such shares are so converted), and then any remaining cash election share shortfall will be made up by converting a portion of the stock election shares into the right to receive cash consideration rather than stock cash consideration, with such adjustment being made on a pro-rata basis among the stock election shares. As a result, KAYAK stockholders may receive a different combination of merger consideration than elected, depending on the elections made by other KAYAK stockholders.

    KAYAK stockholders who receive the merger consideration as stock will receive for each share of KAYAK common stock a fraction of a share of priceline.com common stock determined by dividing $40.00 by the aggregate volume weighted average price per share of priceline.com common stock for the 30 day trading period ending on the second full trading day prior to the effective date, which we refer to as the priceline.com average trading price, provided that the priceline.com average trading price is between (or including) $571.35 and $698.32 per share. If the priceline.com average trading price is below $571.35 then the exchange ratio will be fixed at 0.07001 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. If the priceline.com average trading price is above $698.32 then the exchange ratio will be fixed at 0.05728 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. Accordingly, the actual number of shares and the value of the priceline.com common stock delivered to KAYAK stockholders who receive stock consideration will depend on the priceline.com average trading price, and the value of the portion of a share of priceline.com common stock delivered for each such share of KAYAK common stock may be greater than or less than $40.00.

    For example, if the priceline.com average trading price is $672.72 (which was the closing price per share of priceline.com common stock on NASDAQ on January 18, 2013), the exchange ratio will be 0.05946 shares of priceline.com common stock to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock. Accordingly, a holder of 100 shares of KAYAK common stock who elects the stock consideration would be entitled to receive 5 shares of priceline.com common stock and cash consideration in lieu of a fraction of a share of priceline.com stock of $636.39. Because, in this example, the priceline.com average trading price is between $571.35 and $698.32, the value of the stock consideration to be delivered to the KAYAK stockholder would be $40.00 (assuming the closing price per share of priceline.com common stock on the effective date of the merger also is $672.72), which is equal to the cash consideration. As noted above, if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both below $571.35, then the value of the stock consideration to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock will be less than $40.00, and if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both above $698.32, the value of such stock consideration will be greater than $40.00.

Q:
WILL KAYAK STOCKHOLDERS RECEIVE THE TYPE OF MERGER CONSIDERATION THAT THEY HAVE ELECTED?

A:
Not necessarily. You may not receive all of your merger consideration in the form that you elect. KAYAK stockholders will not know at the time of making such election or casting their vote in respect of adoption of the merger agreement the blend of merger consideration they will ultimately receive in exchange for their shares of KAYAK common stock. The merger agreement provides that, overall, the total cash number of shares of KAYAK common stock will receive cash and the remaining shares of KAYAK common stock will receive priceline.com common stock in the merger. The actual allocation of the cash and stock components of the merger consideration to any particular KAYAK stockholder will depend on the elections made by all KAYAK stockholders. As

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    a result, if the election to receive cash consideration is either oversubscribed or undersubscribed there is a chance that you will receive a different blend of merger consideration than you elected. For example, if the election to receive cash consideration is oversubscribed, each KAYAK stockholder who elected to receive cash will receive cash in exchange for a portion of those shares and stock consideration for the remaining portion of shares, according to a pro ration formula. On the other hand, if the election to receive cash is undersubscribed, stockholders who elected to receive stock may receive cash in exchange for a portion of their shares, depending on the number of stockholders who expressed no preference regarding the form of consideration (because those stockholders who made no election would be the first to make up the shortfall, on a pro-rata basis).

Q:
WHAT HAPPENS IF I AM ELIGIBLE TO RECEIVE A FRACTION OF A SHARE OF PRICELINE.COM COMMON STOCK AS PART OF MY MERGER CONSIDERATION?

A:
If you are to receive all or a portion of your merger consideration for your shares of KAYAK common stock in the form of priceline.com common stock (subject to the pro ration mechanism) and the aggregate number of shares of priceline.com common stock you are eligible to receive as merger consideration includes a fraction of a share of priceline.com common stock, you will receive cash in lieu of that fractional share.

Q:
WHAT IF I DO NOT MAKE AN ELECTION IN RESPECT OF THE MERGER CONSIDERATION?

A:
If you make no election in respect of the type of merger consideration you wish to receive in exchange for your shares of KAYAK common stock, you may receive the merger consideration as either cash, stock or a combination of both cash and stock, depending on the relative number of shares of KAYAK common stock in respect of which elections have been received for each of the cash consideration and stock consideration. If the cash consideration has been oversubscribed then you will receive priceline.com common stock. If the cash consideration has been undersubscribed then you will receive either all cash, or a combination of cash and priceline.com common stock depending on the number of shares of KAYAK common stock for which no election has been received and the extent to which the cash consideration is undersubscribed.

Q:
WHAT WILL HOLDERS OF KAYAK STOCK OPTIONS RECEIVE IN THE MERGER?

A.
Each outstanding and unexercised option to purchase a share of KAYAK common stock, whether vested or unvested, will cease to represent an option to purchase a share of KAYAK common stock and will be automatically converted into (1) an option to purchase shares of priceline.com common stock and (2) a cash amount. The number of shares subject to each option to purchase shares of priceline.com common stock and the exercise price per share will be determined using a conversion ratio equal to the exchange ratio, or if the exchange ratio is fixed at 0.05728 or 0.07001, a ratio adjusted by reference to the fixed exchange ratio and the priceline.com average trading price, as further described herein. The cash amount will equal the fraction of a whole share of priceline.com common stock that would have resulted from the option conversion, but for rounding, multiplied by the priceline.com average trading price. Holders of options should be aware that any applicable taxes may be withheld with respect to the cash payment.

    For a more detailed description of the treatment of KAYAK options in the merger, see "The Merger Agreement—Treatment of KAYAK Stock Options and Restricted Stock Units in the Merger" beginning on page 133.

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Q:
HOW WILL KAYAK RESTRICTED STOCK UNITS BE TREATED IN THE MERGER?

A:
Any vesting conditions applicable to each outstanding KAYAK RSU will accelerate in full and each RSU will be cancelled. The holders of each RSU will only be entitled to receive a cash amount equal to the cash consideration, or if the exchange ratio is fixed at 0.05728 or 0.07001, an amount adjusted by reference to the fixed exchange ratio and the priceline.com average trading price, as further described herein. Holders of RSUs should be aware that any applicable taxes may be withheld with respect to the cash payment.

    For a more detailed description of the treatment of KAYAK RSUs in the merger, see "The Merger Agreement—Treatment of KAYAK Stock Options and Restricted Stock Units in the Merger" beginning on page 133.

Q:
WHAT WILL HAPPEN TO KAYAK AS A RESULT OF THE MERGER?

A:
If the merger is completed, KAYAK will be merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation and a wholly owned subsidiary of priceline.com. Merger Sub will be renamed "KAYAK Software Corporation" upon completion of the merger.

Q:
WHAT EQUITY STAKE WILL KAYAK STOCKHOLDERS HOLD IN PRICELINE.COM IMMEDIATELY FOLLOWING THE MERGER?

A:
Based on the number of shares of priceline.com common stock and KAYAK common stock as of January 18, 2013, holders of shares of KAYAK common stock as of immediately prior to the closing of the merger will hold less than 4% in the aggregate, of the issued and outstanding shares of priceline.com common stock immediately following the closing of the merger, in each case as determined on a fully-diluted basis. The exact number of shares of priceline.com common stock that will be issued in the merger will not be determined until the exchange ratio is set in connection with the closing of the merger.

Q:
WHAT CONDITIONS MUST BE SATISFIED TO COMPLETE THE MERGER?

A:
Neither priceline.com nor KAYAK is required to consummate the merger unless a number of conditions to closing of the merger as set out in the merger agreement are either satisfied or waived, including KAYAK stockholder approval of the adoption of the merger agreement, the expiration or termination of the waiting period applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, the expiration or termination under or the receipt of other competition law approvals outside the Unites States, the absence of any law or order that would prohibit, restrain or make illegal the merger, the approval of priceline.com common stock for listing on NASDAQ and the declaration by the SEC of the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part.

    The closing of the merger also is dependent on the accuracy of representations and warranties made by the parties to the merger agreement, as of the date of the merger agreement and as of the effective date of the closing of the merger (subject to customary materiality qualifiers and other customary exceptions), the performance in all material respects by KAYAK, priceline.com and Merger Sub of their respective obligations imposed under the merger agreement and the receipt of certificates of the other party attesting to the satisfaction of these conditions and the receipt by each of priceline.com and KAYAK of a tax opinion from its respective tax counsel that the merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, for United States federal income tax purposes, and that KAYAK, priceline.com and Merger Sub will be a party to that reorganization within the meaning of Section 368(b) of the Code for such purposes.

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    For a more complete summary of the conditions that must be satisfied or waived prior to consummation of the merger, see "The Merger Agreement—Conditions to Completion of the Merger" beginning on page 149.

Q:
IS PRICELINE.COM'S OBLIGATION TO COMPLETE THE MERGER SUBJECT TO PRICELINE.COM RECEIVING FINANCING?

A:
No. Priceline.com's obligations under the merger agreement are not subject to any condition regarding its ability to finance, or obtain financing for, the transactions contemplated by the merger agreement.

Q:
WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A:
Priceline.com and KAYAK are working to complete the merger as quickly as possible, and we anticipate that the merger will be completed by the end of the first quarter of 2013. However, the merger is subject to various regulatory approvals and other conditions which are described in more detail in this proxy statement/prospectus, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. See "The Merger Agreement—Conditions to Completion of the Merger" beginning on page 149.

Q:
WHAT HAPPENS IF THE MERGER IS NOT COMPLETED?

A:
If the merger is not completed, KAYAK stockholders will not receive any consideration for their shares of KAYAK common stock in connection with the merger. Instead, KAYAK will remain an independent public company, and the KAYAK Class A common stock will continue to be listed and traded on NASDAQ. Under specified circumstances, KAYAK may be required to pay a fee of $52,700,000 to priceline.com in connection with the termination of the merger agreement. Under other circumstances, priceline.com may be required to reimburse KAYAK for all or a portion of the expenses it incurred in connection with or related to negotiation of the merger agreement. For further discussion of the termination rights and these fees and expense reimbursement provisions, see "The Merger Agreement—Termination of the Merger Agreement," beginning on page 151.

Q:
WHAT ARE THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO KAYAK STOCKHOLDERS?

A:
The closing of the merger is conditioned upon the receipt by each of priceline.com and KAYAK of an opinion from its respective tax counsel that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code for United States federal income tax purposes and that KAYAK, priceline.com and Merger Sub will each be a party to that reorganization within the meaning of Section 368(b) of the Code for such purposes. As a result of the merger, subject to the limitations and qualifications described in "The Merger—Material United States Federal Income Tax Consequences," KAYAK stockholders whose shares of KAYAK common stock are exchanged in the merger solely for shares of priceline.com common stock will not recognize gain or loss for United States federal income tax purposes on the exchange (except to the extent they receive cash in lieu of a fractional share of priceline.com common stock), KAYAK stockholders whose shares of KAYAK common stock are exchanged in the merger for shares of priceline.com common stock and cash will recognize capital gain (but not loss) realized on the exchange in an amount not exceeding the amount of cash received (excluding cash received in lieu of a fractional share of priceline.com common stock), and KAYAK stockholders whose shares of KAYAK common stock are exchanged in the merger solely for cash will recognize capital gain or loss realized on the exchange. This tax treatment may not apply to certain KAYAK stockholders, as described in "The Merger—Material United States Federal Income Tax Consequences."

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    For a more detailed discussion of the material United States federal income tax consequences of the transaction, see "The Merger—Material United States Federal Income Tax Consequences" beginning on page 126.

    The tax consequences of the merger for any particular KAYAK stockholder will depend on that stockholder's particular facts and circumstances. Accordingly, KAYAK stockholders are urged to consult their tax advisors to determine the tax consequences of the merger to them, including estate, gift, state, local or non-United States tax consequences of the merger.

Q:
ARE KAYAK STOCKHOLDERS ENTITLED TO APPRAISAL RIGHTS?

A:
Yes. Under Section 262 of the DGCL, record holders of KAYAK common stock who do not vote in favor of the proposal to adopt the merger agreement will be entitled to seek appraisal rights in connection with the merger, and if the merger is completed, obtain payment in cash equal to the fair value of their shares of KAYAK common stock as determined by the Court of Chancery of the State of Delaware, instead of the merger consideration. To exercise their appraisal rights, KAYAK stockholders must strictly follow the procedures prescribed by Section 262 of the DGCL. These procedures are summarized in this proxy statement/prospectus in the section entitled "Appraisal Rights of KAYAK Stockholders" beginning on page 154. In addition, the text of Section 262 of the DGCL is reproduced in its entirety as Annex C to this document. Failure to strictly comply with these provisions will result in the loss of appraisal rights.

Q:
WHAT DO I NEED TO DO NOW?

A:
Whether or not you plan to attend the special meeting, please cast your vote by indicating on the enclosed proxy card how you wish to vote or follow the instructions on the proxy card to vote by telephone or internet, and fill out your election form, in each case according to their instructions. Please sign and mail the proxy card (if you do not plan to vote by telephone or internet) in the enclosed pre-addressed postage-paid envelope as soon as possible so that your shares may be represented at the special meeting. Please also sign and mail the election form in the pre-addressed postage-paid envelope that you will also receive in the mail so that we may know the type of merger consideration you wish to receive. If your proxy is properly given and not revoked without indicating how you wish to vote, your proxy will be counted as a vote in favor of the merger. If you do not vote on the merger or if you abstain, the effect will be a vote against the adoption of the merger agreement.

    Your vote is very important and we encourage you to vote your proxy promptly.

    This will help to ensure that a quorum is present at the special meeting and will help reduce the costs associated with the solicitation of proxies.

Q:
WHEN AND WHERE WILL KAYAK STOCKHOLDERS MEET?

A:
KAYAK will hold a special meeting of its stockholders on March 4, 2013, at 10:00 a.m., Eastern Standard Time, at the offices of Bingham McCutchen LLP, located in Boston, Massachusetts.

    For more details of the special meeting of stockholders see "Information about the Special Meeting of KAYAK Stockholders" beginning on page 89.

Q:
WHO CAN VOTE AT THE SPECIAL MEETING?

A:
Holders of record of KAYAK Class A common stock and KAYAK Class B common stock on the record date are entitled to vote at the special meeting. The record date is January 24, 2013.

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Q:
HOW MANY VOTES DO I HAVE?

A:
Each holder of KAYAK Class A common stock is entitled to one vote for each share of KAYAK Class A common stock held of record as of the record date. Each holder of KAYAK Class B common stock is entitled to ten votes for each share of KAYAK Class B common stock held of record as of the record date.

    As of the close of business on the record date, there were 8,063,665 shares of KAYAK Class A common stock issued and outstanding and 30,634,733 shares of KAYAK Class B common stock issued and outstanding.

Q:
HOW MANY VOTES MUST BE REPRESENTED IN PERSON OR BY PROXY AT THE SPECIAL MEETING TO HAVE A QUORUM?

A:
The holders of a majority of the outstanding voting power of the shares of KAYAK common stock outstanding and entitled to vote at the special meeting, present in person or represented by proxy, will constitute a quorum.

Q:
WHAT VOTE BY KAYAK STOCKHOLDERS IS REQUIRED TO APPROVE THE SPECIAL MEETING PROPOSALS?

A:
Assuming a quorum is present at the special meeting, approval of the adoption of the merger agreement will require the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of KAYAK common stock entitled to vote at the special meeting, with holders of shares of KAYAK Class A common stock and KAYAK Class B common stock voting together as a single class. Accordingly, the failure by a KAYAK stockholder to submit a proxy or to vote in person at the special meeting, an abstention from voting, or the failure of a KAYAK stockholder who holds his or her shares in "street name" through a broker or other nominee to give voting instructions to such broker or other nominee, which we refer to as a broker non-vote, will have the same effect as a vote AGAINST the adoption of the merger agreement.

    Approval of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies will require the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of KAYAK common stock present in person or represented by proxy at the special meeting and entitled to vote at the special meeting. Accordingly, if you fail to submit a proxy or vote in person at the special meeting, abstain, or there are broker non-votes on the issue, as applicable, the shares of KAYAK common stock not voted will not be counted in respect of, and will have no effect on, the proposal to adjourn the special meeting.

    As of the record date, directors and executive officers of KAYAK, together with their affiliates, had sole or shared voting power over approximately 82.6% of the voting power of the outstanding shares of KAYAK common stock entitled to vote at the special meeting.

Q:
HOW MAY KAYAK STOCKHOLDERS VOTE THEIR SHARES AT THE SPECIAL MEETING?

A:
KAYAK stockholders may vote by (i) using the internet at the address shown on their respective proxy card, (ii) telephone using the number on such proxy card, (iii) completing, signing, dating and returning such proxy card in the enclosed prepaid return envelope or (iv) attending the special meeting and voting in person. We encourage you to submit your proxy as soon as possible to ensure that your shares will be represented and voted at the special meeting.

    Submitting a proxy will not affect the right of any KAYAK stockholder to vote in person.

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Q:
IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER AUTOMATICALLY VOTE MY SHARES FOR ME?

A:
No. If your shares are held in the name of a broker, bank or other nominee, you are considered the "beneficial holder" of the shares held for you in what is known as "street name." You are not the holder of record of such shares. If this is the case, this proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial holder, unless your broker, bank or other nominee has discretionary authority over your shares, you generally have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which your broker, bank or other nominee does not have discretionary authority. This is often called a "broker non-vote." In connection with the special meeting, broker non-votes will have the same effect as a vote AGAINST the proposal to adopt the merger agreement. You should therefore provide your broker, bank or other nominee with instructions as to how to vote your shares of KAYAK common stock.

    Please follow the voting instructions provided by your broker, bank or other nominee so that it may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to KAYAK or by voting in person at the special meeting unless you first obtain a proxy from your broker, bank or other nominee.

Q:
CAN I CHANGE MY VOTE ONCE I HAVE VOTED MY PROXY?

A:
Yes. If you do vote your proxy, you can take it back at any time until the stockholders vote at the special meeting and you can either change your vote or attend the special meeting and vote in person.

    You may change your vote in any of the following ways:

    by sending written notice to KAYAK's secretary at KAYAK Software Corporation, 55 North Water Street, Suite 1, Norwalk, CT 06854 prior to the special meeting stating that you would like to revoke your proxy;

    by completing, signing and dating another proxy card bearing a later date and returning it pursuant to the instructions on your proxy card;

    by casting your proxy by telephone or internet at any time after you have voted your proxy; or

    by attending the special meeting and voting in person.

Q:
SHOULD KAYAK STOCKHOLDERS SEND IN THEIR STOCK CERTIFICATES NOW?

A:
No. Do not send in your stock certificate(s) representing shares of KAYAK common stock if you hold your shares of KAYAK common stock in certificated form. If the merger is approved and you hold your shares of KAYAK common stock in certificated form, you will be sent a letter of transmittal that will include instructions for sending in your stock certificates at a later date.

Q:
ARE THERE ANY RISKS THAT I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR APPROVAL OF THE MERGER?

A:
Yes. You should read and carefully consider the risk factors set forth in the section of this proxy statement/prospectus entitled "Risk Factors" beginning on page 31. You also should read and carefully consider the risk factors of priceline.com which are incorporated by reference into this proxy statement/prospectus. See "Information about priceline.com—Risks Relating to priceline.com's Business" beginning on page 95 and "Where You Can Find More Information"

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    beginning on page 169 and the risk factors of KAYAK set forth in the section entitled "Information about KAYAK—Risks Relating to KAYAK's Business" beginning on page 48.

Q:
IS CONSUMMATION OF THE MERGER CONTINGENT UPON APPROVAL BY THE HOLDERS OF PRICELINE.COM STOCK?

A:
No. A vote of holders of priceline.com's capital stock is not required to approve the merger.

Q:
WHAT SHOULD A KAYAK STOCKHOLDER DO IF HE OR SHE RECEIVES MORE THAN ONE SET OF VOTING MATERIALS?

A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold those shares. If you are a holder of record of KAYAK common stock and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive (or cast your vote by telephone or internet as provided on your proxy card or voting instruction card) or otherwise follow the voting instructions set forth in this proxy statement/prospectus in the section entitled "Information about the Special Meeting of KAYAK Stockholders" beginning on page 89.

Q:
WHAT HAPPENS IF I SELL MY SHARES OF KAYAK COMMON STOCK BEFORE THE SPECIAL MEETING?

A:
The record date is earlier than both the date of the special meeting and the effective date of the merger. If you transfer your shares of KAYAK common stock after the record date but before the special meeting, you will, unless the transferee requests a proxy, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration, KAYAK stockholders must hold their shares through the effective date of the merger.

Q:
IF THE MERGER IS COMPLETED, WHEN CAN I EXPECT TO RECEIVE THE MERGER CONSIDERATION FOR MY SHARES OF KAYAK COMMON STOCK?

A:
When you can expect to receive the merger consideration for your shares of KAYAK common stock will depend on whether your shares are certificated shares or book-entry shares.

    Book-Entry Shares:    Each holder of record of one or more book-entry shares of KAYAK common stock whose shares will be converted into the right to receive the merger consideration will automatically, upon the effective date of the merger, be entitled to receive, and priceline.com will cause the exchange agent to deliver to such holder as promptly as practicable after the effective date of the merger, the merger consideration to which such holder is entitled under the merger agreement. Holders of book-entry shares will not be required to deliver a certificate or an executed letter of transmittal to the exchange agent in order to receive the merger consideration. See "The Merger Agreement—Exchange and Payment Procedures" beginning on page 134.

    Certificated Shares:    As soon as reasonably practicable after the effective date of the merger, priceline.com will cause the exchange agent to mail to each holder of certificated shares of KAYAK common stock a letter of transmittal and instructions for use in effecting the exchange of KAYAK common stock for the merger consideration. After receiving the proper documentation (including the stock certificates) from a holder of KAYAK common stock, the exchange agent will deliver to such holder the merger consideration to which such holder is entitled under the merger agreement. More information on the documentation that a holder of KAYAK common stock is

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    required to deliver to the exchange agent may be found under the section entitled "The Merger Agreement—Exchange and Payment Procedures" beginning on page 134.

Q:
IF I AM A KAYAK STOCKHOLDER, WHO CAN HELP ANSWER MY QUESTIONS?

A:
If you have any questions about the merger or the special meeting, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact Investor Relations, KAYAK Software Corporation, 55 North Water Street, Suite 1, Norwalk, CT 06854, telephone: (203) 899-3100.

    If you have any questions about the election form, or if you need additional copies of the election form, you should contact KAYAK's information agent, Georgeson, 199 Water Street, 26th Floor, New York, NY 10038, telephone: (888) 293-6908 (Toll Free) and for banks and brokerage firms, telephone: (212) 440-9800.

Q:
WHERE CAN I FIND MORE INFORMATION ABOUT PRICELINE.COM AND KAYAK?

A:
You can find more information about priceline.com and KAYAK from the various sources described under the section "Where You Can Find More Information" beginning on page 169.

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SUMMARY

        This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. To understand the merger fully, you should read carefully this entire proxy statement/prospectus and the documents we refer to. See "Where You Can Find More Information" beginning on page 169. The merger agreement is attached as Annex A to this proxy statement/prospectus and is incorporated herein by reference. We encourage you to read it, as it is the most important legal document that governs the merger. We have included page references in parentheses to direct you to a more complete description contained elsewhere in this proxy statement/prospectus of the topics presented in this summary. In this proxy statement/prospectus, unless stated to the contrary or the context requires otherwise, the terms "we," "our," "ours" and "us" refer to both priceline.com and KAYAK.

The Companies
(Pages 39 and 94)

priceline.com Incorporated
800 Connecticut Avenue
Norwalk, CT 06854
(203) 299-8000

        Priceline.com is a leading online travel company that offers its customers hotel room reservations at over 270,000 hotels and accommodations worldwide through the Booking.com, priceline.com and Agoda.com brands. In the United States, priceline.com also offers its customers reservations for car rentals, airline tickets, vacation packages, destination services and cruises through the priceline.com brand. Priceline.com offers car rental reservations worldwide through rentalcars.com (formerly known as TravelJigsaw).

        Priceline.com was formed as a Delaware limited liability company in 1997 and was converted into a Delaware corporation in July 1998. Its principal executive offices are located at 800 Connecticut Avenue, Norwalk, Connecticut 06854.

        Priceline.com launched its business in the United States in 1998 under the priceline.com brand and has since expanded its operations to include the Booking.com, Agoda.com and rentalcars.com companies. Priceline.com's principal goal is to serve its customers with worldwide leadership in online hotel and rental car reservations. Its business is driven primarily by international results. Priceline.com's international business is primarily comprised of hotel reservation services and gross profit earned in connection with the reservation of hotel room nights represents a substantial majority of its gross profit.

        At present, priceline.com derives substantially all of its gross profit from a number of sources, including commissions earned from facilitating reservations of price-disclosed hotel room reservations, rental cars, cruises and other travel services; transaction gross profit and customer processing fees from its price-disclosed merchant hotel room and rental car reservation services, as well as its vacation package service; transaction gross profit and customer processing fees from its Name Your Own Price® hotel room reservation, rental car and airline ticket services; global distribution system, which we refer to as GDS, reservation booking fees related to both its Name Your Own Price® airline ticket, hotel room reservation and rental car services, and price-disclosed airline tickets and rental car services; and selling advertising on its websites.

        Priceline.com's corporate website address is www.priceline.com. Priceline.com does not incorporate the information contained on, or accessible through, priceline.com's corporate website into this proxy statement/prospectus, and you should not consider it part of this proxy statement/prospectus.

 

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KAYAK Software Corporation
55 North Water Street, Suite 1
Norwalk, CT 06854
(203) 899-3100

        KAYAK was originally incorporated in Delaware in 2004 under the name Travel Search Company, Inc., and changed its name to Kayak Software Corporation in August 2004 and to KAYAK Software Corporation in December 2011.

        On July 25, 2012, KAYAK completed its initial public offering, which we refer to as its IPO, in which KAYAK issued and sold 4,025,000 shares of Class A common stock at an offering price of $26.00 per share. KAYAK received net proceeds of $94,234,000 after deducting underwriting discounts and commissions and issuance costs of approximately $4,091,000. In connection with its IPO, KAYAK also entered into private placement transactions with existing stockholders pursuant to which it issued and sold 231,695 shares of its Class A common stock at a price of $26.00 per share and issued 308,032 shares of its Class A common stock for no consideration.

        KAYAK is a technology-driven company committed to improving online travel. Cofounders of Expedia, Travelocity and Orbitz started KAYAK in 2004 to take a better approach to finding travel online. KAYAK's websites and mobile applications enable people to easily research and compare accurate and relevant information from hundreds of other travel websites in one comprehensive, fast and intuitive display. KAYAK also provides multiple filtering and sorting options, travel management tools and services such as flight status updates, pricing alerts and itinerary management. Once users find their desired flight, hotel or other travel products, KAYAK sends them to their preferred travel supplier or online travel agency, which we refer to as OTA, website to complete their purchase, and in many cases, users may now complete bookings directly through KAYAK's websites and mobile applications.

        KAYAK's services are free for travelers. KAYAK offers travel suppliers and OTAs an efficient channel to sell their products and services to a highly targeted audience focused on purchasing travel. KAYAK earns revenues by sending referrals to travel suppliers and OTAs and from a variety of advertising placements on its websites and mobile applications.

        As of January 18, 2013, KAYAK had 203 employees, and it had local websites in 18 countries including the United States, Germany, Spain, the United Kingdom, Austria, France and Italy.

        KAYAK's corporate website address is www.KAYAK.com. KAYAK does not incorporate the information contained on, or accessible through, KAYAK's corporate website into this proxy statement/prospectus, and you should not consider it part of this proxy statement/prospectus.

Produce Merger Sub, Inc.
c/o The Corporation Service Company
2711 Centerville Road, Suite 400, Wilmington, DE 19808
(302) 636-5400

        Produce Merger Sub, Inc. is a newly-formed, wholly owned subsidiary of priceline.com. Priceline.com formed this subsidiary as a Delaware corporation solely to effect the merger, and this subsidiary has not conducted any business during any period of its existence.

Risk Factors and Cautionary Statement Concerning Forward-Looking Statements
(Pages 31 and 38)

        Both companies have made forward-looking statements in this proxy statement/prospectus and priceline.com has made forward-looking statements in the documents that are incorporated by reference. Forward-looking statements are subject to risks and uncertainties, which risks and uncertainties are described in priceline.com's filings under the Exchange Act that are incorporated by

 

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reference into this proxy statement/prospectus. See "Where You Can Find More Information" on page 169. Forward-looking statements include information concerning possible or assumed future results of operations of priceline.com, KAYAK or the combined company. When words such as "expects," "anticipates," "intends," "plans" and similar expressions are used, we are making forward-looking statements.

        If you are a KAYAK stockholder, you should note that an investment in priceline.com common stock involves risks and uncertainties, which risks and uncertainties are described in priceline.com's filings under the Exchange Act that are incorporated by reference into this proxy statement/prospectus. See "Where You Can Find More Information" beginning on page 169. You should consider these risk factors in evaluating how to vote your shares of KAYAK common stock at the special meeting.

Special Meeting; Stockholders Entitled to Vote at the Special Meeting; Required Vote
(Page 89)

        The special meeting will be held on March 4, 2013 at the offices of Bingham McCutchen LLP, 13th Floor, One Federal Street, Boston, Massachusetts 02110, commencing at 10:00 a.m., Eastern Standard Time. For more details on the special meeting, see "Information about the Special Meeting of KAYAK Stockholders" beginning on page 89.

        The close of business on January 24, 2013 has been set as the record date for the special meeting. Only KAYAK stockholders on the record date are entitled to notice of and to vote at the special meeting. Each share of KAYAK Class A common stock will be entitled to one vote on each matter to be acted upon at the special meeting. Each share of KAYAK Class B common stock will be entitled to ten votes on each matter to be acted upon at the special meeting. We refer to KAYAK Class A common stock and KAYAK Class B common stock collectively as KAYAK common stock.

        The affirmative vote of holders of a majority of the outstanding voting power of KAYAK common stock entitled to vote at the special meeting, voting together as a single class, is required to adopt the merger agreement.

        The affirmative vote of holders of a majority of the outstanding voting power of KAYAK common stock present in person or represented by proxy at the special meeting and entitled to vote is required to approve the adjournment proposal.

The Merger
(Page 96)

        In the merger, KAYAK will be merged with and into Merger Sub. Merger Sub will continue as the surviving corporation and a wholly owned subsidiary of priceline.com. Merger Sub will be renamed "KAYAK Software Corporation" upon completion of the merger.

Merger Consideration
(Page 96)

        If the merger agreement is adopted and the merger is completed, each share of KAYAK Class A common stock and each share of KAYAK Class B common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive, at the election of the stockholder, $40.00 in cash or a fraction of a share of priceline.com common stock as determined by the exchange ratio pursuant to the merger agreement, subject to pro ration, as described in this proxy statement/prospectus.

        The exchange ratio will be determined by dividing $40.00 by the aggregate volume weighted average price per share of priceline.com common stock on NASDAQ for the 30 consecutive trading days ending on the second full trading day prior to the closing date of the merger, which we refer to as the priceline.com average trading price, provided that the priceline.com average trading price is

 

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between (or including) $571.35 and $698.32 per share. If the priceline.com average trading price is below $571.35 then the exchange ratio will be fixed at 0.07001 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. If the priceline.com average trading price is above $698.32 then the exchange ratio will be fixed at 0.05728 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. Accordingly, the actual number of shares and the value of the priceline.com common stock delivered to KAYAK stockholders who receive stock consideration will depend on the average priceline.com trading price, and the value of the portion of a share of priceline.com common stock delivered for each such share of KAYAK common stock may be greater than or less than $40.00.

        For example, if the priceline.com average trading price is $672.72 (which was the closing price per share of priceline.com common stock on NASDAQ on January 18, 2013), the exchange ratio will be 0.05946 shares of priceline.com common stock to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock. Accordingly, a holder of 100 shares of KAYAK common stock who elects the stock consideration would be entitled to receive 5 shares of priceline.com common stock and cash consideration in lieu of a fraction of a share of priceline.com stock of $636.39. Because, in this example, the priceline.com average trading price is between $571.35 and $698.32, the value of the stock consideration to be delivered to the KAYAK stockholder would be $40.00 (assuming the closing price per share of priceline.com common stock on the effective date of the merger also is $672.72), which is equal to the cash consideration. As noted above, if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both below $571.35, then the value of the stock consideration to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock will be less than $40.00, and if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both above $698.32, the value of such stock consideration will be greater than $40.00.

        Any shares of KAYAK common stock owned by priceline.com, KAYAK, Merger Sub or any of their respective direct or indirect wholly-owned subsidiaries will be canceled without payment of any consideration.

        KAYAK stockholders that have perfected and not withdrawn a demand for, or lost the right to, appraisal pursuant to Section 262 of the DGCL will be entitled to the appraisal rights provided under the DGCL as described under the "Appraisal Rights of KAYAK Stockholders" section beginning on page 154.

        The merger agreement also contains a pro ration mechanism that will ensure that the total cash number of shares of KAYAK common stock will be exchanged for cash consideration, and the remaining shares of KAYAK common stock will be exchanged for stock consideration. In the event that the holders of more than the total cash number of shares of KAYAK common stock elect to receive cash consideration, certain pro-rata adjustments will be made so that, in the aggregate, the total cash number of shares of KAYAK common stock will be converted into the right to receive cash consideration and the balance of the shares of KAYAK common stock will be converted into the right to receive priceline.com common stock. This pro ration mechanism is discussed in greater detail in the section entitled "The Merger Agreement—Treatment of KAYAK Common Stock in the Merger—Cash Election" beginning on page 132.

Election
(Page 132)

        An election form will be mailed to each KAYAK stockholder as soon as reasonably practicable following the mailing of this proxy statement/prospectus. You should follow the instructions included on the election form for completing the election form and delivering it to the exchange agent. For a

 

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detailed description of the election procedures, see "The Merger Agreement—Treatment of KAYAK Common Stock in the Merger—Cash Election" beginning on page 132.

Fractional Shares
(Page 135)

        No fractional shares of priceline.com common stock will be issued upon the surrender of KAYAK common stock. Instead, each KAYAK stockholder who would otherwise have been entitled to receive a fraction of a share of priceline.com common stock will receive an amount of cash equal to the product of (i) such KAYAK stockholder's proportionate interest in a share of priceline.com common stock and (ii) the priceline.com average trading price. All fractional shares that a KAYAK stockholder would otherwise be entitled to receive will be aggregated and rounded to three decimal places for purposes of determining the cash payment for such fractional shares.

Treatment of Stock Options and Restricted Stock Units
(Page 133)

        At the effective time of the merger, each outstanding and unexercised option to purchase a share of KAYAK common stock, whether vested or unvested, will cease to represent an option to purchase a share of KAYAK common stock and will be automatically converted into (1) an option to purchase a number of shares of priceline.com common stock equal to the product (rounded down to the nearest whole number) of (x) the number of shares of KAYAK common stock subject to the option immediately prior to the effective time of the merger and (y) the conversion ratio which is described below, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of KAYAK common stock of such outstanding option immediately prior to the effective time of the merger divided by (B) the conversion ratio; and (2) an amount in cash equal to the product of (i) the fraction of a whole share of priceline.com common stock that would have resulted from the calculation described above but for the rounding and (ii) the priceline.com average trading price (rounded up or down, as applicable, to the nearest whole cent) less any applicable taxes. Except as otherwise described in this paragraph, following the effective time of the merger, each option will continue to be governed by the same terms and conditions as were applicable under such option immediately prior to the effective time of the merger.

        The conversion ratio will be equal to $40.00 divided by the priceline.com average trading price, which we refer to as the exchange ratio, unless the exchange ratio is fixed at 0.05728 or 0.07001, as described above, in which case the conversion ratio will be equal to the sum of (i) the product of such fixed exchange ratio multiplied by 67% plus (ii) the quotient obtained by dividing the product of the cash consideration multiplied by 33% by the priceline.com average trading price.

        At the effective time of the merger, any vesting conditions applicable to each outstanding RSU will accelerate in full and each RSU will be cancelled. The holder of the RSU will only be entitled to receive an amount in cash equal to (x) the total number of shares of KAYAK common stock subject to such RSU immediately prior to the effective time of the merger multiplied by (y) the per share RSU consideration, as described below (less applicable taxes to be withheld with respect to such payment).

        The per share RSU consideration will be equal to the cash consideration unless the exchange ratio is fixed at 0.05728 or 0.07001 as described above, in which case the per share RSU consideration will be equal to the sum of (i) the product of the cash consideration multiplied by 33% plus (ii) 67% multiplied by the product of such fixed exchange ratio and the priceline.com average trading price.

        For a detailed description of the treatment of stock options and restricted stock units at the effective time of the merger, see "The Merger Agreement—Treatment of KAYAK Stock Options and Restricted Stock Units in the Merger" beginning on page 133.

 

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The Merger Agreement
(Page 130)

        The merger agreement is attached as Annex A to this proxy statement/prospectus. You should read the merger agreement in its entirety. It is the most important legal document governing the merger. A summary of the merger agreement begins on page 130 of this proxy statement/prospectus.

Recommendation of KAYAK's Board of Directors and KAYAK's Reasons for the Merger
(Page 107)

        After careful consideration, the KAYAK board approved the merger agreement. The KAYAK board recommends that KAYAK stockholders vote FOR the adoption of the merger agreement.

        In reaching its decision to approve the merger agreement and to recommend that KAYAK stockholders vote to adopt the merger agreement, the KAYAK board consulted with KAYAK's management and KAYAK's advisors and considered a number of strategic, financial and other considerations referred to under "The Merger—Recommendation of KAYAK's Board of Directors and KAYAK's Reasons for the Merger" beginning on page 107.

Opinion of KAYAK's Financial Advisor
(Page 109)

        On November 8, 2012, Houlihan Lokey Financial Advisors, Inc., which we refer to as Houlihan Lokey, rendered its oral opinion to the KAYAK special committee of the KAYAK board, which we refer to as the KAYAK special committee (which was confirmed in writing by delivery of Houlihan Lokey's written opinion to the KAYAK special committee and the KAYAK board dated the same date), as to, as of November 8, 2012, the fairness, from a financial point of view, to the holders of KAYAK common stock of the aggregate merger consideration to be received by such holders in the merger pursuant to the merger agreement.

        Houlihan Lokey's opinion was directed to the KAYAK special committee and the KAYAK board and addressed only the fairness, from a financial point of view, to the holders of KAYAK common stock of the aggregate merger consideration to be received by such holders in the merger pursuant to the merger agreement and did not address any other aspect or implication of the merger. The summary of Houlihan Lokey's opinion in this proxy statement/prospectus is qualified in its entirety by reference to the full text of Houlihan Lokey's written opinion, which is included as Annex B to this proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion. However, neither Houlihan Lokey's opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus are intended to be, and do not constitute, advice or a recommendation to the KAYAK special committee, the KAYAK board or any securityholder of KAYAK or priceline.com or any other party as to how to act or vote with respect to any matter relating to the merger or otherwise including, without limitation, whether a holder of KAYAK common stock should elect to receive the cash consideration or the stock consideration. See "The Merger—Opinion of KAYAK's Financial Advisor" beginning on page 109.

Interests of Certain Persons in the Merger
(Page 120)

        KAYAK's executive officers and directors have economic interests in the merger that are different from, or in addition to, those of KAYAK's stockholders generally. These interests include, but are not limited to the treatment of equity awards held by executive officers and directors (including the treatment of options to purchase shares of KAYAK common stock and of KAYAK RSUs), and the

 

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potential payment of severance and other benefits to executive officers in the event of a qualifying termination of their employment following the merger.

Ownership of priceline.com Following the Merger
(Page 97)

        Based on the number of shares of priceline.com common stock and KAYAK common stock outstanding as of January 18, 2013, existing KAYAK stockholders will own less than 4% of the shares of priceline.com common stock outstanding immediately after consummation of the merger. The exact number of shares of priceline.com common stock that will be issued in the merger will not be determined until the closing.

Stock Exchange Listings
(Page 125)

        Application will be made to have the shares of priceline.com common stock issued in connection with the merger approved for listing on NASDAQ. If the merger is completed, KAYAK stockholders will be able to trade the shares of priceline.com common stock they receive in the merger on NASDAQ.

        If the merger is completed, KAYAK Class A common stock will no longer be quoted on NASDAQ and will be deregistered under the Exchange Act.

Conditions to Completion of the Merger
(Page 149)

        Consummation of the merger is conditional on KAYAK stockholders holding a majority of the outstanding voting power of KAYAK approving the proposal to adopt the merger agreement.

        Consummation of the merger also is conditional on the expiration or termination of all applicable waiting periods under the HSR Act as well as the satisfaction of all waiting periods or obtaining of all approvals or consents from relevant regulatory entities necessary to consummate the merger including the receipt of other competition law approvals outside the United States, the absence of any law or order that would prohibit, restrain or make illegal the merger, the approval of priceline.com common stock for listing on NASDAQ and the declaration by the SEC of the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part, no stop order suspending its effectiveness having been issued and no proceeding for this purpose having been initiated by the SEC.

        Closing is also dependent on the accuracy of representations and warranties made by the parties to the merger agreement, as of the date of the merger agreement and as of the effective date (subject to customary materiality qualifiers and other customary exceptions), the performance in all material respects by KAYAK, priceline.com and Merger Sub of their respective obligations imposed under the merger agreement, the receipt of certificates of the other party attesting to the satisfaction of these conditions and the receipt by each of KAYAK and priceline.com of an opinion from its respective tax counsel that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code for United States federal income tax purposes and that KAYAK, priceline.com and Merger Sub will each be a party to that reorganization within the meaning of Section 368(b) of the Code for such purposes.

        For a more complete summary of the conditions that must be satisfied or waived prior to consummation of the merger, see "The Merger Agreement—Conditions to Completion of the Merger" beginning on page 149.

 

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Termination of the Merger Agreement
(Page 151)

        The merger agreement may be terminated by mutual written consent of KAYAK and priceline.com at any time prior to the effective time of the merger, whether before or after adoption of the merger agreement by KAYAK's stockholders, and by either priceline.com or KAYAK if, at any time prior to the effective time of the merger: (i) (whether before or after KAYAK stockholders have adopted the merger agreement) the merger has not been consummated by March 8, 2013, which we refer to as the termination date, taking into account any extensions to the termination date provided for under the merger agreement); (ii) the special meeting has been held and completed and KAYAK's stockholders have not adopted the merger agreement at such special meeting, or at any adjournment or postponement thereof; (iii) any order permanently restraining, enjoining or otherwise prohibiting consummation of the merger has become final and non-appealable (whether before or after the vote of KAYAK stockholders for adoption of the merger agreement); or (iv) there has been a breach of any representation, warranty, covenant or agreement made by the other party in the merger agreement, or any such representation and warranty becomes untrue after the date of the merger agreement, such that certain conditions to the terminating party's obligations to complete the merger would not be satisfied and such breach or condition is not curable or, if curable, is not cured within 30 days after written notice thereof is given (subject to the qualification that such termination right will not be available to any party if at the time the party seeks to terminate the merger agreement that party is in material breach of any of its covenants or agreements in the merger agreement).

        KAYAK may terminate the merger agreement prior to the time KAYAK stockholders have adopted the merger agreement (provided it is not in material breach of any of its terms) if the KAYAK board authorizes KAYAK to enter into an alternative acquisition agreement with respect to a superior proposal in compliance with the no solicitation restrictions in the merger agreement, provided that KAYAK first pays to priceline.com a $52,700,000 termination fee.

        Priceline.com may terminate the merger agreement at any time prior to the effective time of the merger if the KAYAK board has made a change in its recommendation that KAYAK's stockholders adopt the merger agreement and KAYAK will be required to pay a $52,700,000 termination fee.

        For further discussion of the termination provisions, see "Merger Agreement—Termination of the Merger Agreement" beginning on page 151.

Termination Fee
(Page 152)

        If the merger is not completed, KAYAK stockholders will not receive any consideration for their shares of KAYAK common stock in connection with the merger. Instead, KAYAK will remain an independent public company, and the KAYAK Class A common stock will continue to be listed and traded on NASDAQ. Under specified circumstances, KAYAK may be required to pay a fee of $52,700,000 to priceline.com in connection with the termination of the merger agreement. Under other circumstances, priceline.com may be required to reimburse KAYAK for a portion of the expenses it incurred in connection with or related to negotiation of the merger agreement.

        For further discussion of the termination rights and these fees and expense reimbursement provisions, see "The Merger Agreement—Termination of the Merger Agreement" beginning on page 151.

Other Covenants
(Page 145)

        The parties have agreed to cooperate with each other and use their respective reasonable best efforts (and cause their subsidiaries to use their reasonable best efforts) to take or cause to be taken all

 

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actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under the merger agreement and applicable laws to consummate and make effective the merger as soon as practicable, including by making appropriate filings of notifications and reports pursuant to the HSR Act and with competition regulators outside the United States.

        The parties also have agreed that KAYAK will afford priceline.com reasonable access to all of its and its subsidiaries' properties, books, contracts, commitments, personnel and records (upon reasonable request and subject to certain exceptions) and that they will use commercially reasonable efforts to cause the merger to constitute a reorganization within the meaning of Section 368(a) of the Code and not knowingly take any action, or fail to take any action, that would prevent, or reasonably be expected to prevent, the merger from qualifying as a reorganization under Section 368(a) of the Code.

        Priceline.com is required to cause the shares of priceline.com common stock that will be issued in connection with the merger to be approved for listing on NASDAQ prior to the effective date of the merger. KAYAK and priceline.com also have agreed to cooperate and use reasonable best efforts to cause the KAYAK common stock to be delisted from NASDAQ and deregistered under the Exchange Act within ten days of the effective date of the merger.

        Each party has agreed to promptly notify the other party of, and keep the other party reasonably informed with respect to, any stockholder litigation related to the merger agreement and take certain actions in respect of defending or settling such stockholder litigation.

        For further discussion of these efforts, see "Merger Agreement—Other Covenants," beginning on page 145.

No Solicitation
(Page 142)

        Neither KAYAK nor any of its subsidiaries nor any of their respective officers or directors will, and KAYAK will instruct and use commercially reasonable efforts to cause its and its subsidiaries' employees, investment bankers, attorneys, accountants and other advisors or representatives not to, directly or indirectly initiate, solicit, or knowingly encourage any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal (which term is described below), enter into any agreement or agreement in principle with any person concerning any letter of intent, memorandum of understanding, acquisition agreement, merger agreement, joint venture agreement, partnership agreement or other similar agreement concerning an acquisition proposal (other than a confidentiality agreement entered into in accordance with the merger agreement), grant any waiver, amendment or release under any standstill or confidentiality agreement concerning an acquisition proposal (except in respect of any standstill agreement entered into in compliance with the merger agreement) or engage, continue or otherwise participate in any discussions or negotiations regarding any acquisition proposal.

        An acquisition proposal is any proposal or offer made by a person (other than priceline.com or Merger Sub) relating to any direct or indirect acquisition or purchase of 15% or more of the consolidated total assets of KAYAK and its subsidiaries (taken as a whole) or 15% or more of the total voting power of the equity securities of KAYAK or any of its subsidiaries, any tender offer or exchange offer that if consummated would result in any person beneficially owning 15% or more of the total voting power of the equity securities of KAYAK, or any merger, consolidation, exclusive license, business combination, recapitalization, joint venture, partnership, liquidation, dissolution or similar transaction involving KAYAK or any of its subsidiaries pursuant to which any person or its stockholders would (directly or indirectly) beneficially own 15% or more of the total voting power of the equity securities of KAYAK, in each case other than the merger.

        KAYAK is permitted to take certain actions following the receipt of an acquisition proposal made on or after the date of the merger agreement and prior to, but not after, the adoption of the merger agreement by KAYAK stockholders at the special meeting, including providing certain information or

 

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engaging or participating in any discussions or negotiations with a person who has made an unsolicited bona fide written acquisition proposal providing for the acquisition of more than 50% of the consolidated assets of KAYAK and its subsidiaries or more than 50% of the total voting power of the equity securities of KAYAK (subject to certain obligations of KAYAK set forth in the merger agreement).

        KAYAK also is permitted to approve, recommend, or otherwise declare advisable or propose to do any of the foregoing with respect to, such an acquisition proposal or authorize KAYAK to enter into an alternative acquisition agreement with respect to any acquisition proposal, only if it has complied with certain obligations in respect of priceline.com's match rights (as set out more fully in the section entitled "The Merger Agreement—No Solicitation of Acquisition Proposals—Match Rights") and the KAYAK board first determines in good faith after consultation with outside legal counsel that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law, and if required under the merger agreement, that the KAYAK board has determined in good faith based on the information then available and after consultation with its outside legal counsel that such acquisition proposal constitutes a superior proposal or is reasonably likely to result in a superior proposal.

        A superior proposal is a fully financed and bona fide written acquisition proposal involving more than 50% of the consolidated total assets of KAYAK and its subsidiaries (taken as a whole) or more than 50% of the total voting power of the equity securities of KAYAK that the KAYAK board has determined in good faith after consultation with its outside legal counsel is reasonably likely to be consummated substantially in accordance with its terms, and that, taking into account all legal, financial and regulatory aspects of the proposal and the person making the proposal, if consummated, would result in a transaction more favorable to KAYAK stockholders from a financial point of view than the transactions contemplated by the merger agreement, in each case after taking into account all relevant factors, including all terms and conditions of such acquisition proposal and the merger agreement and any revisions to the merger agreement pursuant to the exercise of priceline.com's match rights and the time likely to be required to consummate such acquisition proposal.

        The KAYAK board may make a change of recommendation in connection with a superior proposal only if it has notified priceline.com at least three business days' in advance of its intention to effect a change of recommendation in respect of the superior proposal and intends to cause KAYAK to enter into an alternative acquisition proposal with respect to such superior proposal, it attaches a copy of the alternative acquisition agreement and any other documents related to such superior proposal and after providing such notice and prior to taking any such action, KAYAK must negotiate with priceline.com in good faith (to the extent priceline.com desires to negotiate) during such three business day period to make revisions to the terms of the merger agreement so that the acquisition proposal that is the subject of the notice ceases to be a superior proposal. For a more detailed discussion of the ability of the KAYAK board to make a change of recommendation in connection with a superior proposal see the section entitled "The Merger Agreement—No Solicitation of Acquisition Proposals—Changes in KAYAK's Board of Directors' Recommendation" beginning on page 144.

        If the financial or other material terms of any acquisition proposal are amended, KAYAK must deliver a new notice to priceline.com and attach a copy of the most current version of the alternative acquisition agreement related to such proposal and any related documents, and the negotiation period will be extended by an additional two business days.

Litigation Related to the Merger
(Page 125)

        In connection with the merger, KAYAK, priceline.com, Merger Sub and members of the KAYAK board have been named as defendants in three class action complaints. Two complaints have been filed in the Delaware Court of Chancery and the other complaint has been filed in the Judicial District of

 

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Stamford / Norwalk, Connecticut. Each complaint generally alleges, among other things, that the KAYAK board failed to adequately discharge its fiduciary duties to the holders of shares of KAYAK Class A common stock by failing to ensure they will receive maximum value for their shares, failing to conduct an appropriate sale process and agreeing to inappropriate provisions in the merger agreement that would dissuade or otherwise preclude the emergence of a superior offer. Each complaint also alleges that KAYAK and priceline.com aided and abetted the KAYAK board's breach of its fiduciary duties. The actions seek injunctive relief compelling the KAYAK board to properly exercise its fiduciary duties to holders of shares of KAYAK's Class A common stock, enjoining the consummation of the merger and declaring the merger agreement unlawful and unenforceable, among other things. Each complaint seeks to recover costs and disbursements from the defendants, including reasonable attorneys' and experts fees.

        On January 16, 2013, the priceline.com and KAYAK defendants entered into a Memorandum of Understanding, which we refer to as the MOU, with the plaintiffs for each action described above to settle those lawsuits. The MOU provides for, among other things, the inclusion of additional disclosures with respect to various aspects of the merger in this proxy statement/prospectus. In addition, it grants plaintiffs' counsel the right to seek reasonable attorneys' fees and expenses, subject to court approval. The MOU further provides that the parties will promptly enter into a stipulation of settlement which will provide, among other things, that all proceedings in the actions filed in Delaware, except for settlement-related proceedings, shall be stayed until the Delaware Court of Chancery rules upon a motion for final approval of the settlement and enters a judgment in an appropriate form dismissing the actions filed in Delaware with prejudice. Additionally, the plaintiffs in the Connecticut action have agreed to stay proceedings in the Connecticut courts pending final approval of the settlement by the Delaware Court of Chancery, and have agreed that the Connecticut complaint is to be dismissed with prejudice within five business days of such final approval of such settlement. The MOU and stipulation of settlement are subject to various conditions, including court approval following notice to KAYAK stockholders, completion of certain confirmatory discovery and consummation of the merger. If the settlement is approved, it will resolve and release on behalf of the entire class of KAYAK stockholders, all claims that were or could have been brought challenging any aspect of the merger, the merger agreement and any disclosure made in connection therewith, among other claims.

Appraisal Rights
(Page 154)

        Record holders of KAYAK common stock have appraisal rights under the DGCL in connection with the merger. Holders of KAYAK common stock who do not vote in favor of the merger and who otherwise comply with the applicable provisions of Section 262 of the DGCL will be entitled to exercise appraisal rights thereunder. Any shares of KAYAK common stock held by a KAYAK stockholder as of the record date who has not voted in favor of the merger and who has demanded appraisal for such shares in accordance with the DGCL will not be converted into a right to receive the merger consideration, unless such KAYAK stockholder fails to perfect, withdraws or otherwise loses such stockholder's appraisal rights under the DGCL. If, after the consummation of the merger, such holder of KAYAK common stock fails to perfect, withdraws or otherwise loses his, her or its appraisal rights, each such share will be treated as if it had been converted as of the consummation of the merger into a right to receive the merger consideration. The relevant provisions of the DGCL are included as Annex C to this proxy statement/prospectus.

        You are encouraged to read these provisions carefully and in their entirety. Due to the complexity of the procedures for exercising your appraisal rights, KAYAK stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in the loss of appraisal rights. See the section entitled "Appraisal Rights of KAYAK Stockholders" beginning on page 154 for additional information and the text of Section 262 of the DGCL reproduced in its entirety as Annex C to this proxy statement/prospectus.

 

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Material United States Federal Income Tax Consequences of the Merger
(Page 126)

        The closing of the merger is conditional upon the receipt by each of priceline.com and KAYAK of an opinion from its respective tax counsel that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code for United States federal income tax purposes and that KAYAK, priceline.com and Merger Sub will each be a party to that reorganization within the meaning of Section 368(b) of the Code for such purposes. As a result of the merger, subject to the limitations and qualifications described in "The Merger—Material United States Federal Income Tax Consequences," KAYAK stockholders whose shares of KAYAK common stock are exchanged in the merger solely for shares of priceline.com common stock will not recognize gain or loss for United States federal income tax purposes on the exchange (except to the extent they receive cash in lieu of a fractional share of priceline.com common stock), KAYAK stockholders whose shares of KAYAK common stock are exchanged in the merger for shares of priceline.com common stock and cash will recognize capital gain (but not loss) realized on the exchange in an amount not exceeding the amount of cash received (excluding cash received in lieu of a fractional share of priceline.com common stock), and KAYAK stockholders whose shares of KAYAK common stock are exchanged in the merger solely for cash will recognize capital gain or loss realized on the exchange. This tax treatment may not apply to certain KAYAK stockholders, as described in "The Merger—Material United States Federal Income Tax Consequences."

        The tax consequences of the merger to any particular stockholder will depend on that stockholder's particular facts and circumstances. Accordingly, you are urged to consult your own tax advisor to determine your own tax consequences from the merger, including estate, gift, state, local or non-United States tax consequences of the merger. See the section of this proxy statement/prospectus entitled "The Merger—Material United States Federal Income Tax Consequences" beginning on page 126 for a summary discussion of material United States federal income tax consequences of the merger to United States holders.

Accounting Treatment
(Page 129)

        Priceline.com prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which we refer to as GAAP. The merger will be accounted for using the acquisition method of accounting. Priceline.com will be treated as the acquirer for accounting purposes.

Comparison of Rights of KAYAK Stockholders and priceline.com Stockholders
(Page 159)

        KAYAK's charter and by-laws and Delaware corporate law govern the rights of KAYAK stockholders. Priceline.com's amended and restated certificate of incorporation, which we refer to as priceline.com's charter and priceline.com's amended and restated by-laws, which we refer to as priceline.com's by-laws, and Delaware corporate law will govern your rights as a stockholder of priceline.com following the merger. Your rights under priceline.com's charter and by-laws will differ in some respects from your rights under KAYAK's charter and by-laws. See "Comparison of Rights of priceline.com Stockholders and KAYAK Stockholders" on page 159.

 

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SELECTED HISTORICAL FINANCIAL DATA OF PRICELINE.COM INCORPORATED

        The following table presents selected historical consolidated financial data for priceline.com Incorporated as of and for the fiscal years ended December 31, 2011, 2010, 2009, 2008 and 2007 and as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011. The financial data for the fiscal years ended December 31, 2011, 2010 and 2009 have been derived from priceline.com's audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2011, incorporated by reference in this proxy statement/prospectus. The financial data for the fiscal years ended December 31, 2008 and 2007 have been derived from priceline.com's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2009. The financial data as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011 have been derived from priceline.com's unaudited consolidated financial statements included in the Quarterly Report on Form 10-Q for the nine months ended September 30, 2012, incorporated by reference in this proxy statement/prospectus. Also incorporated by reference into this proxy statement/prospectus is the Form 8-K filed on December 10, 2012 which provides priceline.com's Unaudited Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2011, 2010, and 2009 under the new accounting guidance which became effective January 1, 2012. Selected historical financial data reflects data related to rentalcars.com (formerly known as TravelJigsaw) and Agoda from their respective acquisition dates of May 2010 and November 2007.

        The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in priceline.com's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and priceline.com's Quarterly Report on Form 10-Q for the nine months ended September 30, 2012, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes therein. See the section of this proxy statement/prospectus entitled "Where You Can Find More Information" beginning on page 169.

 
  Nine Months Ended
September 30,
  Year Ended December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  
 
  (In thousands except
per share amounts)

  (In thousands, except per share amounts)
 

Total revenues

  $ 4,070,316   $ 3,364,839   $ 4,355,610   $ 3,084,905   $ 2,338,212   $ 1,884,806   $ 1,409,409  

Cost of revenues

    926,385     1,009,657     1,275,730     1,175,934     1,077,449     928,835     769,997  

Gross profit

    3,143,931     2,355,182     3,079,880     1,908,971     1,260,763     955,971     639,412  

Total operating expenses(1)

    1,688,453     1,260,038     1,680,958     1,122,174     789,928     666,497     501,477  

Operating income(1)

    1,455,478     1,095,144     1,398,922     786,797     470,835     289,474     137,935  

Total other expense

    49,631     26,010     31,128     40,514     28,533     13,369     16,074  

Income tax (expense) benefit(2)

    (271,405 )   (235,959 )   (308,663 )   (218,141 )   47,168     (90,171 )   23,537  

Equity in income (loss) income of investees

                    2     (310 )   (321 )

Net income(1)(2)

    1,134,442     833,175     1,059,131     528,142     489,472     185,624     145,077  

Net income attributable to noncontrolling interests(3)

    3,539     2,520     2,760     601         3,378     4,679  

Net income applicable to common stockholders(1)(2)

   
1,130,903
   
830,655
   
1,056,371
   
527,541
   
489,472
   
182,246
   
138,843
 

Net income applicable to common stockholders per basic common share(1)(2)

    22.70     16.74     21.27     11.00     11.54     4.64     3.69  

Net income applicable to common stockholders per diluted share(1)(2)

    22.05     16.23     20.63     10.35     9.88     3.74     3.05  

Total assets

    6,217,809     3,815,573     3,970,671     2,905,953     1,834,224     1,312,421     1,334,017  

Long-term obligations and redeemable noncontrolling interests(4)

   
1,679,147
   
736,182
   
788,218
   
621,624
   
263,708
   
459,928
   
724,144
 

Total liabilities

    2,446,267     1,265,828     1,191,971     1,046,828     476,610     538,520     672,492  

Total stockholders' equity

    3,577,864     2,390,299     2,574,295     1,813,336     1,321,629     698,826     453,625  

(1)
Priceline.com recorded a $55.4 million expense related to a litigation settlement in 2007.

(2)
Priceline.com recorded non-cash income tax benefits for the year ended December 31, 2009, resulting from the reversal of a portion of its valuation allowance on its deferred tax assets related to net operating loss carryforwards of $183.3 million. Priceline.com also recorded non-cash income tax benefits in the year ended December 31, 2007 amounting to $47.9 million resulting from a reversal of a portion of the valuation allowance on its deferred tax assets related to domestic net operating loss carryfowards.

(3)
In September 2008, priceline.com repurchased all of the remaining outstanding shares underlying noncontrolling interests in Priceline.com International Limited. Redeemable noncontrolling interests beginning in 2010 relates to priceline.com's purchase of rentalcars.com in May 2010. In April 2011, in connection with the exercise of certain call and put options in March 2011, the redeemable noncontrolling interests in rentalcars.com were reduced from 24.4% to 19.0%. In April 2012, in connection with the exercise of certain call and put options in March 2012, the redeemable noncontrolling interests in rentalcars.com were reduced from 19.0% to 12.7%.

(4)
Includes convertible debt which is classified as a current liability.

 

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SELECTED HISTORICAL FINANCIAL DATA OF KAYAK SOFTWARE CORPORATION

        The following table presents selected historical consolidated financial data for KAYAK Software Corporation as of and for the nine months ended September 30, 2012 and the fiscal years ended December 31, 2011, 2010, 2009, 2008 and 2007. The financial data for the fiscal years ended December 31, 2011, 2010 and 2009 have been derived from KAYAK's audited consolidated financial statements included elsewhere in this proxy statement/prospectus. The consolidated statements of operations presented below for the years ended December 31, 2008 and 2007 and consolidated balance sheet data as of December 31, 2009, 2008 and 2007 have been derived from consolidated financial statements not included in this proxy statement/prospectus. The financial data as of September 30, 2012 and for the nine months ended September 30, 2012 and 2011 have been derived from KAYAK's unaudited consolidated financial statements included elsewhere in this proxy statement/prospectus.

        The information set forth below is not necessarily indicative of future results and should be read together with the other information included elsewhere in this proxy statement/prospectus.

 
   
   
   
   
   
     
 
  Nine Months Ended
September 30,
   
   
   
 
 
  Years ended December 31,  
(in thousands except share and per
share amounts)
 
  2012   2011   2011   2010   2009   2008   2007  

Revenues

  $ 228,880   $ 170,587   $ 224,534   $ 170,698   $ 112,698   $ 112,018   $ 48,444  
                               

Cost of revenues (excludes depreciation and amortization)

    14,900     13,780     18,598     15,630     15,362     17,985     7,497  
                               

Selling, general and administrative expenses:

                                           

Marketing

    120,700     87,417     111,018     91,721     57,389     56,841     33,624  

Personnel

    35,612     30,125     40,785     29,764     22,638     19,150     8,131  

Other general and administrative expenses                                    

    12,703     11,577     16,400     9,967     6,568     5,743     2,346  
                               

Total selling, general and administrative expenses (excludes depreciation and amortization)

    169,015     129,119     168,203     131,452     86,595     81,734     44,101  
                               

Depreciation and amortization

    6,178     6,337     8,486     6,821     5,380     5,214     1,485  

Impairment of intangible assets(1)

        14,980     14,980                  
                               

Income from operations

    38,787     6,371     14,267     16,795     5,361     7,085     (4,639 )

Other income (expense)

    (1,506 )   536     2,117     3,357     (1,225 )   (1,569 )   271  

Income tax (expense) benefit

    (17,894 )   (3,077 )   (6,681 )   (12,120 )   2,776     (415 )    
                               

Net income

    19,387     3,830     9,703     8,032     6,912   $ 5,101   $ (4,368 )

Redeemable convertible preferred stock dividends

    (6,644 )   (8,809 )   (11,745 )   (11,745 )   (11,728 )   (11,728 )   (2,085 )

Deemed dividend from modification of redeemable convertible preferred stock

    (2,929 )                        
                               

Net income (loss) applicable to common stockholders

  $ 9,814   $ (4,979 ) $ (2,042 ) $ (3,713 ) $ (4,816 )   (6,627 )   (6,453 )
                               

Net income (loss) applicable to common stockholders

                                           

Basic

  $ 0.67   $ (0.67 ) $ (0.28 ) $ (0.57 ) $ (0.92 ) $ (1.37 ) $ (1.67 )

Diluted

  $ 0.48   $ (0.67 ) $ (0.28 ) $ (0.57 ) $ (0.92 ) $ (1.37 ) $ (1.67 )

Weighted average shares outstanding:

                                           

Basic

    14,739,047     7,412,882     7,309,202     6,463,639     5,223,187     4,831,777     3,860,114  

Diluted

    40,289,192     7,412,882     7,309,202     6,463,639     5,223,187     4,831,777     3,860,114  

Total assets

   
422,799
   
275,982
   
277,948
   
269,907
   
222,823
   
232,544
   
221,494
 

Long-term obligations(2) and redeemable convertible preferred stock

    542     246,451     248,644     238,246     225,085     237,218     230,330  
                               

Total stockholders' equity (deficit)

    377,433     (6,310 )   (1,724 )   (450 )   (21,780 )   (22,940 )   (23,609 )
                               

(1)
In January 2011, KAYAK determined that it would not support two brand names and URLs in the United States and decided that it would migrate all traffic from sidestep.com to KAYAK.com. As a result, the SideStep brand name and URL intangible assets were impaired, and KAYAK incurred a related write-down of $15.0 million in the first three months of 2011.

(2)
Long-term obligations includes current and long-term portions of debt, warrant liability and acquisition-related put liability.

 

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UNAUDITED SUMMARY PRO FORMA COMBINED FINANCIAL DATA

        The following table presents unaudited summary pro forma combined financial information about priceline.com's consolidated balance sheet and statements of operations, after giving effect to the merger. The information under "Summary Pro Forma Combined Earnings Information" in the table below gives effect to the merger as if it had been completed on January 1, 2011. The information under "Summary Pro Forma Combined Balance Sheet Information" in the table below assumes the merger had been completed on September 30, 2012. This unaudited summary pro forma combined financial data was prepared using the acquisition method of accounting with priceline.com considered the acquirer of KAYAK. Accordingly, the merger consideration has been allocated to assets and liabilities of KAYAK based upon their estimated fair values as of the date of completion of the merger. Any amount of the merger consideration that is in excess of the estimated fair values of assets acquired net of liabilities assumed in the merger will be recorded as goodwill in priceline.com's balance sheet after the completion of the merger.

        The unaudited summary pro forma combined financial data has been derived from and should be read in conjunction with the more detailed unaudited pro forma combined financial statements, which we refer to as the statements, appearing elsewhere in this proxy statement/prospectus and the accompanying notes to the statements. In addition, the statements were based on and should be read in conjunction with the historical consolidated financial statements and related notes of priceline.com as of and for the applicable periods, which have been incorporated into this proxy statement/prospectus by reference, as well as the historical financial statements and related notes of KAYAK as of and for the applicable periods, which have been included in this proxy statement/prospectus. See "Where You Can Find More Information" beginning on page 169 and "Unaudited Pro Forma Combined Financial Information" beginning on page F-69.

        The unaudited summary pro forma combined financial data is being provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of priceline.com would have been had the merger occurred on the dates assumed, nor are they necessarily indicative of priceline.com's future consolidated results of operations or consolidated financial position. The unaudited summary pro forma combined financial data is based upon currently available information and estimates and assumptions that priceline.com management believes are reasonable as of the date hereof. Any of the factors underlying these estimates and assumptions may change or prove to be materially different, and the estimates and assumptions may not be representative of facts existing at the closing date of the merger.


Summary Pro Forma Combined Earnings Information:

(In thousands, except per share amounts)
  Nine Months
Ended
September 30,
2012
  Year Ended
December 31,
2011
 

Revenues

  $ 4,277,401   $ 4,562,175  

Operating income

    1,456,381     1,333,792  

Earnings before income taxes

    1,405,244     1,304,781  

Net income available to common shareholders

  $ 1,127,938   $ 1,019,230  

Basic earnings per share

             

Net income per share available to common shareholders

  $ 21.92   $ 19.87  

Diluted earnings per share

             

Net income per share available to common shareholders

  $ 21.14   $ 19.14  

 

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Summary Pro Forma Combined Balance Sheet Information:

(In thousands)
  As of
September 30,
2012
 

Total assets

  $ 8,009,052  

Long-term obligations and redeemable non-controlling interests(1)

    2,086,910  

Total stockholders' equity

    4,924,977  

(1)
Includes convertible debt which is classified as a current liability.

 

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

        The following table shows, for the year ended December 31, 2011, and the nine months ended September 30, 2012, historical and pro forma equivalent per share data for KAYAK common stock and historical and pro forma combined per share data for priceline.com common stock. The information in the table related to priceline.com is derived from priceline.com's respective historical consolidated financial statements incorporated by reference herein, as well as KAYAK's respective historical consolidated financial statements included in this proxy statement/prospectus and the unaudited pro forma combined financial information included elsewhere herein.

        The pro forma equivalent information shows the effect of the merger from the perspective of an owner of KAYAK common stock. The information was computed by multiplying the pro forma combined net income per common share as of September 30, 2012 by the exchange ratio of the stock portion of the merger consideration of 0.06282 shares of priceline.com common stock for each share of KAYAK common stock. The exchange ratio of 0.06282 is calculated by dividing the merger consideration of $40.00 per share of KAYAK common stock by the aggregate volume weighted average price per share of priceline.com common stock for the 30 day trading period ending two days prior to the assumed effective date of the merger. For the pro forma combined financial information included in this proxy statement/prospectus, the exchange ratio was calculated as 0.06282 shares of priceline.com common stock for each share of KAYAK common stock as though the merger closing date was January 18, 2013. The aggregate volume weighted average price per share of priceline.com common stock from December 4, 2012 through January 16, 2013 was $636.75. The merger is expected to close by the end of the first quarter of 2013.

        The pro forma combined data below is presented for illustrative purposes only. The pro forma adjustments to the statement of earnings data are based on the assumption that the merger was completed on January 1, 2011, and the pro forma adjustments to the balance sheet data are based on the assumption that the merger was completed on September 30, 2012.

        Either company's actual historical financial condition and results of operations may have been different had the companies always been combined. You should not rely on this information as being indicative of the historical financial condition and results of operations that would have actually been achieved or of the future results of priceline.com after the completion of the merger.

        You should read the information below together with the historical consolidated financial statements and related notes of priceline.com as of and for the applicable periods, which have been incorporated by reference into this proxy statement/prospectus, the historical financial statements and related notes of KAYAK as of and for the applicable periods, which have been included in this proxy

 

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statement/prospectus, along with the information under the heading "Unaudited Pro Forma Combined Financial Information" beginning on page F-69.

 
  KAYAK Common Stock   priceline.com Common Stock  
 
  Historical   Pro Forma
Equivalent(1)
  Historical   Pro Forma
Combined
 

Net income per share available to common shareholders

                         

Basic

                         

Year Ended December 31, 2011        

  $ (0.28 ) $ 1.25   $ 21.27   $ 19.87  

Nine Months Ended September 30, 2012

  $ 0.67   $ 1.38   $ 22.70   $ 21.92  

Diluted

                         

Year Ended December 31, 2011        

  $ (0.28 ) $ 1.20   $ 20.63   $ 19.14  

Nine Months Ended September 30, 2012

  $ 0.48   $ 1.33   $ 22.05   $ 21.14  

Book Value per Share

                         

Year Ended December 31, 2011        

  $ (0.25 ) $ 4.33   $ 51.69   $ 68.89 (2)

Nine Months Ended September 30, 2012

  $ 9.79   $ 6.01   $ 71.75   $ 95.64 (2)

(1)
Calculated by multiplying the "Pro Forma Combined" amounts by an exchange ratio of 0.06282, the assumed exchange ratio in the pro forma financial statements.

(2)
Based on combined pro forma shares outstanding of 51.5 million and 51.4 million as of September 30, 2012 and December 31, 2011, respectively.

 

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COMPARATIVE PER SHARE MARKET PRICE DATA

        Priceline.com common stock trades on NASDAQ under the symbol "PCLN". KAYAK Class A common stock trades on NASDAQ under the symbol "KYAK".

        The following table sets forth the high, low and closing prices for priceline.com common stock and KAYAK Class A common stock as reported on NASDAQ on November 8, 2012, the last full trading day before priceline.com and KAYAK announced the merger, and January 31, 2013, the last full trading day before filing of this proxy statement/prospectus with the SEC. This table also shows the estimated implied value of the merger consideration for each share of KAYAK common stock on the relevant date.

 
  priceline.com   KAYAK    
 
 
   
   
   
   
   
   
  Estimated value
per KAYAK
common share
of the merger
consideration(1)
 
 
  Common stock   Class A Common stock  
 
  High   Low   Close   High   Low   Close  

November 8, 2012

  $ 640.65   $ 627.11   $ 627.87   $ 34.31   $ 30.61   $ 31.04   $ 41.05  

January 31, 2013

 
$

687.34
 
$

673.72
 
$

685.47
 
$

40.55
 
$

39.81
 
$

40.37
 
$

41.27
 

(1)
The implied value of the merger consideration represents the estimated value of the stock consideration and cash consideration for each share of KAYAK common stock outstanding (assuming 67% of the shares of KAYAK common stock are exchanged for shares of priceline.com common stock and 33% of the shares of KAYAK common stock are exchanged for cash) based on the aggregate volume weighted average price per share of priceline.com common stock for the 30 day trading period ending on the second full trading day prior to November 8, 2012 and January 31, 2013 of $604.22 and $654.40, respectively.

        The above table shows only historical comparisons. The market price of KAYAK common stock and priceline.com common stock will fluctuate prior to the special meeting and before completion of the merger, which will affect the implied value of the stock portion of the merger consideration paid to the KAYAK stockholders. These comparisons may not provide meaningful information to KAYAK stockholders in determining whether to adopt the merger agreement. KAYAK stockholders are urged to obtain current market quotations for priceline.com common stock and KAYAK Class A common stock and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference into this proxy statement/prospectus, when considering whether to adopt the merger agreement. See "Where You Can Find More Information" beginning on page 169.

 

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RISK FACTORS

        By voting in favor of the proposal to adopt the merger agreement, KAYAK stockholders will be choosing to invest in priceline.com common stock. An investment in priceline.com common stock involves a high degree of risk. In addition to the other information contained in or incorporated by reference into this proxy statement/prospectus, you should carefully consider the following risk factors in deciding whether to vote in favor of the proposal to adopt the merger agreement. You should also carefully consider the risk factors of priceline.com incorporated by reference into this proxy statement/prospectus, see "Information about priceline.com—Risks Relating to priceline.com's Business" beginning on page 95 and "Where You Can Find More Information" beginning on page 169) and the risk factors of KAYAK set forth in the section entitled "Information about KAYAK—Risks Relating to KAYAK's Business" beginning on page 48. In addition to the risks set forth below, new risks may emerge from time to time and it is not possible to predict all risk factors, nor can KAYAK or priceline.com assess the impact of all factors on the merger and the combined company following the merger or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward-looking statements.


Risks Relating to the Merger

The value of the stock portion of the merger consideration is subject to changes based on fluctuations in the value of priceline.com common stock, and you may receive stock consideration with a value that is more or less than $40.00 per share in certain circumstances.

        The market value of priceline.com common stock will fluctuate during the period before the date of the special meeting of stockholders to vote on the adoption of the merger agreement, during the 30 trading day period that the exchange ratio will be based upon and the time between the effective date of the merger and the time you receive merger consideration in the form of priceline.com common stock. Priceline.com's trading price on NASDAQ has fluctuated significantly in the past. The closing price of one share of priceline.com common stock on January 31, 2013, the last trading day before the date of this proxy statement/prospectus, was $685.47.

        KAYAK stockholders who receive merger consideration as stock will receive the number of shares of priceline.com common stock determined by dividing $40.00 by the priceline.com average trading price, provided that the priceline.com average trading price is between (or including) $571.35 and $698.32 per share. If the priceline.com average trading price is below $571.35 then the exchange ratio will be fixed at 0.07001 shares of priceline.com common stock to be delivered for each such share of KAYAK common stock. If the priceline.com average trading price is above $698.32 then the exchange ratio will be fixed at 0.05728 shares of priceline.com common stock to be delivered for each such share of KAYAK common stock. Accordingly, the actual number of shares and the value of the priceline.com common stock delivered to KAYAK stockholders who receive stock consideration will depend on the priceline.com average trading price, and the value of the portion of a share of priceline.com common stock delivered for each such share of KAYAK common stock may be greater than or less than $40.00.

        For example, if the priceline.com average trading price is $672.72 (which was the closing price per share of priceline.com common stock on NASDAQ on January 18, 2013), the exchange ratio will be 0.05946 shares of priceline.com common stock to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock. Accordingly, a holder of 100 shares of KAYAK common stock who elects the stock consideration would be entitled to receive 5 shares of priceline.com common stock and cash consideration in lieu of a fraction of a share of priceline.com stock of $636.39. Because, in this example, the priceline.com average trading price is between $571.35 and $698.32, the value of the stock consideration to be delivered to the KAYAK stockholder would be $40.00 (assuming the closing price per share of priceline.com common stock on the effective date of the merger also is $672.72), which is equal to the cash consideration. As noted above, if the priceline.com average trading price and the closing price per share of priceline.com common stock on

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the effective date of the merger are both below $571.35, then the value of the stock consideration to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock will be less than $40.00, and if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both above $698.32, the value of such stock consideration will be greater than $40.00.

        It is impossible to accurately predict the market price of priceline.com common stock at the effective time of the merger and therefore impossible to accurately predict the value of the stock consideration that those KAYAK stockholders who receive stock consideration will be delivered in the merger. The value of the stock consideration may be significantly higher or lower than the value of the cash consideration, which is fixed at $40.00 per share of KAYAK common stock.

You may not receive the form of merger consideration that you elect.

        You may not receive all of your merger consideration in the form that you elect. The merger agreement provides that, overall, holders of the total cash number of the outstanding shares of KAYAK common stock will receive cash and the remaining holders of KAYAK common stock will receive priceline.com common stock in the merger. The actual allocation of the cash and stock components of the merger consideration will depend on the elections made by all of the KAYAK stockholders.

        In the event that the aggregate number of shares of KAYAK common stock for which cash elections are received is greater than the total cash number, the number of shares for which cash elections have been made will be adjusted on a pro-rata basis and converted into the right to receive stock consideration in the manner described in the section entitled "The Merger Agreement—Treatment of KAYAK Common Stock in the Merger—Cash Election" beginning on page 132. In the event that the aggregate number of shares of KAYAK common stock for which cash elections are received is less than the total cash number, then unless there are enough shares for which no election has been made to fill the shortfall, some of the shares for which stock elections have been made will be adjusted on a pro-rata basis and converted into the right to receive cash consideration in the manner described in the section entitled "Merger Agreement—Treatment of KAYAK Common Stock in the Merger—Cash Election" beginning on page 132. Accordingly, no assurance can be given that holders of KAYAK common stock will receive the form of merger consideration that has been elected.

The market price of priceline.com common stock will continue to fluctuate following the merger.

        The market price of priceline.com common stock may fluctuate significantly following consummation of the merger and you could lose the value of your investment in priceline.com common stock. In addition, the stock market has experienced significant price and volume fluctuations in recent times which could have a material adverse effect on the market for, or liquidity of, the priceline.com common stock, regardless of priceline.com's actual operating performance.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

        KAYAK and priceline.com are subject to the antitrust laws of the United States as well as the competition laws of other jurisdictions outside the United States. Consummation of the merger is conditional on the expiration or termination of all applicable waiting periods under the HSR Act, which KAYAK and priceline.com received on January 7, 2013, as well as the obtaining of all approvals or consents from relevant regulatory entities necessary to consummate the merger. Whether or not these approvals or consents will be obtained is dependent on the effect of the merger on competition within the relevant jurisdictions. There can be no assurance that regulators will not impose certain conditions, terms, obligations or restrictions on priceline.com that may have the effect of delaying or

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preventing consummation of the merger or that may have a material impact on its business. For further details see "The Merger Agreement—Conditions to Completion of the Merger" beginning on page 149.

Closing of the merger is subject to many conditions and if these conditions are not satisfied or waived the merger will not be completed.

        Consummation of the merger is subject to a number of conditions as set out in the merger agreement that must be satisfied or waived, including KAYAK stockholder approval of adoption of the merger agreement, the expiration or termination of the waiting period applicable to the merger under the HSR Act and the receipt of other foreign competition law approvals, the absence of any law or order that would prohibit, restrain or make illegal the merger, the approval of priceline.com common stock for listing on NASDAQ and the declaration by the SEC of the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part.

        Closing of the merger also is dependent on the accuracy of representations and warranties made by the parties to the merger agreement, as of the date of the merger agreement and as of the effective date (subject to customary materiality qualifiers and other customary exceptions), the performance in all material respects by KAYAK, priceline.com and Merger Sub of obligations imposed under the merger agreement, the receipt of certificates of the other party attesting to the satisfaction of these conditions and the receipt of certain tax opinions.

        For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see "The Merger Agreement—Conditions to Completion of the Merger" beginning on page 149.

        There can be no assurance that the conditions to closing of the merger will be satisfied or waived or that the merger will be consummated.

Lawsuits have been filed against KAYAK and priceline.com challenging the merger, and one or more adverse rulings may prevent the merger from being completed.

        In connection with the merger, KAYAK, priceline.com, Merger Sub and members of KAYAK's board were named as defendants in a putative class action complaint filed on November 16, 2012 by Michael James Krawczynski on behalf of himself and other holders of shares of KAYAK Class A common stock, which we refer to as the Krawczynski complaint. The Krawczynski complaint was filed in the Delaware Court of Chancery and alleges, among other things, that KAYAK's board failed to adequately discharge its fiduciary duties to the holders of shares of KAYAK Class A common stock by failing to ensure they will receive maximum value for their shares, failing to conduct an appropriate sale process and agreeing to inappropriate provisions in the merger agreement that would dissuade or otherwise preclude the emergence of a superior offer. The complaint also alleges that priceline.com and KAYAK aided and abetted the KAYAK board's breach of its fiduciary duties to holders of shares of KAYAK's Class A common stock. The action seeks, among other things, injunctive relief (1) enjoining priceline.com and KAYAK from proceeding under the terms of the merger agreement, (2) enjoining priceline.com and KAYAK from consummating the merger unless KAYAK's board implements procedures to obtain the highest possible price for KAYAK, and (3) declaring that the merger agreement was entered into in breach of the KAYAK board's fiduciary duties and is therefore unlawful and unenforceable. The Krawczynski complaint also seeks to recover costs and disbursements from the defendants, including reasonable attorneys' and experts fees.

        A second putative class action complaint was filed against KAYAK, priceline.com, Merger Sub and members of KAYAK's board in the Delaware Court of Chancery on December 20, 2012 by Bert Ly on behalf of himself and other holders of shares of KAYAK Class A common stock, which we refer to as the Ly complaint. The Ly complaint raises substantially similar allegations as the Krawczysnki complaint, including, among other things, that KAYAK's board failed to adequately discharge its

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fiduciary duties to the holders of shares of KAYAK Class A common stock by failing to ensure they will receive adequate or fair value for their shares, failing to conduct an appropriate sale process and agreeing to inappropriate provisions in the merger agreement that would dissuade or otherwise preclude the emergence of a superior offer. The complaint also alleges that the registration statement, of which this proxy statement/prospectus is a part, is false and misleading because, among other things, it does not include material information about the financial analyses performed for the KAYAK special committee and the KAYAK board by Sequoia Capital and Houlihan Lokey. The complaint further alleges that priceline.com and Merger Sub aided and abetted the KAYAK board's breach of its fiduciary duties to holders of shares of KAYAK's Class A common stock. The action seeks, among other things, (1) injunctive relief enjoining priceline.com and KAYAK from proceeding under the terms of the merger agreement until KAYAK's board has acted in accordance with its fiduciary duties and made full and fair disclosure of all material factors to the plaintiffs and class; (2) rescissory damages if the merger is consummated prior to the judgment; (3) money damages to account for any profits and special benefits obtained by the defendants as a result of their alleged breach; and (4) attorneys' fees.

        On January 7, 2013 the Delaware Court of Chancery granted a motion by the plaintiffs in the Krawczynski complaint and the Ly complaint to consolidate their related claims. On January 8, 2013 the Delaware Court of Chancery also certified a class consisting of all persons who held shares of KAYAK common stock, together with their successors and assigns, at any time during the period from and including November 8, 2012 through the consummation of the merger. The Delaware Court of Chancery also granted a motion for the plaintiffs in the consolidated action to file a verified consolidated class action complaint.

        Additionally, on November 21, 2012, Joseph McKinney, on behalf of himself and other holders of shares of KAYAK Class A common stock, filed a substantively identical putative class action complaint against the defendants referenced above, which we refer to as the McKinney complaint, in the Judicial District of Stamford / Norwalk, Connecticut. The allegations set forth in the McKinney complaint, as well as the relief requested, are generally the same as those set forth in the Krawczynski complaint. The McKinney complaint also alleges that the KAYAK board breached its fiduciary duties by agreeing to sell KAYAK without first taking steps to ensure that the holders of shares of KAYAK Class A common stock would obtain adequate, fair and maximum consideration and engineering a merger to benefit themselves and/or priceline.com without regard for holders of shares of KAYAK's Class A common stock. The McKinney complaint also seeks, among other things, (1) to direct the defendants to exercise their fiduciary duties to obtain a transaction which is in the best interest of the holders of shares of KAYAK Class A common stock until the process for the sale is completed and the highest possible price is obtained and (2) to rescind the merger and merger agreement and, in the event the merger is consummated prior to the judgment, rescind the merger and award rescissory damages.

        On January 16, 2013, the priceline.com and KAYAK defendants entered into the MOU with the plaintiffs for each action described above to settle those lawsuits. The MOU provides for, among other things, the inclusion of additional disclosures with respect to various aspects of the merger in this proxy statement/prospectus. In addition, it grants plaintiffs' counsel the right to seek reasonable attorneys' fees and expenses, subject to court approval. The MOU further provides that the parties will promptly enter into a stipulation of settlement which will provide, among other things, that all proceedings in the actions filed in Delaware, except for settlement-related proceedings, shall be stayed until the Delaware Court of Chancery rules upon a motion for final approval of the settlement and enters a judgment in an appropriate form dismissing the actions filed in Delaware with prejudice. Additionally, the plaintiffs in the McKinney action have agreed to stay proceedings in the Connecticut courts pending final approval of the settlement by the Delaware Court of Chancery, and have agreed that the McKinney complaint is to be dismissed with prejudice within five business days of such final approval of the settlement. The MOU and stipulation of settlement are subject to various conditions, including court approval following notice to KAYAK stockholders, completion of certain confirmatory discovery and

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consummation of the merger. If the settlement is approved, it will resolve and release on behalf of the entire class of KAYAK stockholders, all claims that were or could have been brought challenging any aspect of the merger, the merger agreement and any disclosure made in connection therewith, among other claims.

KAYAK stockholders will have less influence, as a group, as stockholders of priceline.com than as stockholders of KAYAK.

        Immediately after consummation of the merger, former KAYAK stockholders, who collectively own 100% of KAYAK, will own no more than 4% of priceline.com based on the number of shares of priceline.com common stock and KAYAK common stock outstanding as of January 18, 2013. Consequently, KAYAK stockholders, as a group, will exercise less influence over the management and policies of priceline.com than they currently may have over the management and policies of KAYAK.

The shares of priceline.com common stock to be received by KAYAK stockholders as a result of the merger will have rights different from the shares of KAYAK common stock.

        Upon consummation of the merger, the rights of KAYAK stockholders who have elected to receive stock consideration and who will become priceline.com stockholders will be governed by the certificate of incorporation and by-laws of priceline.com. The rights associated with KAYAK common stock are different from the rights associated with the priceline.com common stock. See "Comparison of Rights of priceline.com Stockholders and KAYAK Stockholders" beginning on page 159 for a discussion of these rights.

KAYAK will be subject to business uncertainties and certain operating restrictions until consummation of the merger.

        Uncertainty about the effect of the merger on employees and customers may have an adverse effect on KAYAK and consequently on the combined company following the merger. These uncertainties could disrupt KAYAK's business and cause customers, suppliers, partners and others that deal with KAYAK to defer entering into contracts with KAYAK or making other decisions concerning KAYAK or seek to change or cancel existing business relationships with KAYAK. The uncertainty and difficulty of integration could also cause key employees of KAYAK to lose motivation or to leave their employment. In addition, the merger agreement restricts KAYAK from making certain acquisitions and taking other specified actions until the merger occurs without the consent of priceline.com. These restrictions may prevent KAYAK from pursuing attractive business opportunities that may arise prior to the completion of the merger. KAYAK has and may continue to become subject to lawsuits and may be subject to adverse judgments related to the merger that may prevent the merger from being completed or from being completed within the expected timeframe. See "The Merger Agreement—KAYAK's Conduct of Business Before Completion of the Merger" beginning on page 140 for a description of the restrictive covenants to which KAYAK is subject.

The merger agreement may be terminated in accordance with its terms and the merger may not be consummated.

        Either KAYAK or priceline.com may terminate the merger agreement under certain circumstances, including, among other reasons, if the merger is not completed by the termination date (as defined in the merger agreement). In addition, if the merger agreement is terminated under certain circumstances specified in the merger agreement, KAYAK may be required to pay priceline.com a termination fee of $52,700,000, including in the event KAYAK terminates the merger agreement to accept a superior proposal. See "The Merger Agreement—Termination of the Merger Agreement" beginning on page 151 for a more complete discussion of the circumstances under which the merger agreement could be terminated and when the termination fee may be payable by KAYAK.

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The merger agreement contains restrictions on the ability of KAYAK to pursue other alternatives to the merger.

        The merger agreement contains non-solicitation provisions that, subject to limited exceptions, restrict KAYAK's ability to initiate, solicit or knowingly encourage any third-party offer or proposal that might reasonably be expected to lead to an acquisition proposal to acquire 15% or more of the assets or voting power of the equity securities of KAYAK. Further, there are limited exceptions, consistent with applicable law, to the agreement that the KAYAK board will not withhold, withdraw, qualify or modify in a manner adverse to priceline.com its recommendation that KAYAK's stockholders adopt the merger agreement, and priceline.com has a right to negotiate with KAYAK in order to match any competing acquisition proposals that may be made. Although the KAYAK board is permitted to take actions in response to a superior proposal if it determines that doing so is necessary to comply with its fiduciary duties, doing so in specified situations could require KAYAK to pay to priceline.com a termination fee of $52,700,000. See "The Merger Agreement—No Solicitation of Acquisition Proposals" beginning on page 142 and "The Merger Agreement—Termination of the Merger Agreement" beginning on page 151 for a more complete discussion of these restrictions and consequences.

        Such provisions could discourage a potential competing acquiror that might have an interest in making a proposal from considering or proposing any such acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than that to be paid in the merger. There also is a risk that the requirement to pay a termination fee to priceline.com in certain situations may result in a potential competing acquiror proposing to pay a lower per share price to acquire KAYAK than it might otherwise have proposed to pay.

Certain directors and executive officers of KAYAK may have interests in the merger that are different from or conflict with yours.

        Certain directors and executive officers of KAYAK were involved in the negotiation of the merger agreement and certain officers of KAYAK have arrangements with KAYAK that provide for termination benefits if their employment is terminated under certain circumstances following completion of the merger. See "The Merger—Interests of Certain Persons in the Merger" beginning on page 120 and "KAYAK Golden Parachute Compensation" beginning on page 86. In addition, at the effective time of the merger, 50% of the unvested portion of certain KAYAK options outstanding immediately prior to the effective time of the merger will vest, and all KAYAK RSUs will be accelerated and paid out. The stock option awards that are subject to 50% vesting at the time of the merger consist of (a) awards that were granted prior to July 19, 2012 and (b) awards that were granted on or after July 19, 2012 to individuals who had not previously received an equity award under any of KAYAK's equity plans. See "The Merger Agreement—Treatment of KAYAK Stock Options and Restricted Stock Units in the Merger" on page 133.


Risks Relating to Integration

Third parties may terminate or alter existing contracts or relationships with KAYAK or priceline.com.

        KAYAK has contracts with suppliers, advertisers, distributors, customers, licensors and other business partners which may require KAYAK to obtain consent from these other parties in connection with the merger. If these consents cannot be obtained, KAYAK may suffer a loss of potential future revenue and may lose rights that are material to its business and the business of the combined company.

        In addition, third parties with whom KAYAK or priceline.com currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the merger. For example, during the nine months ended September 30, 2012, KAYAK's top ten travel suppliers and OTAs (almost all of which are direct competitors of priceline.com) accounted for

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approximately 65% of KAYAK's total revenues. Furthermore, Expedia and its affiliates, including its Hotels.com and Hotwire subsidiaries, accounted for 26% of KAYAK's total revenues during the same period. Priceline.com's competitors that are customers of KAYAK may elect to terminate or decrease the scope of their relationship with KAYAK for competitive reasons. Because KAYAK generates a significant portion of revenues from a few large customers, if KAYAK's relationship with any of its top travel suppliers or OTAs were to end or otherwise be materially reduced, its revenues and operating results could experience significant decline.

Priceline.com may be unable to retain KAYAK personnel successfully after the merger is completed.

        The success of the merger will depend in part on priceline.com's ability to retain the talents and dedication of the professionals currently employed by KAYAK. It is possible that these employees might decide not to remain with KAYAK while the merger is pending or with the combined company after the merger is consummated. If key employees terminate their employment, or insufficient numbers of employees are retained to maintain effective operations, the combined company's business activities might be adversely affected, management's attention might be diverted from successfully integrating KAYAK's operations to hiring suitable replacements, and the combined company's business might suffer. In addition, priceline.com and KAYAK might not be able to locate suitable replacements for any key employees that leave either company or offer employment to potential replacements on reasonable terms.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

        This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain forward-looking statements within the meaning of the federal securities laws. These statements relate to future events or the future financial performance of priceline.com, KAYAK or the combined company. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," or "continue," the negative of such terms, or comparable terminology.

        Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks discussed under the caption entitled "Risk Factors" beginning on page 31 and the other cautionary statements made in this proxy statement/prospectus. These factors may cause priceline.com's, KAYAK's and the combined company's actual results to differ materially from any forward-looking statement.

        Although priceline.com and KAYAK believe that the expectations reflected in the forward-looking statements are reasonable, priceline.com and KAYAK cannot guarantee future results, events, levels of activity, performance or achievements. Moreover, none of priceline.com, KAYAK or any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

        These statements relate to future events or the future financial performance of priceline.com, KAYAK or the combined company, and involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. These risks and other factors include those listed under the caption entitled "Risk Factors" beginning on page 31, and elsewhere in this proxy statement/prospectus. Priceline.com and KAYAK are under no duty to update any of the forward-looking statements after the date of this proxy statement/prospectus to conform such statements to actual results or to changes in expectations.

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INFORMATION ABOUT KAYAK

Overview of the Business

        KAYAK is a technology-driven company committed to improving online travel. Cofounders of Expedia, Travelocity and Orbitz started KAYAK in 2004 to take a better approach to finding travel online. KAYAK's websites and mobile applications enable people to easily research and compare accurate and relevant information from hundreds of other travel websites in one comprehensive, fast and intuitive display. KAYAK also provides multiple filtering and sorting options, travel management tools and services such as flight status updates, pricing alerts and itinerary management. Once users find their desired flight, hotel or other travel products, KAYAK sends them to their preferred travel supplier or OTA, to complete their purchase, and in many cases, users may now complete bookings directly through KAYAK's websites and mobile applications.

        KAYAK's services are free for travelers. KAYAK offers travel suppliers and OTAs an efficient channel to sell their products and services to a highly targeted audience focused on purchasing travel. KAYAK earns revenues by sending referrals to travel suppliers and OTAs and from a variety of advertising placements on its websites and mobile applications.

        Since KAYAK's commercial launch in 2005, KAYAK has experienced significant growth:

    For the nine months ended September 30, 2012, KAYAK generated $228.9 million of revenues, representing growth of 34.2% over the nine months ended September 30, 2011;

    For the nine months ended September 30, 2012, KAYAK generated income from operations of $38.8 million as compared to $6.4 million for the nine months ended September 30, 2011. After adjusting for a $15.0 million impairment charge related to KAYAK's decision to stop supporting the SideStep brand name, operating income for the nine months ended September 30, 2012 increased by 81.7% over the same period in 2011;

    For the nine months ended September 30, 2012, KAYAK had adjusted EBITDA of $54.9 million representing growth of 48.4% over the nine months ended September 30, 2011. Adjusted earnings before interest, taxes, depreciation and amortization, which we refer to as adjusted EBITDA, is a non-generally accepted accounting principle metric used by management to measure KAYAK's operating performance. See "KAYAK Management's Discussion and Analysis of KAYAK's Financial Condition and Results of Operations—Overview—Adjusted EBITDA Reconciliation" beginning on page 61 for an additional description of adjusted EBITDA and a reconciliation of adjusted EBITDA to income (loss) from operations;

    For the nine months ended September 30, 2012, KAYAK processed 901 million user queries for travel information, representing growth of 35.3% over the nine months ended September 30, 2011; and

    KAYAK mobile applications have been downloaded over 20 million times since their introduction in March 2009. For the nine months ended September 30, 2012, KAYAK had approximately 8 million downloads, representing growth of 58.4% over the nine months ended September 30, 2011.

        As of January 18, 2013, KAYAK had 203 employees, and it had local websites in 18 countries including the United States, Germany, Spain, the United Kingdom, Austria, France and Italy.


KAYAK Brands—KAYAK, swoodoo and checkfelix.com

        KAYAK operates its websites and mobile applications under three brands: KAYAK, swoodoo and checkfelix.com. Each of these brands provides the same core set of free services including flight, hotel and other travel search, flight status updates, pricing alerts and itinerary management.

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        KAYAK uses the KAYAK brand across multiple platforms including: KAYAK.com; local websites in 18 countries including the United States; a mobile website, m.KAYAK.com; and the KAYAK mobile smartphone applications currently available on the iPhone, iPad, Android, Windows Phone 7 and 8 and other platforms. KAYAK branded websites and mobile applications account for most of its query volume, and it will focus its future growth efforts on building the KAYAK brand in the United States and in key international markets and growing the swoodoo brand in Germany.

        The SideStep brand, which KAYAK acquired in December 2007, was used for KAYAK's sidestep.com website. In January 2011, KAYAK determined that it would not support two brand names and URLs in the United States and began redirecting traffic from sidestep.com to KAYAK.com. The swoodoo brand, which KAYAK acquired in May 2010, is used for the swoodoo.com website and the related mobile travel application, which is a leading travel search platform in Germany. KAYAK acquired JaBo Vertrieb-und Entwicklung GmbH, which supported the checkfelix.com brand, in April 2011. Checkfelix.com is a leading travel search platform in Austria.


KAYAK's Distribution and Advertising Platform

        KAYAK's services are free for travelers. KAYAK earns revenues by sending referrals to travel suppliers and OTAs after a traveler selects a specific itinerary (distribution revenues), and through advertising placements on its websites and mobile applications (advertising revenues).


    Distribution Revenues

        KAYAK receives distribution revenues by sending qualified leads to travel suppliers and OTAs and by facilitating bookings directly through its websites and mobile applications. After a traveler has entered a query on KAYAK's website or mobile applications, reviewed the results, and decided upon a specific itinerary, KAYAK sends the user directly into the travel supplier's or OTA's purchase process to complete the transaction. In many cases, users may now complete bookings with the travel supplier or OTA without leaving the KAYAK websites and mobile applications. Travel suppliers and OTAs have the flexibility to pay KAYAK either when these qualified leads click on a query result at a set cost per click, or CPC basis, or when they purchase a travel product through KAYAK or on the travel supplier or OTA website, which is referred to as cost per acquisition, or CPA, basis. KAYAK separately negotiates and enters into distribution agreements, and these agreements set forth the payment terms for the applicable travel supplier or OTA.


    Advertising Revenues

        Advertising revenues primarily come from payments for compare units, text-based sponsored links and display advertisements. A "compare unit" is an advertising placement that, if selected by a KAYAK user, launches the advertiser's website and initiates a query based on the same travel parameters provided on the KAYAK website. The major types of advertisers on KAYAK's websites consist of OTAs, third party sponsored link providers, hotels, airlines and vacation package providers. Generally, KAYAK's advertisers pay KAYAK on a CPC basis, which means advertisers pay only when someone clicks on one of their advertisements, or on a cost per thousand impression basis, or CPM. Paying on a CPM basis means that advertisers pay KAYAK based on the number of times their advertisements appear on KAYAK's websites or mobile applications.

        KAYAK has a proprietary advertising platform called the KAYAK Network, or KN. KN allows advertisers to target the placement and message of their advertisements to the search parameters entered by a traveler, such as the traveler's origin, destination and desired travel dates. This technology allows advertisers to target their advertisements better, create more effective messages and to transfer people to their websites more efficiently. KAYAK's platform allows advertisers to limit placements to instances when the advertiser has an offer that is relevant to a traveler's query. For example, an airline

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can ensure it only advertises when a traveler searches for a route offered by such airline, and a hotelier can ensure it only advertises to travelers who have searched for dates when the hotelier has low occupancy. KAYAK also enables advertisers to use a traveler's search parameters to dynamically create targeted messages, and after the traveler clicks on an advertisement, KAYAK can pass the same search information through to the advertiser, thus increasing the likelihood of a purchase on their website.


Concentration of Customers

        During the nine months ended September 30, 2012, KAYAK's top ten travel suppliers and OTAs accounted for approximately 65% of its total revenues. In particular, for the nine months ended September 30, 2012, Expedia and its affiliates, including its Hotels.com and Hotwire subsidiaries, accounted for 26% of KAYAK's total revenues. Also during this period, priceline.com and Orbitz and its affiliates, including its CheapTickets, HotelClub and ebookers subsidiaries, accounted for 10% and 8%, respectively of KAYAK's total revenues.

        For the nine months ended September 30, 2012, and the years ended December 31, 2011 and 2010, KAYAK's revenues attributable to operations in the United States were $182.4, $184.4 and $154.7, respectively. This revenue comprised 80%, 82% and 91%, respectively, of KAYAK's total revenue during those periods.


Technology and Infrastructure

        KAYAK is a technology-driven company. KAYAK's technology platform powers its websites and mobile applications by rapidly searching through the complex and fragmented range of travel industry data and presenting comprehensive and relevant travel query results to the user in a clear and intuitive manner.


    Search Capabilities

        KAYAK's software and systems have been designed from inception to handle significant growth in users and queries, without requiring significant re-engineering or major capital expenditures. In the first nine months of 2012, KAYAK received and processed 901 million user queries for travel information.

        When a travel query is entered on one of KAYAK's websites or mobile applications, its technology platform analyzes the travel parameters, determines which websites and other travel databases have relevant travel information and then queries those multiple sources in parallel. Many of those sources operate with differing protocols, and therefore return results in slightly different ways and in differing time frames. KAYAK's platform gathers, prioritizes and standardizes this travel data. KAYAK's proprietary software then detects and eliminates inaccurate prices or results in this data, and its ranking software then determines which results are likely to be the most relevant and useful to the user. KAYAK's technology platform completes these processes and returns a comprehensive and relevant set of results within moments of receiving the travel query from the user.


    Website Design and Hosting

        Reliability, speed and integrity are important to KAYAK. It has designed its websites and mobile applications using a combination of its own proprietary software and a variety of open source or other public domain technologies. Where appropriate, KAYAK has chosen to use public domain technologies to develop and maintain its websites and mobile applications because KAYAK believes they are widely used and well proven by the engineering community and end-users, and, therefore, offer a reliable and efficient development environment and infrastructure. Such technologies also enable KAYAK to provide its users with a stable web or mobile experience and are often free. KAYAK's limited and selective use of commercially available software means that as it continues to grow the number of users

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that visit its websites and download its mobile applications, it does not incur significant additional software costs or software licensing fees.

        KAYAK's websites are hosted on hardware and software located at third-party facilities in Medford and Somerville, Massachusetts and Freiburg, Germany. KAYAK also uses content delivery networks and third-party domain name system, or DNS, services to optimize routing and increase the speed of its website pages. KAYAK is committed to ensuring that its websites are highly available. KAYAK's use of multiple secured hosting facilities provides it with power redundancy and expandable and redundant bandwidth, and KAYAK believes these facilities are well suited to fit its current and planned business needs.


    Mobile Applications and Platforms

        KAYAK offers mobile applications for the iPhone, iPad, Android, Windows Phone 7 and 8 and other platforms. These applications combine the speed and comprehensiveness found in KAYAK's website experience with the convenience and portability offered by today's smartphones and tablets. To enhance the mobile experience, KAYAK has also implemented mobile-specific functionality in these applications, such as currency conversion, visual flight status, airport guides, offline travel itineraries and location-based features.

        As some smartphone users prefer to use the web browser on their phones rather than download a separate application, KAYAK also offers a mobile-optimized website. These users are automatically redirected to m.KAYAK.com, where KAYAK provides an "application-like" experience, including a streamlined interface, touch screen functionality and assisted input based on the user's location.


    Focus on Innovation

        KAYAK strives to continually improve the user-experience on its websites and mobile applications. For example, KAYAK routinely works to improve its software and algorithms to further reduce the time required to return query results. KAYAK reviews the feature sets and design of its websites and mobile applications on a regular basis to identify areas for improvement. To aid in its review, KAYAK conducts regular formal usability testing, focus groups and comparison testing of new features. KAYAK releases new code to its websites on a nearly weekly basis. Some examples of KAYAK's past innovations include a user interface capable of updating page elements without reloading the entire page and "sliding bars" and other tools to filter query results based on relevant criteria, such as specific departure and arrival times for flights.

        Certain costs to develop internal use computer software are capitalized because these costs are expected to be recoverable, while costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred. KAYAK capitalized software and website development costs of $1.0 million, $1.4 million and $0.6 million during the years ended December 31, 2011, 2010 and 2009, respectively and $0.8 million during the nine months ended September 30, 2012.


Intellectual Property

        KAYAK's intellectual property, including patents, trademarks, copyrights and trade secrets are an important component of its business. KAYAK also relies on confidentiality procedures and contractual provisions to protect its proprietary technology and its brands. In addition, KAYAK enters into confidentiality and invention assignment agreements with its employees and consultants and confidentiality agreements with other third parties.

        KAYAK's registered trademarks include: KAYAK, KAYAK.com, KAYAK Network, Search One and Done, SideStep, checkfelix.com and swoodoo. All of these trademarks, other than swoodoo and checkfelix.com, are registered in the U.S. and many of them are also registered in other jurisdictions.

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        KAYAK has ten issued U.S. patents and eleven U.S. patent applications for various aspects of its technology. Its patents expire at various dates between March 2021 and October 2026.


Marketing

        KAYAK believes that continued investment in marketing is important to attracting new users to its websites and mobile applications. KAYAK balances its marketing investments between brand marketing campaigns designed to grow brand awareness and online marketing investments designed to generate additional query volume.


    Brand Marketing

        To grow brand awareness, KAYAK advertises in broad reach media, including television, outdoor and online display media. During the first nine months of 2012, it spent $59.0 million on KAYAK, swoodoo and checkfelix brand marketing. KAYAK measures the return on investment of its brand marketing through online brand tracking studies and overall query growth. KAYAK views the costs of its offline brand marketing campaign as relatively fixed, and KAYAK believes that as its revenues grow these costs will decrease as a percentage of its total revenues.


    Online Marketing

        KAYAK also markets its services and acquires traffic to its websites by purchasing travel-related keywords from general search engines and through other online marketing channels. The purchase of travel-related keywords consists of anticipating what words and terms consumers will use to search for travel on general search engines and then bidding on those words and terms in the applicable search engine's auction system. As a result, KAYAK bids against other advertisers for preferred placement on the applicable general search engine's results page. KAYAK spent $57.0 million on online marketing in the first nine months ended September 30, 2012.


Strategic Relationships

        In an effort to continue to grow its business and offer exceptional services to its users, KAYAK enters into strategic relationships with travel suppliers, OTAs, general search engines and travel technology companies. KAYAK's strategic relationships include the following:


    Orbitz Worldwide, Inc.

        KAYAK has maintained a strategic relationship with Orbitz Worldwide, Inc., or Orbitz, since 2004. Under the terms of its current long-term agreement, which it entered into in April 2009 and has subsequently amended, Orbitz provides KAYAK with access to its travel information and pays KAYAK for any transactions KAYAK sends to one of its websites. In return, KAYAK provides exclusivity to Orbitz relating to the display of certain core query results. This agreement expires December 31, 2013.


    Google Inc.

        KAYAK has maintained a strategic relationship with Google since 2004. Under the terms of the current long-term agreement, which was entered into in December 2004, and subsequently amended, Google provides KAYAK with sponsored link advertisements that, in addition to KAYAK's own advertisements, are placed throughout the KAYAK websites at locations KAYAK determines. Google and KAYAK share the revenues that are generated from these advertisements. KAYAK's agreement with Google expires October 31, 2014.

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    ITA Software, Inc.

        In March 2005 KAYAK entered into an agreement to license faring engine software from ITA. This faring engine software provides airfare content that is used in a majority of KAYAK's domestic flight query results and to supplement KAYAK's international flight query results. This agreement expires December 31, 2013.


    Other Relationships

        In addition, KAYAK's commercial relationships include agreements with over 300 travel suppliers, OTAs and technology providers. These relationships provide KAYAK with access to travel information, booking, fulfillment and customer service solutions as well as distribution and advertising revenue, and are established and managed by KAYAK's Business Development, Advertising Sales and Account Management teams. KAYAK's Business Development team negotiates agreements with travel suppliers, OTAs and technology providers for access to their travel content, for payment from distribution-related referrals and for content delivery, booking, fulfillment and customer service solutions. This team is focused on contract negotiation and relationship management. KAYAK's Advertising Sales team calls on travel suppliers, OTAs and their advertising agencies and negotiates advertising insertion orders for placements throughout the KAYAK websites and mobile applications. KAYAK's Account Management team works with travel suppliers and OTAs to implement advertising campaigns and optimize spend.

        These other significant relationships include:

        OTAs:    Airfare.com, airline-direct.de, Expedia (including Hotwire, Hotels.com and CarRentals.com), Fareportal, Getaroom, priceline.com (including Booking.com), ODIGEO (including Opodo and eDreams), Travelocity, Travel Holdings (including Easy Click Travel and Tourico Holidays) and Travix (which manages a portfolio of travel-focused websites, including Vayama and EasyToBook.com);

        Airlines:    Air Canada, airberlin, AirTran Airways, Alaska Airlines, American Airlines, BravoFly, British Airways, Delta Air Lines, easyJet Airline, Lufthansa Airlines, United Air Lines, Virgin America and Virgin Atlantic;

        Hotels:    Best Western, Choice Hotels, Harrah's Entertainment, Hyatt Hotels and Resorts, InterContinental Hotels Group, La Quinta Inn & Suites, Marriott, Starwood Hotels and Wyndham;

        Rental Cars:    Alamo Rent A Car, Auto Europe, Avis Budget Group, Dollar Thrifty Automotive Group, Enterprise Rent-A-Car, Hertz Rent-a-Car and National Car Rental; and

        Technology Providers:    Amadeus, DoubleClick, IAN, Pegasus, SynXis, TravelClick, TRX and World Choice Travel.


Competition

        KAYAK operates in the highly competitive online travel category. KAYAK competes both to attract users to its websites and mobile applications and to attract travel suppliers and OTAs to participate in its query results and purchase advertising placements on its websites.


    Competition for Users

        In KAYAK's efforts to attract and retain users, it competes with travel suppliers, OTAs, search engines and other travel information and research websites. Its major competitors include general search engines such as Google and Bing, OTAs such as Expedia and Orbitz and other travel information sites such as TripAdvisor and Travelzoo. In addition, airlines, hotels and other travel suppliers are increasingly focused on attracting users directly to their own websites.

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    Competition for Advertisers

        While KAYAK competes with travel suppliers and OTAs to bring users directly to its websites, such parties also advertise on KAYAK's websites and mobile applications. KAYAK believes that travel suppliers will spend their advertising dollars on the websites and offline media that results in the highest return on investment. This means that KAYAK directly competes with search engines, OTAs and traditional offline advertising sources such as TV and print media for travel supplier advertising dollars. KAYAK also competes with search engines and offline media sources for advertising from OTAs that look to market their services to travelers. KAYAK believes that travel suppliers and OTAs will direct their advertising dollars to the websites, mobile applications and offline media sources that offer the highest return on investment.


Employees

        As of January 18, 2013, KAYAK had 203 employees, consisting of 162 in the U.S., 27 in Zurich, 7 in Germany and 7 in England. Of those employees, 109 are on KAYAK's engineering and development team. As of January 18, 2013, KAYAK also had an arrangement with an outsourced engineering team in Lithuania that provides it with approximately 32 contractors for engineering and development functions, a team of 29 contractors in Pakistan who provide engineering, data analysis and data operator functions, 4 contractors in India that assist with invoicing activities, 5 contractors serving various functions in Europe and Russia, and 1 contractor in the United States.

        KAYAK considers its relationships with its employees to be good. None of KAYAK's employees is covered by a collective bargaining agreement.


Government Regulation

        Laws and regulations applying to businesses generally and to businesses operating on the Internet affect KAYAK. As the growth in Internet commerce continues, the number of laws and regulations specific to operating on the Internet is increasing and includes areas such as privacy, content, advertising, and information security. Moreover, the applicability to the Internet of existing laws governing issues such as intellectual property ownership and infringement, obscenity, libel and personal privacy is uncertain and evolving.


    Air Transportation Advertising

        KAYAK's travel suppliers and advertisers are subject to laws and regulations relating to the sale of travel, including regulations and standards promulgated by the Department of Transportation, which we refer to as the DOT, related to the advertising and sale of air transportation. KAYAK does not sell or book air transportation, and, therefore, is not positioned similarly to the entities (such as air carriers and ticket agents) that are usually understood to fall within the scope of the DOT's regulations and standards. Nevertheless, KAYAK intends to ensure that any content created by KAYAK is consistent with the DOT's regulations and standards, and KAYAK seeks representations of compliance from its travel suppliers and advertisers for content provided to or promoted by KAYAK. To the extent KAYAK expands its business model in the air transportation area, it could be subject to DOT oversight.


KAYAK's Legal Proceedings

        In connection with the merger, KAYAK, priceline.com, Merger Sub and members of KAYAK's board were named as defendants in a putative class action claim filed on November 16, 2012 by Michael James Krawczynski on behalf of himself and other holders of shares of KAYAK Class A common stock, which we refer to as the Krawczynski complaint. The Krawczynski complaint was filed in the Delaware Court of Chancery and alleges, among other things, that KAYAK's board failed to adequately discharge its fiduciary duties to the holders of shares of KAYAK Class A common stock by

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failing to ensure they will receive maximum value for their shares, failing to conduct an appropriate sale process and agreeing to inappropriate provisions in the merger agreement that would dissuade or otherwise preclude the emergence of a superior offer. The complaint also alleges that priceline.com and KAYAK aided and abetted the KAYAK board's breach of its fiduciary duties to holders of shares of KAYAK's Class A common stock. The action seeks, among other things, injunctive relief (1) enjoining priceline.com and KAYAK from proceeding under the terms of the merger agreement, (2) enjoining priceline.com and KAYAK from consummating the merger unless KAYAK's board implements procedures to obtain the highest possible price for KAYAK, and (3) declaring that the merger agreement was entered into in breach of the KAYAK board's fiduciary duties and is therefore unlawful and unenforceable. The Krawczynski complaint also seeks to recover costs and disbursements from the defendants, including reasonable attorneys' and experts fees.

        A second putative class action claim was filed against KAYAK, priceline.com, Merger Sub and members of KAYAK's board in the Delaware Court of Chancery on December 20, 2012 by Bert Ly on behalf of himself and other holders of shares of KAYAK Class A common stock, which we refer to as the Ly complaint. The Ly complaint raises substantially similar allegations as the Krawczysnki complaint, including, among other things, that KAYAK's board failed to adequately discharge its fiduciary duties to the holders of shares of KAYAK Class A common stock by failing to ensure they will receive adequate or fair value for their shares, failing to conduct an appropriate sale process and agreeing to inappropriate provisions in the merger agreement that would dissuade or otherwise preclude the emergence of a superior offer. The complaint also alleges that the registration statement, of which this proxy statement/prospectus is a part, is false and misleading because, among other things, it does not include material information about the financial analyses relating to the deal performed for the KAYAK special committee and the KAYAK board by Sequoia Capital and Houlihan Lokey. The complaint further alleges that priceline.com and Merger Sub aided and abetted the KAYAK board's breach of its fiduciary duties to holders of shares of KAYAK's Class A common stock. The action seeks, among other things, (1) injunctive relief enjoining priceline.com and KAYAK from proceeding under the terms of the merger agreement until KAYAK's board has acted in accordance with its fiduciary duties and made full and fair disclosure of all material factors to the plaintiffs and class; (2) rescissory damages if the merger is consummated prior to the judgment; (3) money damages to account for any profits and special benefits obtained by the defendants as a result of their alleged breach; and (4) attorneys' fees.

        On January 7, 2013 the Delaware Court of Chancery granted a motion by the plaintiffs in the Krawczynski complaint and the Ly complaint to consolidate their related claims. On January 8, 2013 the Delaware Court of Chancery also certified a class consisting of all persons who held shares of KAYAK common stock, together with their successors and assigns, at any time during the period from and including November 8, 2012 through the consummation of the merger. The Delaware Court of Chancery also granted a motion for the plaintiffs in the consolidated action to file a verified consolidated class action complaint.

        Additionally, on November 21, 2012, Joseph McKinney, on behalf of himself and other holders of shares of KAYAK Class A common stock, filed a substantively identical putative class action claim against the defendants referenced above, which we refer to as the McKinney complaint, in the Judicial District of Stamford / Norwalk, Connecticut. The allegations set forth in the McKinney complaint, as well as the relief requested, are generally the same as those set forth in the Krawczynski complaint. The McKinney complaint also alleges that the KAYAK board breached its fiduciary duties by agreeing to sell KAYAK without first taking steps to ensure that the holders of shares of KAYAK Class A common stock would obtain adequate, fair and maximum consideration and engineering a merger to benefit themselves and/or priceline.com without regard for holders of shares of KAYAK's Class A common stock. The McKinney complaint also seeks, among other things, (1) to direct the defendants to exercise their fiduciary duties to obtain a transaction which is in the best interest of the holders of shares of KAYAK Class A common stock until the process for the sale is completed and the highest

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possible price is obtained and (2) to rescind the merger and merger agreement and, in the event the merger is consummated prior to the judgment, rescind the merger and award rescissory damages.

        On January 16, 2013, the priceline.com and KAYAK defendants entered into the MOU with the plaintiffs for each complaint described above to settle those lawsuits. The MOU provides for, among other things, the inclusion of additional disclosures with respect to various aspects of the merger in this proxy statement/prospectus. In addition, it grants plaintiffs' counsel the right to seek reasonable attorneys' fees and expenses, subject to court approval. The MOU further provides that the parties will promptly enter into a stipulation of settlement which will provide, among other things, that all proceedings in the actions filed in Delaware, except for settlement-related proceedings, shall be stayed until the Delaware Court of Chancery rules upon a motion for final approval of the settlement and enters a judgment in an appropriate form dismissing the actions filed in Delaware with prejudice. Additionally, the plaintiffs in the McKinney complaint have agreed to stay proceedings in the Connecticut courts pending final approval of the settlement by the Delaware Court of Chancery, and have agreed that the McKinney complaint is to be dismissed with prejudice within five business days of such final approval of the settlement. The MOU and stipulation of settlement are subject to various conditions, including court approval following notice to KAYAK stockholders, completion of certain confirmatory discovery and consummation of the merger. If the settlement is approved, it will resolve and release on behalf of the entire class of KAYAK stockholders, all claims that were or could have been brought challenging any aspect of the merger, the merger agreement and any disclosure made in connection therewith, among other claims.


Facilities

        KAYAK leases approximately 7,375 square feet in Norwalk, Connecticut for its corporate headquarters. On June 4, 2012, KAYAK entered into a lease agreement for 17,600 square feet of office space in Stamford, Connecticut. Once the space in Stamford is completed, it will serve as KAYAK's corporate headquarters, and it will close its offices in Norwalk, Connecticut. KAYAK maintains an office of approximately 29,381 square feet in Concord, Massachusetts, which is used primarily by its technology team. In addition, KAYAK leases office space for its foreign subsidiaries in London, England, Munich, Germany and Zurich, Switzerland. These leases are set to expire at varying dates between May 2013 and April 2025.

        KAYAK believes the current and planned space are adequate for its needs and that suitable additional space will be available to accommodate the foreseeable expansion of its operations.


Trademarks

        KAYAK®, swoodooTM, checkfelix.com® and Search One and Done® are KAYAK's key trademarks and are registered under applicable intellectual property laws. This proxy statement/prospectus contains references to KAYAK's trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that KAYAK will not assert, to the fullest extent under applicable law, its rights or the rights of the applicable licensor to these trademarks and trade names. KAYAK does not intend its use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of KAYAK by, any other companies.


Risks Relating to KAYAK's Business

KAYAK may be unable to maintain or establish relationships with travel suppliers and OTAs, which could limit the information it is able to provide to travelers.

        KAYAK's ability to attract users to its services depends in large part on providing a comprehensive set of query results. To do so, KAYAK maintains relationships with travel suppliers and OTAs to

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include their data in its query results. The loss of existing relationships with travel suppliers or OTAs, or an inability to continue to add new ones, may cause KAYAK's query results to provide incomplete pricing, availability and other information important to travelers using its services. This deficiency could reduce traveler confidence in the query results KAYAK provides, making it less popular with travelers.

        With respect to KAYAK's flight and fare information, the willingness of airlines to participate in KAYAK's query results can vary by carrier. Historically, Southwest Airlines has chosen not to include its pricing and availability information in KAYAK's query results and those of other third parties. If KAYAK is unable to continue to display travel data from multiple airline carriers, it would reduce the breadth of KAYAK's query results, and the number of travelers using KAYAK's services could decline, resulting in a loss of revenues and a decline in KAYAK's operating results.

        Recently, there have been a number of airline mergers, including the 2008 merger between Delta Air Lines and Northwest Airlines, the 2010 merger between United Airlines and Continental Airlines and the 2011 merger of AirTran Airlines and Southwest Airlines. If one of KAYAK's airline travel suppliers merges or consolidates with, or is acquired by, another company with which KAYAK does not have a relationship, KAYAK may lose that airline as a participant in its query results or as an advertiser. KAYAK could also lose an airline's participation in the event of an airline bankruptcy.

        Approximately 8% of the hotels displayed on KAYAK's websites are comprised of five hotel chains. A loss of any one of these brand name hotel chains as a travel supplier, or a loss of any one of these chains as a provider of travel information to OTAs, could have a negative impact on KAYAK's business, results of operations and financial condition.

        In addition, many of KAYAK's agreements with travel suppliers and OTAs are short-term agreements that may be terminated on 30 days' notice. KAYAK cannot guarantee that travel suppliers and OTAs will continue to work with it. KAYAK may also be unable to negotiate access, pricing or other terms that are consistent or more favorable than KAYAK's current terms. A failure to retain current terms or obtain more favorable terms with its travel suppliers and OTAs could harm KAYAK's business and operating results.

If travel suppliers or OTAs choose not to advertise with KAYAK, or choose to reduce or even eliminate the fees they pay, KAYAK's financial performance could be materially adversely affected.

        KAYAK's current financial model depends almost entirely on fees paid by travel suppliers and OTAs for referrals from KAYAK's query results and advertising placements. Since KAYAK does not have long-term contracts with most of the travel suppliers or OTAs that use its services, these travel suppliers or OTAs could choose to modify or discontinue their relationship with KAYAK with little to no advance notice. These changes may include a cessation in the provision of travel data to KAYAK, or a reduction in, or elimination of, KAYAK's compensation.

        During the nine months ended September 30, 2012, KAYAK's top ten travel suppliers and OTAs accounted for approximately 65% of KAYAK's total revenues. In particular, for the nine months ended September 30, 2012, Expedia and its affiliates, including its Hotels.com and Hotwire subsidiaries, accounted for 26% of KAYAK's total revenues. Also during this period, priceline.com and Orbitz and its affiliates, including its CheapTickets, HotelClub and ebookers subsidiaries, accounted for 10% and 8%, respectively, of KAYAK's total revenues. If KAYAK's relationship with any of its top travel suppliers or OTAs were to end or otherwise be materially reduced, its revenues and operating results could experience significant decline.

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If KAYAK does not continue to innovate and provide tools and services that are useful to travelers, it may not remain competitive, and its revenues and operating results could suffer.

        KAYAK's success depends on continued innovation to provide features and services that make its websites and mobile applications useful for travelers. KAYAK's competitors are constantly developing innovations in online travel-related services and features. As a result, KAYAK must continue to invest significant resources in research and development in order to continually improve the speed, accuracy and comprehensiveness of its services. If KAYAK is unable to continue offering innovative products and services, it may be unable to attract additional users or retain current users, which could adversely affect its business, results of operations and financial condition.

        KAYAK primarily depends on a single third party to provide airfare query results, and a loss of this provider could limit KAYAK's ability, or make it more difficult, to provide travelers with accurate flight information.

        KAYAK licenses faring engine software from ITA Software, Inc., or ITA, under an agreement which expires on December 31, 2013. This faring engine software directly provided approximately 26% of KAYAK's overall airfare query results for the first nine months of 2012. Additionally, 10% of KAYAK's overall airfare query results during such period were obtained from other sources which, in turn, utilized the ITA faring engine software. KAYAK has invested significant time and resources to develop proprietary software and practices to optimize the output from ITA's software for KAYAK's websites and mobile applications. In addition, KAYAK believes that alternative faring engine solutions currently do not provide the level of comprehensiveness and accuracy that ITA's software provides.

        Airline travel queries accounted for approximately 85% of the queries performed on KAYAK's websites and mobile applications for the nine months ended September 30, 2012, and distribution revenues from airline queries represented approximately 22% of KAYAK's revenues for the nine months ended September 30, 2012. KAYAK anticipates domestic airfare queries will continue to represent a significant portion of KAYAK's overall queries for the foreseeable future. Thus, a loss of access to ITA's software or enhancements or improvements to the software, or an adverse change in KAYAK's costs associated with use of the ITA software, could have a significant negative effect on the comprehensiveness and/or speed of KAYAK's query results, and on KAYAK's revenues and operating results. Moreover, KAYAK believes that a significant number of travelers who use its websites and mobile applications for non-air travel services first come to KAYAK's site to conduct queries for airfare, and accordingly a loss, disruption or other negative impact on its airfare query results could also result in a significant decline in the use of, and financial performance of, KAYAK's query services for non-air travel queries.

In the event KAYAK is not offered access to Google's enhancements of or replacements to ITA software at competitive prices or at all, its ability to compete and operate its business effectively, and its financial performance, may be materially adversely affected.

        On April 8, 2011, Google, Inc., or Google, entered into a consent decree agreeing to conditions on Google's acquisition of ITA, and Google subsequently completed its acquisition of ITA. The consent decree stated Google's intent to offer an online travel search product, and Google has since launched hotel and flight search tools and services that directly compete with the tools and services KAYAK offers. Google's flight search offering includes significantly increased speed on return of search results and, in the future, may include other enhancements or improvements in performance of the ITA software which may not be made available to KAYAK. Although the consent decree will provide KAYAK with the right to renew its existing ITA agreement on the same terms until October 2016, if ITA or Google limit KAYAK's access to the ITA software or any improvements to the software, separately develop replacement software to which they claim KAYAK is not entitled or increase the price KAYAK pays for any improvements or replacement software and KAYAK is unable to replace

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ITA's software with a comparable technology, KAYAK may be unable to operate its business effectively, and its financial performance may suffer.

Competition from general search engine companies could adversely affect KAYAK by reducing traffic to KAYAK's website and mobile applications and by creating a competitive product that people choose over KAYAK when searching for travel online.

        Large, established Internet search engines with substantial resources and expertise in developing online commerce and facilitating Internet traffic are creating, and are expected to create further, inroads into online travel, both in the U.S. and internationally. For example, in addition to its acquisition of ITA, Google has launched a travel search offering that displays hotel and airfare information and rates to travelers. Moreover, Microsoft acquired one of KAYAK's competitors, Farecast.com, in 2008 and relaunched it as Bing Travel, a travel search engine which not only allows users to search for airfare and hotel reservations but also purports to predict the best time to purchase. These initiatives appear to represent a clear intention by Google and Microsoft to appeal more directly to travel consumers and travel suppliers by providing more specific travel-related search results, which could lead to more travelers using services offered by Google or Bing instead of those offered on KAYAK's websites and mobile applications. For example, Google has launched the ability for users of its website to search for hotel and airfare pricing and availability, and as Google integrates such offerings with other Google services such as Google maps and weather information, then the number of users that visit KAYAK's websites and KAYAK's ability to attract advertising dollars could be negatively impacted. Google or other leading search engines could choose to direct general searches on their respective websites to their own travel search service and/or materially improve search speed through hardware investments, which also could negatively impact the number of users that visit KAYAK's websites and KAYAK's ability to attract advertising dollars. If Google or other leading search engines are successful in offering services that directly compete with KAYAK's, KAYAK could lose traffic to its websites and mobile applications, which could have a material adverse effect on its business, results of operations and financial condition.

KAYAK may be unable to maintain and increase brand awareness and preference, which could limit its ability to maintain its current financial performance or achieve additional growth.

        KAYAK relies heavily on the KAYAK brand. In its international markets KAYAK also relies on swoodoo and other brands. Awareness, perceived quality and perceived differentiated attributes of its brands are important aspects of KAYAK's efforts to attract and expand the number of travelers who use its websites and mobile applications. Since many of KAYAK's competitors have more resources and can spend more advertising their brands and services, KAYAK is required to spend considerable money and other resources to preserve and increase its brand awareness. Should the competition for top-of-mind awareness and brand preference increase among online travel services, KAYAK may not be able to successfully maintain or enhance the strength of its brand. Even if KAYAK is successful in its branding efforts, such efforts may not be cost effective. If KAYAK is unable to maintain or enhance traveler and advertiser awareness of its brand cost effectively, KAYAK's business, results of operations and financial condition would be adversely affected.

        In November 2009, KAYAK began a broad-reach marketing campaign that included television commercials and signage advertising in major U.S. airports. KAYAK does not know if continued marketing investments will result in new or additional travelers visiting its websites or mobile applications. If KAYAK is unable to recover these additional costs through an increase in the number of travelers using its services, or if KAYAK discontinues its broad-reach campaign, it will likely experience a decline in financial results.

        KAYAK has registered domain names for websites, such as KAYAK.com, KAYAK.co.uk, swoodoo.com and checkfelix.com. If KAYAK were to lose the ability to use a domain name, it would

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be forced to incur significant expenses to market its services under a new domain name, which could substantially harm its business. In addition, KAYAK's competitors could attempt to capitalize on KAYAK's brand recognition by using domain names similar to KAYAK's. Domain names similar to KAYAK's have been registered in the U.S. and elsewhere, and in some countries the top level domain name "KAYAK" is owned by other parties. KAYAK may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of, its brand, trademarks or service marks. Protecting and enforcing KAYAK's rights in its domain names and determining the rights of others may require litigation, which could result in substantial costs and diversion of management attention.

Competition from other travel companies could result in a decrease in the amount and types of travel information KAYAK displays, a loss of travelers using its products and services and a decrease in financial performance.

        KAYAK operates in the highly competitive online travel category. Many of KAYAK's current and potential competitors, including general search engines, OTAs, travel supplier websites and other travel websites, have existed longer and have larger customer bases, greater brand recognition and significantly greater financial, marketing, personnel, technical and other resources than KAYAK. Some of these competitors may be able to secure services on more favorable terms. In addition, many of these competitors may be able to devote significantly greater resources to:

    marketing and promotional campaigns;

    attracting and retaining key employees;

    securing participation of travel suppliers and access to travel information, including proprietary or exclusive content;

    website and systems development; and

    enhancing the speed at which their services return user search results.

        In addition, consolidation of travel suppliers and OTAs could limit the comprehensiveness of KAYAK's query results and the need for its services and could result in advertisers terminating their relationships with KAYAK.

        Increased competition could result in reduced operating margins and loss of market share. There can be no assurance that KAYAK will be able to compete successfully against current and future competitors or that competition will not have a material adverse effect on KAYAK's business, results of operations and financial condition.

Changes in general search engine algorithms and dynamics or termination of traffic-generating arrangements could result in a decrease in the number of people directed to KAYAK's websites.

        KAYAK uses Internet search engines, principally through the purchase of travel-related keywords, to generate traffic to its websites. The purchase of travel-related keywords consists of anticipating what words and terms consumers will use to search for travel on general search engines and then bidding on those words and terms in the applicable search engine's auction system. KAYAK bids against other advertisers for preferred placement on the applicable general search engine's results page. Approximately 11% of KAYAK's user queries during the nine months ended September 30, 2012, resulted from searches initially entered on general search engine websites. Search engines, such as Google, frequently update and change the logic which determines the placement and ordering of results of a user's search, which may reduce the effectiveness of the keywords KAYAK has purchased. If a major search engine, such as Google, changes its algorithms in a manner that negatively affects the search engine ranking of KAYAK's websites, or changes its pricing, operating or competitive dynamics to KAYAK's disadvantage, KAYAK's business, results of operations and financial condition could be

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adversely affected. KAYAK also relies to a certain extent on advertisements that it places on websites other than general search engines. Approximately 7% of KAYAK's user queries during the nine months ended September 30, 2012 resulted from these traffic-generating arrangements. A loss of one or more of these traffic-generating arrangements as an advertising channel could result in fewer people using KAYAK's services.

KAYAK has limited international experience and may be limited in its ability to expand into international markets, which could result in significant costs and a limitation on its ability to achieve future financial growth.

        KAYAK operates websites in 18 countries, and generated approximately 20% of its net revenues for the nine months ended September 30, 2012 from its international operations. With the exception of its managing director for Europe, KAYAK's senior management team is located in the U.S. and has limited international experience. KAYAK believes that international expansion will be important to its future growth, and therefore currently expects that its international operations will increase. As its international operations expand, KAYAK will face increasing risks resulting from operations in multiple countries, including:

    differences and unexpected changes in regulatory requirements and exposure to local economic conditions;

    limits on its ability to enforce its intellectual property rights;

    restrictions on the repatriation of non-U.S. investments and earnings back to the U.S., including withholding taxes imposed by certain foreign jurisdictions;

    requirements to comply with a number of U.S. and international regulations, including the Foreign Corrupt Practices Act;

    uncertainty over its ability to legally enforce its contractual rights; and

    currency exchange rate fluctuations.

        To the extent KAYAK is not able to effectively mitigate or eliminate these risks, its results of operations could be adversely affected. Furthermore, any failure by its management to adopt appropriate compliance procedures to ensure that KAYAK's employees and agents comply with applicable laws and regulations in foreign jurisdictions could result in substantial penalties or restrictions on KAYAK's ability to conduct business in certain foreign jurisdictions.

        Some of KAYAK's plans for expansion include operating in international markets where it has limited operating experience. These markets may have different competitive conditions, traveler preferences and discretionary spending patterns than the U.S. travel market. As a result, KAYAK's international operations may be less successful than its U.S. operations. Travelers in other countries may not be familiar with KAYAK's brands, and KAYAK may need to build brand awareness in such countries through greater investments in advertising and promotional activity than it originally planned. In addition, KAYAK may find it difficult to effectively hire, manage, motivate and retain qualified employees who share its corporate culture. KAYAK may also have difficulty entering into new agreements with foreign travel suppliers and OTAs on economically favorable terms.

KAYAK's failure to manage growth effectively could harm its ability to attract and retain key personnel and adversely impact its operating results.

        KAYAK values its culture and believes that culture has been a major contributor to its success. As KAYAK grows, however, it may have difficulty maintaining its culture or adapting it sufficiently to meet the needs of its operations. Failure to maintain its culture could negatively impact KAYAK's operations and business results.

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        KAYAK has rapidly and significantly expanded its operations and anticipates expanding further to pursue its growth strategy. KAYAK's workforce worldwide has grown from fewer than 35 employees in 2006 to 203 employees and approximately 71 contractors as of January 18, 2013. Such expansion increases the complexity of KAYAK's business and places a significant strain on its management, operations, technical performance, financial resources and internal control over financial reporting functions.

        There can be no assurance that KAYAK will be able to manage its expansion effectively. KAYAK's current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage its future operations, especially as KAYAK employs personnel in multiple geographic locations. KAYAK may not be able to hire, train, retain, motivate and manage required personnel, which may limit its growth, damage its reputation and negatively affect its financial performance and harm its business.

KAYAK may not be able to expand its business model beyond providing travelers with travel query results, and its attempts to do so could result in significant additional costs without a corresponding increase in revenues.

        KAYAK plans to expand its business model beyond helping travelers search for travel by offering additional services and tools, including assisted booking services through mobile applications and its websites. This growth strategy depends on various factors, including the willingness of travel suppliers and OTAs to participate in KAYAK's assisted booking services, as well as travelers' use of these other new services and a willingness to trust KAYAK with their personal information. These newly launched services may not succeed, and, even if KAYAK is successful, its revenues may not increase. These new services could also increase operating costs and result in costs that KAYAK has not incurred in the past, including customer service.

KAYAK is dependent on the leisure travel industry, and declines in leisure travel or discretionary spending generally could reduce the demand for its services.

        KAYAK's financial prospects are significantly dependent upon leisure travelers using its services. Leisure travel, including leisure airline tickets, hotel room reservations and rental car reservations, is dependent on personal discretionary spending levels. Leisure travel services tend to decline, along with the advertising dollars spent by travel suppliers, during general economic downturns and recessions. The current worldwide economic conditions have led to a general decrease in leisure travel and travel spending, which has negatively impacted the demand for KAYAK's services.

        Events beyond KAYAK's control also may adversely affect the leisure travel industry, with a corresponding negative impact on KAYAK's business and results of operations. Natural disasters, including hurricanes, tsunamis, earthquakes or volcanic eruptions, as well as other natural phenomena, such as outbreaks of H1N1 influenza (swine flu), avian flu and other pandemics and epidemics, have disrupted normal leisure travel patterns and levels. The leisure travel industry is also sensitive to other events beyond KAYAK's control, such as work stoppages or labor unrest at any of the major airlines, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities, travel related accidents and terrorist attacks, any of which could have an impact on KAYAK's business and results of operations. Although the September 2001 terrorist attacks in the U.S. occurred before KAYAK was formed, those attacks had a dramatic and sustained impact on the leisure travel industry, and any future terrorist attack, whether on a small or large scale, could have a material and negative impact on KAYAK's business and results of operations.

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KAYAK relies on the performance of highly skilled personnel, including senior management and technology professionals, and if it is unable to retain or motivate key personnel or hire, retain and motivate qualified personnel, its business would be harmed.

        KAYAK believes its success has depended, and continues to depend, on the efforts and talents of its senior management and its highly skilled team members, including its software engineers. KAYAK's future success depends on its continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. The loss of any of KAYAK's senior management or key employees could materially adversely affect KAYAK's ability to build on the efforts management has undertaken and to execute its business plan, and it may not be able to find adequate replacements. In particular, the contributions of certain key senior management in the U.S. are critical to KAYAK's overall success. KAYAK cannot ensure that it will be able to retain the services of any members of its senior management or other key employees. KAYAK does not maintain any key person life insurance policies.

        Competition for well-qualified employees in all aspects of KAYAK's business, including software engineers and other technology professionals, is intense both in the United States and abroad. KAYAK's continued ability to compete effectively depends on its ability to attract new employees and to retain and motivate existing employees. KAYAK's software engineers and technology professionals are key to designing code and algorithms necessary to its business. If KAYAK does not succeed in attracting well-qualified employees or retaining and motivating existing employees, its business will be adversely affected.

KAYAK processes, stores and uses personal data which exposes it to risks of internal and external security breaches and could give rise to liabilities as a result of governmental regulation and differing personal privacy rights.

        KAYAK may acquire personal or confidential information from travelers who use KAYAK's websites and mobile applications. Substantial or ongoing security breaches to KAYAK's system, whether resulting from internal or external sources, could significantly harm KAYAK's business. It is possible that advances in computer circumvention capabilities, new discoveries or other developments, including KAYAK's own acts or omissions, could result in a compromise or breach of personal and confidential traveler information.

        KAYAK cannot guarantee that its existing security measures will prevent security breaches or attacks. A party, whether internal or external, that is able to circumvent KAYAK's security systems could steal traveler information or proprietary information or cause significant interruptions in KAYAK's operations. In the past KAYAK has experienced "denial-of-service"-type attacks on its systems that have made portions of its website unavailable for periods of time. KAYAK may need to expend significant resources to protect against security breaches or to address problems caused by breaches, and reductions in website availability could cause a loss of substantial business volume during the occurrence of any such incident. The risk of such security breaches is likely to increase as KAYAK expands the number of places where it operates and as the tools and techniques used in these types of attacks become more advanced. Security breaches could result in negative publicity, damage KAYAK's reputation, expose it to risk of loss or litigation and possible liability and subject it to regulatory penalties and sanctions. Security breaches could also cause travelers and potential users to lose confidence in KAYAK's security, which would have a negative effect on the value of its brand. KAYAK's insurance policies carry low coverage limits and would likely not be adequate to reimburse KAYAK for losses caused by security breaches.

        Companies that KAYAK has acquired, and that it may acquire in the future, may employ security and networking standards at levels KAYAK finds unsatisfactory. The process of enhancing infrastructure to improve security and network standards may be time consuming and expensive and may require resources and expertise that are difficult to obtain. Acquisitions could also increase the number of potential vulnerabilities and could cause delays in detection of an attack, or the timelines of

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recovery from an attack. Failure to adequately protect against attacks or intrusions could expose KAYAK to security breaches of, among other things, personal user data and credit card information that would have an adverse impact on KAYAK's business, results of operations and financial condition.

        KAYAK also faces risks associated with security breaches affecting third parties conducting business over the Internet. People generally are concerned with security and privacy on the Internet, and any publicized security problems could inhibit the growth of KAYAK's business. Additionally, security breaches at third parties upon which KAYAK relies, such as travel suppliers, could result in negative publicity, damage KAYAK's reputation, expose it to risk of loss or litigation and possible liability and subject it to regulatory penalties and sanctions.

        KAYAK currently provides users with the option to complete certain hotel bookings directly through its websites and mobile applications. KAYAK also currently facilitates the purchase of airline tickets through its mobile applications and assists users in completing transactions directly with travel suppliers. In connection with facilitating these transactions, KAYAK receives and stores certain personally identifiable information, including credit card information. This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world, including the Commission of the European Union through its Data Protection Directive and variations of that directive in the member states of the European Union. Government regulation is typically intended to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction. KAYAK could be adversely affected if legislation or regulations are expanded to require changes in KAYAK's business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect KAYAK's business, results of operations and financial condition.

Litigation could distract management, increase KAYAK's expenses or subject it to material money damages and other remedies.

        KAYAK is involved in various legal proceedings, including, but not limited to, actions relating to breach of contract and intellectual property infringement that involve claims for substantial amounts of money or for other relief or that might necessitate changes to KAYAK's business or operations, including the legal matters further discussed in "Information about KAYAK—KAYAK's Legal Proceedings" beginning on page 46. Regardless of whether any claims against it are valid, or whether it is ultimately held liable or subject to payment of damages, KAYAK may have to spend significant sums to defend such claims, and its management's time may be drawn away from business objectives. If any legal proceedings were to result in an unfavorable outcome, it could have a material adverse effect on KAYAK's business, financial position and results of operations. Any adverse publicity resulting from actual or potential litigation may also materially and adversely affect KAYAK's reputation, which in turn could adversely affect its results.

        Companies in the Internet, technology and media industries are frequently subject to allegations of infringement or other violations of intellectual property rights. KAYAK is currently subject to several patent infringement claims and may be subject to future claims relating to intellectual property rights. As KAYAK grows its business and expands its operations, it may be subject to intellectual property claims by third parties. KAYAK plans to vigorously defend its intellectual property rights and its freedom to operate its business; however, regardless of the merits of the claims, intellectual property claims are often time-consuming and extremely expensive to litigate or settle, and are likely to continue to divert managerial attention and resources from KAYAK's business objectives. Successful infringement claims against KAYAK could result in significant monetary liability or prevent it from operating its business, or portions of its business. Resolution of claims may require KAYAK to obtain licenses to use intellectual property rights belonging to third parties, which may be expensive to procure, or it may be required to cease using intellectual property altogether. Many of KAYAK's agreements with travel suppliers, OTAs and other partners require it to indemnify these entities against

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third-party intellectual property infringement claims, which would increase KAYAK's defense costs and may require that it pay damages if there were an adverse ruling in any such claims. Any of these events could have a material adverse effect on KAYAK's business, results of operations or financial condition.

Acquisitions and investments could result in operating difficulties, dilution and other harmful consequences.

        KAYAK has acquired a number of businesses in the past, including SideStep, Inc., or SideStep, swoodoo AG, or swoodoo, and JaBo Software Vertrieb-und Entwicklung GmbH, or JaBo Software. KAYAK expects to continue to evaluate and enter into discussions regarding a wide array of potential strategic transactions. Any transactions that KAYAK enters into could be material to its financial condition and results of operations. The process of integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures. The areas where KAYAK faces risks include:

    diversion of management time and focus from operating its business to acquisition integration challenges;

    implementation or remediation of controls, procedures and policies at the acquired company;

    coordination of product, engineering and sales and marketing functions;

    retention of employees from the businesses it acquires;

    liability for activities of the acquired company before the acquisition;

    litigation or other claims in connection with the acquired company; and

    in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries.

        KAYAK's failure to address these risks or other problems encountered in connection with its past or future acquisitions and investments could cause it to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities and harm its business generally.

Fluctuations in KAYAK's financial results make quarterly comparisons and financial forecasting difficult, which could make it difficult to manage KAYAK's business.

        KAYAK's revenues and operating results have varied significantly from quarter to quarter because its business experiences seasonal fluctuations, which reflect seasonal trends for the travel products distributed through and advertised on KAYAK's platform. Traditional leisure travel bookings in the United States and Europe are generally higher in the second and third calendar quarters of the year as travelers take spring and summer vacations. In the fourth quarter of the calendar year, demand for travel services in the United States and Europe generally declines. KAYAK has seen and expects to continue to see, that the most significant portion of KAYAK's revenues will be earned in the second and third quarters. The current state of the global economic environment, combined with the seasonal nature of KAYAK's business and its relatively limited operating history, makes forecasting future operating results difficult. Because KAYAK's business is changing and evolving, its historical operating results may not be useful for predicting KAYAK's future operating results. Advertising spending has historically been cyclical in nature, reflecting overall economic conditions as well as individual travel patterns. KAYAK's rapid growth has tended to mask the cyclicality and seasonality of KAYAK's business. As KAYAK's growth rate slows, the cyclicality and seasonality in its business will become more pronounced and cause its operating results to fluctuate.

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Any significant disruption in service on KAYAK's websites or in its computer systems, which are currently hosted primarily by third-party providers, could damage KAYAK's reputation and result in a loss of users, which would harm KAYAK's business and operating results.

        KAYAK's brands, reputation and ability to attract and retain travelers to use its websites and mobile applications depend upon the reliable performance of its network infrastructure and content delivery processes. KAYAK has experienced interruptions in these systems in the past, including server failures that temporarily slowed down the performance of its websites and mobile applications, and it may experience interruptions in the future. Interruptions in these systems, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the security or availability of KAYAK's services on its websites and mobile applications and prevent or inhibit the ability of travelers to access its services. Problems with the reliability or security of its systems could harm KAYAK's reputation, and damage to its reputation and the cost of remedying these problems could negatively affect KAYAK's business, financial condition and results of operations.

        Substantially all of the communications, network and computer hardware used to operate KAYAK's website are located at facilities in Medford and Somerville, Massachusetts and, with respect to KAYAK's swoodoo operations, Freiburg, Germany. KAYAK does not own or control the operation of these facilities. KAYAK's systems and operations are vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, computer viruses, earthquakes and similar events. The occurrence of any of the foregoing events could result in damage to KAYAK's systems and hardware or could cause them to fail completely, and KAYAK's insurance may not cover such events or may be insufficient to compensate it for losses that may occur. KAYAK's systems are not completely redundant, so a failure of its system at one site could result in reduced functionality for its travelers, and a total failure of its systems at both U.S. sites could cause KAYAK's websites or mobile applications to be inaccessible by its travelers. Problems faced by KAYAK's third-party web hosting providers with the telecommunications network providers with which they contract or with the systems by which they allocate capacity among their customers, including KAYAK, could adversely affect the experience of KAYAK's travelers. KAYAK's third-party web hosting providers could decide to close their facilities without adequate notice. Any financial difficulties, such as bankruptcy reorganization, faced by KAYAK's third-party web hosting providers or any of the service providers with whom they contract may have negative effects on KAYAK's business, the nature and extent of which are difficult to predict. If KAYAK's third-party web hosting providers are unable to keep up with KAYAK's growing needs for capacity, this could have an adverse effect on KAYAK's business. Any errors, defects, disruptions or other performance problems with KAYAK's services could harm its reputation and have an adverse effect on its business, financial condition and results of operations.

Governmental regulation and associated legal uncertainties could limit KAYAK's ability to expand its product offerings or enter into new markets and could require it to expend significant resources, including the attention of senior management, to review and comply with such regulations.

        Many of the services KAYAK offers are regulated by federal and state governments, and KAYAK's ability to provide these services is and will continue to be affected by government regulations. The implementation of unfavorable regulations or unfavorable interpretations of existing regulations by courts or regulatory bodies could require KAYAK to incur significant compliance costs, cause the development of the affected markets to become impractical and otherwise have a material adverse effect on KAYAK's business, results of operations and financial condition.

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        In particular, the DOT regulates the advertising and sale of air transportation. The DOT actively enforces its regulations and recently made significant changes to the regulations and standards that apply to air carriers and ticket agents. While KAYAK is neither an air carrier nor a ticket agent, to the extent it expands its business model in the air transportation area to facilitate bookings, KAYAK could become subject to DOT oversight, which would require it to incur significant compliance costs and may require it to change its business practices with respect to the display of airfare and airfare advertising.

        In addition, KAYAK's business strategy involves expansion into regions around the world, many of which have different legislation, regulatory environments, tax laws and levels of political stability. Compliance with foreign legal, regulatory or tax requirements will place demands on KAYAK's time and resources, and KAYAK may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax consequences.

        KAYAK assists with the processing of customer credit card transactions, which results in it receiving and storing personally identifiable information. This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world. This legislation and regulation is generally intended to protect the privacy and security of personal information, including credit card information, that is collected, processed and transmitted in or from the governing jurisdiction. KAYAK could be adversely affected if government regulations require it to significantly change its business practices with respect to this type of information.

Fluctuations in foreign currency exchange rates affect financial results in U.S. dollar terms and could negatively impact KAYAK's financial results.

        A portion of KAYAK's revenues come from international operations. Revenues generated and expenses incurred by KAYAK's international subsidiaries are often denominated in local currencies. As a result, KAYAK's consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates as the financial results of its international subsidiaries are translated from local currencies into U.S. dollars. KAYAK's financial results are subject to changes in exchange rates that impact the settlement of transactions in non-local currencies.

KAYAK may not be able to adequately protect its intellectual property, which could harm the value of its brands and adversely affect its business.

        KAYAK regards its intellectual property as critical to its success, and it relies on trademark, copyright and patent law, trade secret protection and confidentiality and/or license agreements to protect its proprietary rights. If KAYAK is not successful in protecting its intellectual property, it could have a material adverse effect on its business, results of operations and financial condition.

        While KAYAK believes that its issued patents and pending patent applications help to protect its business, there can be no assurance that its operations do not, or will not, infringe valid, enforceable patents of third parties or that competitors will not devise new methods of competing with it that are not covered by its patents or patent applications. There can also be no assurance that KAYAK's patent applications will be approved, that any patents issued will adequately protect its intellectual property, or that such patents will not be challenged by third parties or found to be invalid or unenforceable, or that its patents will be effective in preventing third parties from utilizing a copycat business model to offer the same service in one or more categories. Moreover, KAYAK relies on intellectual property and technology developed or licensed by third parties, and it may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.

        Effective trademark, service mark, copyright and trade secret protection may not be available in every country in which KAYAK's services are provided. The laws of certain countries do not protect proprietary rights to the same extent as the laws of the U.S. and, therefore, in certain jurisdictions, KAYAK may be unable to protect its proprietary technology adequately against unauthorized third

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party copying or use, which could adversely affect its competitive position. KAYAK has licensed in the past, and expects to license in the future, certain of its proprietary rights, such as trademarks or copyrighted material, to third parties. These licensees may take actions that might diminish the value of KAYAK's proprietary rights or harm KAYAK's reputation, even if KAYAK has agreements prohibiting such activity. Also to the extent third parties are obligated to indemnify KAYAK for breaches of its intellectual property rights, these third parties may be unable to meet these obligations. Any of these events could have a material adverse effect on KAYAK's business, results of operations or financial condition.

Claims by third parties that KAYAK infringes their intellectual property rights could result in significant costs and have a material adverse effect on KAYAK's business, results of operations or financial condition.

        KAYAK is currently subject to various patent infringement claims. These claims allege, among other things, that KAYAK's website technology infringes upon owned patent technology. If KAYAK is not successful in defending itself against these claims, it may be required to pay money damages, which could have an adverse effect on its results of operations. In addition, the costs associated with the loss of these claims could have an adverse effect on KAYAK's results of operations. KAYAK may be subject to future claims relating to its intellectual property rights. As it grows its business and expands its operations, KAYAK expects that it will continue to be subject to intellectual property claims. Resolving intellectual property claims may require KAYAK to obtain licenses to use intellectual property rights belonging to third parties, which may be expensive to procure, or it may be required to cease using intellectual property altogether. Any of these events could have a material adverse effect on KAYAK's business, results of operations or financial condition.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

        A substantial amount of KAYAK's processes and technologies is protected by trade secret laws. In order to protect these technologies and processes, KAYAK relies in part on confidentiality agreements with its employees, licensees, independent contractors and other advisors. These agreements may not effectively prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover KAYAK's trade secrets and proprietary information, and in such cases KAYAK could not assert any trade secret rights against such parties. To the extent that KAYAK's employees, contractors or other third parties with which KAYAK does business use intellectual property owned by others in their work for KAYAK, disputes may arise as to the rights in related or resulting know-how and inventions. Laws regarding trade secret rights in certain markets in which KAYAK operates may afford little or no protection to KAYAK's trade secrets. The loss of trade secret protection could make it easier for third parties to compete with KAYAK's products by copying functionality. In addition, any changes in, or unexpected interpretations of, the trade secret and other intellectual property laws in any country in which KAYAK operates may compromise its ability to enforce its trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of KAYAK's proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect its business, revenue, reputation and competitive position.

KAYAK's use of "open source" software could adversely affect its ability to offer its services and subject it to possible litigation.

        KAYAK uses open source software in connection with its product development. From time to time, companies that use open source software have faced claims challenging the use of open source software and/or compliance with open source license terms. KAYAK could be subject to suits by parties claiming

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ownership of what KAYAK believes to be open source software, or claiming noncompliance with open source licensing terms. Some open source licenses require users who distribute software containing open source to make available all or part of such software, which in some circumstances could include valuable proprietary code of the user. While KAYAK monitors the use of open source software and tries to ensure that none is used in a manner that would require it to disclose its proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are often ambiguous. Any requirement to disclose KAYAK's proprietary source code or pay damages for breach of contract could be harmful to KAYAK's business, results of operations or financial condition, and could help KAYAK's competitors develop products and services that are similar to or better than KAYAK's.


Changes and Disagreements with Accountants on Accounting and Financial Disclosure

        There have been no changes or disagreements with KAYAK's independent registered public accounting firm regarding accounting and financial disclosure during the two most recent fiscal years or any subsequent interim periods.


Corporate Information

        KAYAK's principal executive offices are located at 55 North Water Street, Suite 1, Norwalk, CT 06854 and its telephone number at that address is (203) 899-3100. KAYAK's corporate website address is www.KAYAK.com. KAYAK does not incorporate the information contained on, or accessible through, its corporate website into this proxy statement/prospectus, and you should not consider it part of this prospectus. KAYAK was originally incorporated in Delaware in 2004 under the name Travel Search Company, Inc., and changed its name to Kayak Software Corporation in August 2004 and to KAYAK Software Corporation in December 2011.

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KAYAK MANAGEMENT'S DISCUSSION AND ANALYSIS OF KAYAK'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        KAYAK is a technology-driven company committed to improving online travel. Cofounders of Expedia, Travelocity and Orbitz started KAYAK in 2004 to take a better approach to finding travel online. KAYAK's websites and mobile applications enable people to easily research and compare accurate and relevant information from hundreds of other travel websites in one comprehensive, fast and intuitive display. KAYAK also provides multiple filtering and sorting options, travel management tools and services such as flight status updates, pricing alerts and itinerary management. Once travelers find their desired flight, hotel or other travel products, KAYAK sends them to their preferred travel supplier or online travel agency website to complete their purchase, and in many cases, travelers may now complete bookings directly through KAYAK's websites and mobile applications.

        KAYAK's services are free for travelers. KAYAK offers travel suppliers and OTAs, an efficient channel to sell their products and services to a highly targeted audience focused on purchasing travel. KAYAK earns revenues by sending referrals to travel suppliers and OTAs and from a variety of advertising placements on KAYAK's websites and mobile applications.

        During the nine months ended September 30, 2012, KAYAK experienced the following growth:

    For the nine months ended September 30, 2012, KAYAK generated $228.9 million of revenues, representing growth of 34.2% over the nine months ended September 30, 2011;

    For the nine months ended September 30, 2012, KAYAK generated income from operations of $38.8 million as compared to $6.4 million for the nine months ended September 30, 2011. After adjusting for a $15.0 million impairment charge related to KAYAK's decision to stop supporting the SideStep brand name, operating income for the nine months ended September 30, 2012 increased by 81.7% over the same period in 2011;

    For the nine months ended September 30, 2012, KAYAK had adjusted EBITDA of $54.9 million representing growth of 48.4% over the nine months ended September 30, 2011. Adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, is a non-generally accepted accounting principle metric used by management to measure KAYAK's operating performance;

    For the nine months ended September 30, 2012, KAYAK processed 901 million user queries for travel information, representing growth of 35.3% over the nine months ended September 30, 2011; and

    KAYAK mobile applications have been downloaded over 20 million times since their introduction in March 2009. For the nine months ended September 30, 2012, KAYAK had approximately 8 million downloads, representing growth of 58.4% over the nine months ended September 30, 2011.

        As of January 18, 2013, KAYAK had 203 employees, and KAYAK had local websites in 18 countries, including the United States, Germany, Spain, the United Kingdom, Austria, France and Italy.


    Adjusted EBITDA Reconciliation

        Earnings Before Interest, Taxes, Depreciation and Amortization, which we refer to as EBITDA, is a metric used by KAYAK's management to measure operating performance. Adjusted EBITDA represents EBITDA excluding the impact of stock-based compensation expense and other income (expense), net. KAYAK presents adjusted EBITDA as a supplemental performance measure because it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting other income

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(expense), net), tax positions (such as the impact on periods or companies of changes in effective tax rates), the age and book depreciation of fixed assets (affecting relative depreciation expense), the impact of acquisitions and the impact of stock-based compensation expense. Because adjusted EBITDA facilitates internal comparisons of operating performance on a more consistent basis, KAYAK also uses adjusted EBITDA in measuring performance relative to that of its competitors. Adjusted EBITDA is not a measurement of KAYAK's financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities or as a measure of KAYAK's profitability or liquidity. KAYAK understands that although adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of KAYAK's results as reported under GAAP. Some of these limitations are:

    adjusted EBITDA does not reflect KAYAK's cash expenditures or future requirements for capital expenditures or contractual commitments;

    adjusted EBITDA does not reflect changes in, or cash requirements for, KAYAK's working capital needs;

    although depreciation is a non-cash charge, the assets being depreciated will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements; and

    other companies in KAYAK's industry may calculate adjusted EBITDA differently than KAYAK does, limiting the usefulness of adjusted EBITDA as a comparative measure.

The following table reconciles income from operations to adjusted EBITDA for the periods presented and is unaudited:


KAYAK Software Corporation and Subsidiaries

Adjusted EBITDA Reconciliation
(In thousands)

 
  Nine months ended
September 30,
  Years ended December 31,  
 
  2012   2011   2011   2010   2009  

Income from operations

  $ 38,787   $ 6,371   $ 14,267   $ 16,795   $ 5,361  

Other income (expense), net

    (1,640 )   468     2,006     3,250     (1,346 )

Depreciation and amortization

    6,178     6,337     8,486     6,821     5,380  

Impairment of intangible assets

        14,980     14,980          
                       

EBITDA

    43,325     28,156     39,739     26,866     9,395  

Stock-based compensation

    9,952     9,312     12,427     8,503     5,447  

Other (income) expense, net

    1,640     (468 )   (2,006 )   (3,250 )   1,346  
                       

Adjusted EBITDA

  $ 54,917   $ 37,000   $ 50,160   $ 32,119   $ 16,188  
                       


How KAYAK Generates Revenues

        KAYAK earns distribution revenues by sending referrals to travel suppliers and OTAs and by facilitating bookings through its websites and mobile applications, and KAYAK earns advertising revenues from advertising placements on its websites and mobile applications. On the distribution side, travel suppliers and OTAs either pay KAYAK at the time of referral on a set cost per click, which we refer to as CPC, basis or after a user completes a transaction on a supplier or OTA website or through

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the KAYAK booking feature on a fixed cost per acquisition, which we refer to as CPA, basis or as a percentage of the transaction value.

        Advertising revenues primarily come from payments for text-based sponsored links, graphical display advertisements and compare units. A "compare unit" is an advertising placement that, if selected by a KAYAK user, launches the advertiser's website and initiates a query based on the same travel parameters provided on the KAYAK website. The major types of advertisers on KAYAK's websites consist of OTAs, third party sponsored link providers, hotels, airlines and vacation package providers. Generally, KAYAK's advertisers pay on a CPC basis, which means advertisers pay only when someone clicks on one of their advertisements, or on a cost per thousand impression basis, which we refer to as CPM. Paying on a CPM basis means that advertisers pay based on the number of times their advertisements appear on KAYAK's websites. KAYAK believes that offering advertisers the ability to pay on a CPC or CPM basis provides advertisers the ability to choose the method of payment that best suits their needs and ultimately results in more advertisers choosing to advertise with KAYAK.

        KAYAK generates a significant portion of revenues from a few large customers. Expedia and its affiliated brands, including Hotels.com and Hotwire, together accounted for 26% of KAYAK's total revenues for the nine months ended September 30, 2012. KAYAK has separate contracts with respect to Expedia and each of its affiliated brands, each of which have varying terms and expiration dates. Also during this period, priceline.com and Orbitz and its affiliates, including its CheapTickets, HotelClub and ebookers subsidiaries, accounted for 10% and 8% respectively of KAYAK's total revenues. KAYAK's contract with Orbitz expires on December 31, 2013.


Highlights and Trends

    Revenue Growth

        KAYAK's revenue for the nine months ended September 30, 2012 was $228.9 million, a 34.2% increase over the nine months ended September 30, 2011. Revenue for the year ended December 31, 2011 was $224.5 million, a 31.5% increase over the year ended December 31, 2010. These increases in revenue were primarily due to increased travel queries on KAYAK's websites and mobile applications, which increased 35.3% for the first nine months of 2012 and 40.5% for the full year 2011, respectively over the comparable periods in 2011 and 2010. KAYAK believes that traffic and queries on its websites and mobile applications will continue to increase as more people learn about KAYAK's websites and brand.


    Brand Marketing

        KAYAK began investing in brand advertising, including TV advertisements and billboards, in late 2009. For the nine months ended September 30, 2012, and for the year ended December 31, 2011, KAYAK spent $59.0 million and $57.7 million on these activities, respectively. KAYAK believes that these investments have contributed significantly to its revenue growth. Increasing brand awareness and usage is an important part of KAYAK's growth strategy and KAYAK expects to continue to invest at this level or above in brand marketing for the foreseeable future.


    International Expansion

        KAYAK revenue from international operations accounted for approximately 20.3% and 17.9% of total revenue for the nine months ended September 30, 2012, and the year ended December 31, 2011, respectively. KAYAK acquired swoodoo in May 2010 and checkfelix.com in April 2011. As a result of these acquisitions, and organic growth of the KAYAK brand, international revenue grew to approximately $46.5 million during the first nine months of 2012 from approximately $29.7 million during the first nine months of 2011. KAYAK believes that these strategic acquisitions, along with the establishment of a European headquarters in Zurich, Switzerland, have strengthened KAYAK's presence and team in Europe, and KAYAK plans to continue to invest in the international team and

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brands. KAYAK expects revenues from international operations to increase at a rate faster than revenues from U.S. operations.


    Mobile Products

        KAYAK offers several mobile applications that allow people to use its services from smartphones such as the iPhone, Windows Phone 7 and 8 and phones running on the Android operating system and tablet devices such as the iPad. These applications extend the availability of KAYAK's services beyond traditional computers and allow users greater access to KAYAK's services. Queries conducted on KAYAK's mobile applications accounted for 16.7% and 12.4% of its total queries for the nine months ended September 30, 2012, and the year ended December 31, 2011, respectively. However, KAYAK estimates that revenues from mobile applications were 3.4% and 1.7% of total revenues during the nine months ended September 30, 2012 and the year ended December 31, 2011, respectively. KAYAK believes mobile applications will continue to gain popularity, and expect to continue to commit resources to improve the features, functionality and commercialization of its mobile applications. KAYAK also believes that over time mobile applications will begin to contribute meaningful revenue to the business.


    Cash and Debt

        KAYAK had cash and cash equivalents and marketable securities of $178.4 and $46.3 million as of September 30, 2012 and December 31, 2011, respectively, and no outstanding long- or short-term debt. Given the recent financial turmoil and low interest rates, KAYAK holds most of its funds as cash and cash equivalents or marketable securities, and the rest is invested in highly rated money market funds and commercial paper.


Results of Operations

        KAYAK's results of operations as a percentage of revenue and period-over-period variances are discussed below. All dollars and query amounts are presented in thousands, except RPMs.


    Operating Metrics

        KAYAK's operating results are affected by certain key metrics. These metrics help to predict financial results and evaluate KAYAK's business. These metrics consist of queries and revenue per thousand queries.


    Queries and Revenue per Thousand Queries

        Queries refer to requests for travel information KAYAK processes through its websites and mobile applications. KAYAK counts a separate query each time a person requests travel information through one of its websites or mobile applications. Therefore, a user visit to one of KAYAK's websites may result in no queries being counted, or in multiple queries being counted, depending on the activity of the traveler during that visit. On average, a traveler performs approximately 1.1 queries per visit to KAYAK's websites.

        KAYAK uses revenue per thousand queries, which we refer to as RPM, to measure how effectively it converts user queries to revenues. RPM is calculated as total revenues divided by thousand queries.

        KAYAK uses query metrics to understand the performance of its marketing activities, while RPM is used to analyze the performance of services and partnerships.

        KAYAK recently revised its methodology for counting mobile queries to remove repetitive searches conducted during the same user session. By removing repetitive searches, the methodology is now consistent for both website queries and mobile. As a result, the number of reported mobile queries is

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lower, and the corresponding RPM is higher for mobile. The tables shown below present the revised estimates for historical mobile queries and RPMs based on the revised methodology.


    Revenues

 
  Nine Months ended
September 30,
   
 
 
  (Amounts in thousands
(except RPM))
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Revenues

  $ 228,880   $ 170,587     34.2 %

Queries

    901,403     666,136     35.3 %

RPM

  $ 254   $ 256     (0.8 )%

        Revenues for the nine months ended September 30, 2012 increased $58.3 million over the same period in 2011 primarily due to a 35.3% increase in query volume. KAYAK attributes the increase in query volume to a variety of factors, including the investment in marketing activities, the partnership with Bing Travel which began in March 2011 and the acquisition of checkfelix.com in April 2011.

 
  Nine Months ended
September 30,
   
 
 
  (Amounts in thousands
(except RPM))
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Estimated Mobile Queries

    150,373     77,185     94.8 %

Estimated Mobile RPM

  $ 52   $ 37     40.5 %

Estimated Website Queries

    751,030     588,952     27.5 %

Estimated Website RPM

  $ 294   $ 285     3.2 %

        Mobile and website RPM figures are estimated based on data provided by those travel partners that differentiate between mobile and website travel bookings.

        Mobile queries for the nine months ended September 30, 2012 increased by 94.8% over the same period in 2011 primarily due to an increase of approximately 10.0 million downloads of KAYAK's mobile applications between September 30, 2011 and September 30, 2012, bringing downloads as of September 30, 2012 to approximately 20 million. Mobile RPM for the nine months ended September 30, 2012 increased by $15 over the same period in 2011 due to a higher percentage of completed transactions, especially on hotels, and the addition of new advertising products on KAYAK's mobile application.

        Website queries for the nine months ended September 30, 2012 increased by 27.5% over the same period in 2011 attributable primarily to KAYAK's investment in marketing activities and its partnership with Bing Travel, which began in March 2011. Website RPM for the nine months ended September 30, 2012 increased by $9 over the same period in 2011 due primarily to increased RPM in KAYAK's international business, improvement in advertising rates, and increased adoption of KAYAK's booking path.

 
  Year ended December 31,    
   
 
 
  (Amounts in thousands (except RPM))    
   
 
 
  % increase
(decrease)
2010 - 2011
  % increase
(decrease)
2009 - 2010
 
 
  2011   2010   2009  

Revenues

  $ 224,534   $ 170,698   $ 112,698     31.5 %   51.5 %

Queries

    880,909     627,043     457,556     40.5 %   37.0 %

RPM

  $ 255   $ 272   $ 246     (6.3 )%   10.6 %

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        Revenues for the year ended December 31, 2011 increased $53.8 million over the same period in 2010 primarily due to a 40.5% increase in query volume. KAYAK attributes the increase in query volume to a variety of factors including KAYAK's investment in marketing activities, the acquisition of swoodoo in May 2010 and checkfelix.com in April 2011, and the partnership with Bing Travel which began in March 2011. The increase in query volume was partially offset by a reduction in RPM due to an increase in mobile queries, for which KAYAK earns revenue at a lower rate. Mobile queries were 12.4% of total queries in 2011, as compared to 7.1% in 2010.

        Revenues for the year ended December 31, 2010 increased over the same period in 2009 primarily due to a 37.0% increase in query volume. These additional queries accounted for $43.2 million of the $58.0 million increase. During the same period average revenue per thousand queries increased 10.6%, primarily as a result of improved advertising sales. KAYAK's acquisition of swoodoo contributed $8.0 million to KAYAK's revenues in 2010.


    Cost of revenues (excludes depreciation and amortization)

        Cost of revenues consists of fees paid to third parties to process airfare queries and expenses associated with operating and maintaining KAYAK's data centers. Additionally in 2009, these costs included advertising syndication expenses. Syndication activities consisted of placing text-based advertisements on other websites in exchange for a portion of the total revenues that KAYAK received from those advertisements. KAYAK included the portion of revenues remitted to its syndication partners in cost of revenues. KAYAK cancelled the majority of its advertising syndication contracts in April 2009 to focus on its core business, resulting in decreased cost as a percentage of revenues from 2009 forward.

 
  Nine Months ended
September 30,
   
 
 
  (Dollar amounts in
thousands)
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Cost of revenues

  $ 14,900   $ 13,780     8.1%  

% of total revenues

    6.5%     8.1%        

        KAYAK's cost of revenues increased $1.1 million for the nine months ended September 30, of 2012 compared to the same period in 2011 due to higher air query fees partially offset by a decrease in data center costs. Air query fees increased $1.9 million in the nine months ended September 30, 2012 compared to the same period in 2011 due to increased query volume. Data center costs decreased $1.1 million in the nine months ended September 30, 2012 compared to the same period in 2011 due to improved server efficiency.

 
  Year ended December 31,    
   
 
 
  (Amounts in thousands (except RPM))    
   
 
 
  % increase
(decrease)
2010 - 2011
  % increase
(decrease)
2009 - 2010
 
 
  2011   2010   2009  

Cost of revenues

  $ 18,598   $ 15,630   $ 15,362     19.0%     1.7%  

% of total revenues

    8.3%     9.2%     13.6%              

        KAYAK's cost of revenues increased $3.0 million in 2011 as compared to 2010, due to higher data center costs and air query fees. Data center costs increased $1.6 million for the year ended December 31, 2011 as compared to the same period in 2010 due to expenses incurred to process and improve overall query speed and efficiency. Additionally, air query fees increased $1.3 million in 2011 compared to 2010 due to increased query volume, partially offset by a lower cost per query. Air query fees have a tiered pricing structure whereby increased volume results in a lower overall cost per query.

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        KAYAK's cost of revenues were relatively flat for the year ended December 31, 2010 compared to the same period in 2009 due primarily to higher volume-driven air query fees of $1.6 million and data center costs of $0.7 million, partially offset by the elimination of advertising syndication costs of $2.2 million discussed above.


    Selling, general and administrative expenses (excludes depreciation and amortization)

        Selling, general and administrative expenses consist of marketing, technology, personnel and other costs, which are more fully described below.


    Marketing

        Marketing consists of online marketing, brand marketing and other marketing expenses. Online marketing includes search engine fees and contextual advertising placements. Search engine fees are fees paid to Google and Yahoo for KAYAK's advertisements to appear on their result pages when users search certain travel-related keywords on the search engine's website. KAYAK pays contextual advertisement fees to advertise on other travel-related websites. These advertisements generally consist of the placement of a KAYAK logo or a check-box next to the KAYAK name and often allow users who click on the contextual advertisements to launch a query on KAYAK using previously entered search parameters. Brand marketing expense includes TV, billboards and display advertisements, and creative development fees. Other marketing includes affiliate marketing, public relations, and other general marketing costs. Affiliate marketing refers to revenue sharing fees paid to other travel-related websites that drive traffic to KAYAK through use of their own marketing resources. Under KAYAK's affiliate marketing program, KAYAK provides services through third party websites and pays them a percentage of any revenues received from these services.

 
  Nine Months ended
September 30,
   
 
 
  (Dollar amounts in
thousands)
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Brand marketing

  $ 58,962   $ 45,610     29.3%  

% of total revenues

    25.8%     26.7%        

Online marketing fees

  $ 57,040   $ 35,955     58.6%    

% of total revenues

    24.9%     21.1%        

Other marketing

  $ 4,698   $ 5,852     (19.7)%  

% of total revenues

    2.1%     3.4%        

Total marketing expense

  $ 120,700   $ 87,417     38.1%    

% of total revenues

    52.7%     51.2%        

        Marketing expenses for the nine months ended September 30, 2012 increased $33.3 million compared to the same period in 2011. The increase is primarily due to a $21.1 million increase in online marketing of which $8.5 million relates to Europe online marketing. Additionally, there was a $13.4 million increase in brand marketing which relates primarily to a $8.9 million incremental increase in Europe brand marketing expense. KAYAK believes these marketing investments were the primary

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contributor to the 35.3% increase in query growth in the nine months ended September 30, 2012 as compared to the same period in 2011.

 
  Year ended December 31,    
   
 
 
  (Amounts in thousands (except RPM))    
   
 
 
  % increase
(decrease)
2010 - 2011
  % increase
(decrease)
2009 - 2010
 
 
  2011   2010   2009  

Brand marketing

  $ 57,715   $ 43,702   $ 15,418     32.1%     183.4%  

% of total revenues

    25.7%     25.6%     13.7%              

Online marketing fees

  $ 45,648   $ 41,663   $ 35,813     9.6%     16.3%  

% of total revenues

    20.3%     24.4%     31.8%              

Other marketing

  $ 7,655   $ 6,356   $ 6,158     20.4%     3.2%  

% of total revenues

    3.4%     3.7%     5.5%              

Total marketing expense

  $ 111,018   $ 91,721   $ 57,389     21.0%     59.8%  

% of total revenues

    49.4%     53.7%     50.9%              

        Marketing expenses for the year ended December 31, 2011 increased $19.3 million compared to the same period in 2010. The $14.0 million increase in brand marketing relates primarily to a $12.9 million incremental investment in swoodoo, KAYAK Europe and checkfelix.com. Additionally, online marketing expense increased by $4.0 million. As a percentage of revenue, marketing expenses decreased to 49.4% from 53.7% primarily due to efficiencies achieved in U.S. marketing spend during 2011, as compared to the same period in 2010. For the year ended December 31, 2011, total marketing spend for the U.S. and Europe was $87.0 million and $24.0 million, respectively, compared to $84.0 million and $7.7 million, respectively, for the year ended December 31, 2010. KAYAK believes these marketing investments were the primary contributor to the 41.7% increase in query growth in 2011 as compared to 2010.

        Marketing expense for the year ended December 31, 2010, increased $34.3 million compared to the same period in 2009 primarily due to the initial launch of KAYAK's brand marketing campaign. KAYAK initiated a brand marketing campaign in November 2009, and for the year ended December 31, 2010, incurred $39.0 million in brand marketing expense. KAYAK expects to continue to invest in brand marketing going forward, as KAYAK is focused on increasing awareness of brand and bringing more people to its websites and mobile applications.


    Personnel

        Personnel costs consist of wages and benefits paid to employees, stock-based compensation charges and payroll taxes. Stock-based compensation is a significant portion of wage and benefit structure which is impacted by many factors including, but not limited to, the strike price, volatility and expected life of the options. See Note 13 of the KAYAK audited consolidated financial statements included in this proxy statement/prospectus.

 
  Nine Months ended
September 30,
   
 
 
  (Dollar amounts
in thousands)
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Salaries, benefits and taxes

  $ 26,495   $ 20,813     27.3%    

% of total revenues

    11.6%     12.2%        

Stock-based compensation

  $ 9,117   $ 9,312     (2.1)%  

% of total revenues

    4.0%     5.5%        

Total personnel

  $ 35,612   $ 30,125     18.2%    

% of total revenues

    15.6%     17.7%        

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        Salaries, benefits and taxes increased for the nine months ended September 30, 2012 from the same period in 2011. This increase is primarily due to a net increase of 43 employees, or 28.7%, as of September 30, 2012 compared to 2011. Stock compensation expense decreased in the nine months ended September 30, 2012 compared to the same period in 2011 due to options granted in prior years becoming fully vested substantially offsetting the expense related to new grants made in the first nine months of 2012.

 
  Year ended December 31,    
   
 
 
  (Amounts in thousands (except RPM))    
   
 
 
  % increase
(decrease)
2010 - 2011
  % increase
(decrease)
2009 - 2010
 
 
  2011   2010   2009  

Salaries, benefits and taxes

  $ 28,358   $ 21,261   $ 17,473     33.4%     21.7%  

% of total revenues

    12.6%     12.5%     15.5%              

Stock-based compensation

  $ 12,427   $ 8,503   $ 5,165     46.1%     64.6%  

% of total revenues

    5.5%     5.0%     4.6%              

Total personnel

  $ 40,785   $ 29,764   $ 22,638     37.0%     31.5%  

% of total revenues

    18.2%     17.4%     20.1%              

        Salaries, benefits and taxes increased primarily due to wage increases for existing employees and a headcount increase of 11 employees as of December 31, 2011 compared to December 31, 2010. In 2011 KAYAK also awarded bonuses totaling $1.3 million to KAYAK's cofounders. Stock compensation expense increased in 2011 compared to 2010 due to the additional grant of options to purchase 1,155,000 shares of KAYAK's common stock and an increase in the fair market value of its common stock.

        Salaries, benefits and taxes increased primarily due to a headcount increase of 40 employees between December 2009 and December 2010. Stock-based compensation increased in 2010 compared to 2009 due to the grant of 4,199,590 additional common stock options.


    Other general and administrative expenses

        All other operating costs are classified as other general and administrative expenses. The largest items in this category of expenses are technology costs, legal and accounting fees, provision for doubtful accounts, and facilities expenses.

 
  Nine Months ended
September 30,
   
 
 
  (Dollar amounts
in thousands)
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Other general and administrative expenses

  $ 12,703   $ 11,577     9.7%  

% of total revenues

    5.6%     6.8%        

        Other general and administrative expenses increased $1.1 million for the nine months ended September 30, 2012, compared to the same period in 2011 primarily due to stock based compensation expense for restricted stock units granted to certain members of the KAYAK board of $0.8 million, technology costs of $0.8 million, expense taken on options granted to contractors of $0.6 million, travel

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expenses of $0.7 million, partially offset by a decrease in the provision for doubtful accounts of $1.7 million.

 
  Year ended December 31,    
   
 
 
  (Amounts in thousands (except RPM))    
   
 
 
  % increase
(decrease)
2010 - 2011
  % increase
(decrease)
2009 - 2010
 
 
  2011   2010   2009  

Other general and administrative expenses

  $ 16,400   $ 9,967   $ 6,568     64.5%     51.8%  

% of total revenues

    7.3%     5.8%     5.8%              

        Other general and administrative expenses increased $6.4 million for the year ended December 31, 2011 compared to the same period in 2010 primarily due to a $2.9 million increase in legal and accounting fees, a $1.2 million increase in technology costs, and a $0.8 million increase in travel expenses.

        Other general and administrative expenses increased $3.4 million from 2009 to 2010 primarily due to $1.5 million in acquisition-related and other legal and accounting fees, $1.2 million from the inclusion of swoodoo results beginning May 2010, and a $0.4 million increase in the provision for doubtful accounts.


    Depreciation and amortization

        Depreciation and amortization consists primarily of depreciation of computer equipment, software and website development and amortization of KAYAK's trade names, customer relationships and other intangible assets.

 
  Nine Months ended
September 30,
   
 
 
  (Dollar amounts
in thousands)
   
 
 
  % increase
(decrease)
 
 
  2012   2011  

Amortization

  $ 4,203   $ 5,006     (16.0)%  

% of total revenues

    1.8%     2.9%        

Depreciation

  $ 1,975   $ 1,331     48.4%    

% of total revenues

    0.9%     0.8%        

Total depreciation and amortization

  $ 6,178   $ 6,337     (2.5)%  

% of total revenues

    2.7%     3.7%        

        Depreciation and amortization decreased $0.2 million during the nine months ended September 30, 2012 compared to the same period in 2011. Amortization decreased by $0.8 million, which is primarily due to a $2.1 million decrease in tradename amortization related to the discontinuation of the SideStep brand, partially offset by a $1.2 million increase in technology amortization due to the acceleration of amortization of swoodoo's technology. Depreciation increased

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by $0.6 million, primarily due to additions within computer equipment, website development, and leasehold improvements.

 
  Year ended December 31,    
   
 
 
  (Amounts in thousands (except RPM))    
   
 
 
  % increase
(decrease)
2010 - 2011
  % increase
(decrease)
2009 - 2010
 
 
  2011   2010   2009  

Amortization

  $ 6,566   $ 4,619   $ 3,328     42.2%       38.8%  

% of total revenues

    2.9%     2.7%     3.0%              

Depreciation

  $ 1,920   $ 2,202   $ 2,052     (12.8)%     7.3%  

% of total revenues

    0.9%     1.3%     1.8%              

Total depreciation and amortization

  $ 8,486   $ 6,821   $ 5,380     24.4%       26.8%  

% of total revenues

    3.8%     4.0%     4.8%              

        Depreciation and amortization increased $1.7 million during the year ended December 31, 2011, compared to the same period in 2010. The increase is primarily due to a $2.2 million increase in amortization and depreciation from acquired entities, partially offset by a $0.6 million decrease from SideStep assets that are now fully depreciated.

        The inclusion of swoodoo in KAYAK's results from May 2010 accounted for the $1.4 million increase in depreciation and amortization for the year ended December 31, 2010, compared to the same period in 2009.


    Impairment of intangible assets

        In January 2011, KAYAK determined that it would no longer support two brand names and URLs in the United States and decided to migrate all traffic from sidestep.com to KAYAK.com, resulting in a $15.0 million impairment charge.


    Other income (expense)

        For the nine months ended September 30, 2012, KAYAK recorded a loss of $1.5 million as compared to a gain of $0.5 million for the same period in 2011. The decrease is primarily related to the end of KAYAK's obligation to buy back shares of common stock issued as part of the swoodoo acquisition.

        For the year ended December 31, 2011, KAYAK recorded a gain of $1.1 million related to its obligation to buy back shares of KAYAK's common stock issued in connection with KAYAK's acquisition of swoodoo in May 2010. KAYAK also recorded a $0.8 million gain related to the re-measurement of intercompany balances denominated in foreign currencies.

        During 2010, KAYAK recorded a gain of $2.9 million related to its obligation to buy back shares of KAYAK common stock issued in connection with the acquisition of swoodoo in May 2010. In addition, KAYAK realized a gain of $0.5 million related to the sale of the TravelPost assets. In 2009, KAYAK incurred a $1.0 million loss on the early extinguishment of debt.


    Income tax expense (benefit)

        KAYAK's effective tax rate was 48.0% and 40.8% for the nine months ended September 30, 2012 and for the calendar year 2011, respectively. For the nine months ended September 30, 2012, the effective rate was higher than the statutory rate primarily due to state taxes, losses in Europe for which no benefit was recognized and disallowed stock compensation expense for incentive stock options, offset by federal and state research credits.

        Prior to December 31, 2009, KAYAK recorded a full valuation allowance against net deferred tax assets, which consisted primarily of net operating loss carryforwards, due to the uncertainty of

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KAYAK's ability to realize those assets. On December 31, 2009, KAYAK determined that it was more likely than not that it would be able to realize these assets and reversed the valuation allowance, resulting in a tax benefit for that year. In 2010, KAYAK incurred income tax expense of $12.1 million, including a $1.6 million increase to the valuation allowance, giving an effective tax rate of 60.1%. Key effective tax rate drivers specific to 2010 were the sale of Travelpost, Inc., and an increase to the valuation allowance for state net operating losses incurred when KAYAK reduced its presence in California. In 2011, KAYAK incurred income tax expense of $6.7 million giving KAYAK an effective tax rate of 40.8%. The primary differences between the statutory rate and KAYAK's effective tax rate include stock compensation from incentive stock options, state tax expense and differences in jurisdictional tax rates, as shown in the table below.

        Provisions for income taxes compared with income taxes based on the federal statutory tax rate of 35% were as follows:

 
   
  December 31,  
 
  September 30,
2012
 
 
  2011   2010   2009  

U.S. Statutory federal income tax rate

    35.0 %   35.0 %   35.0 %   35.0 %

State income taxes, net of federal benefits

    7.4 %   7.2 %   8.3 %   15.8 %

Compensation related to incentive stock options

    1.4 %   6.0 %   7.1 %   27.0 %

Gain on sale of TravelPost

            4.4 %    

Mark-to-market adjustments

        (2.6 )%   (4.8 )%   5.7 %

Change to valuation allowance

    2.2 %       8.0 %   (149.1 )%

Foreign rate differential

    4.0 %   (2.7 )%        

R&D Credits

    (4.0 )%            

Other

    2.0 %   (2.1 )%   2.1 %   (1.5 )%
                   

Effective income tax rate

    48.0 %   40.8 %   60.1 %   (67.1 )%
                   


Quarterly Financial Data/Seasonality

        The following table presents unaudited consolidated financial data for the trailing eight quarters ended September 30, 2012. The operating results are not necessarily indicative of the results for any subsequent quarter.

 
  2012
Quarters ended
  2011
Quarters ended
  2010
Quarters ended
 
 
  Mar 31   June 30   Sept 30   Mar 31   June 30   Sept 30   Dec 31   Mar 31   Jun 30   Sept 30   Dec 31  

Revenues

  $ 73,338   $ 76,938   $ 78,604   $ 52,674   $ 56,753   $ 61,160   $ 53,947   $ 36,745   $ 43,721   $ 47,814   $ 42,418  

Cost of revenues (excludes depreciation and amortization)

    5,185     4,807     4,908     4,945     4,684     4,151     4,818     4,048     3,772     3,810     4,000  

Selling, general, and administrative

                                                                   

Marketing

    41,249     39,409     40,042     28,457     30,025     28,935     23,601     23,809     21,962     23,368     22,582  

Personnel

    11,913     11,306     12,393     10,039     9,800     10,286     10,660     6,615     7,101     7,271     8,777  

Other general and administrative expenses

    4,832     3,615     4,256     4,217     4,164     3,196     4,823     1,543     2,260     2,728     3,436  
                                               

Total selling, general and administrative expenses (excludes depreciation and amortization)

    57,994     54,330     56,691     42,713     43,989     42,417     39,084     31,967     31,323     33,367     34,795  
                                               

Depreciation and amortization

    2,050     2,050     2,078     2,061     2,341     1,935     2,149     1,367     1,660     1,896     1,898  

Impairment of intangible assets

    0     0     0     14,980     0     0     0     0     0     0     0  
                                               

Income (loss) from operations

  $ 8,109   $ 15,751   $ 14,927   ($ 12,025 ) $ 5,739   $ 12,657   $ 7,896   $ (637 ) $ 6,966   $ 8,741   $ 1,725  
                                               

Net Income (loss)

  $ 4,145   $ 7,288   $ 7,954   $ (6,914 ) $ 3,776   $ 6,968   $ 5,873   $ (854 ) $ 3,333   $ 3,679   $ 1,874  
                                               

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        Seasonal and other factors cause KAYAK's profitability to fluctuate from quarter to quarter. Typically, the highest revenue quarters are the second and third quarters due to the fact that high travel seasons fall in these quarters. Additionally, brand marketing expense fluctuates by quarter, causing operating income to increase or decrease in any given quarter depending on the level of investment.

        In January 2011, KAYAK determined that it would not support two brand names and URLs in the United States and decided that it would migrate all traffic from sidestep.com to KAYAK.com. As a result, the SideStep brand name and URL intangible assets were impaired and KAYAK incurred a related impairment charge of $15.0 million in the first three months of 2011.


Acquisitions

        In May 2010, in an effort to expand KAYAK's European operations, KAYAK acquired all of the outstanding stated share capital of swoodoo in exchange for $6.8 million in cash, net, and 825,000 shares of KAYAK common stock. Pursuant to an option agreed to with the former swoodoo stockholders, in August 2011 KAYAK repurchased 685,219 of these shares at a price of €13.33 per share for a total of $13.2 million. KAYAK is no longer obligated to repurchase any additional shares.

        In April 2011, KAYAK acquired all of the outstanding shares of JaBo Vertrieb-und Entwicklung GmbH, which we refer to as JaBo Software, for $9.2 million in cash, net. JaBo Software operates checkfelix.com, a leading travel metasearch website in Austria.


Liquidity and Capital Resources

        KAYAK has primarily funded its operations through the issuance of equity securities and cash flows from operations. Early in its history, KAYAK relied on cash provided from the sale of shares of its redeemable convertible preferred stock to fund operations and raised $29.8 million prior to 2007. In 2007, KAYAK raised another $165.7 million through the sale of preferred stock and entered into $30.0 million of term loans to fund KAYAK's acquisition of SideStep.

        KAYAK began to generate cash flows from operations in late 2007 and has not required any additional financing to fund operations. KAYAK uses cash to fund operations, make capital expenditures and acquire complementary businesses from time to time.

        As of September 30, 2012, KAYAK had cash and cash equivalents and marketable securities of $178.4 million. Included in this amount is $0.5 million of cash held by foreign subsidiaries that is not available to fund domestic operations and obligations without paying taxes upon its repatriation. KAYAK also has not recorded U.S. income and foreign withholding taxes on the earnings of its foreign subsidiaries at September 30, 2012, because it intends to permanently reinvest those earnings.

        On July 25, 2012, KAYAK completed its IPO which generated $94.2 million after deducting underwriting discounts and commissions and other issuance costs incurred for the sale of KAYAK common stock. In addition, in connection with KAYAK's IPO, certain eligible stockholders elected to purchase shares of KAYAK Class A common stock for $6.0 million. KAYAK believes that cash from operations and its IPO, together with cash and short-term investment balance are sufficient to meet ongoing capital expenditures, working capital requirements and other capital needs for at least the next twelve months.

        KAYAK's liquidity could be negatively affected by a decrease in demand for products and services. In addition, KAYAK may make acquisitions complementary to its business and may need to raise additional capital through future debt or equity financing to provide for greater flexibility to fund any such acquisitions. Additional financing may not be available at all or on terms favorable to KAYAK.

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        The following table presents cash flow information for the stated periods and includes the net cash received from KAYAK's IPO:

 
  Nine Months
Ended September 30,
(unaudited)
  Year ended December 31,  
 
  2012   2011   2011   2010   2009  
 
  (Dollar amounts in thousands)
 

Cash flows from operating activities

  $ 31,680   $ 27,015   $ 32,899   $ 21,932   $ 12,616  

Cash flows from investing activities

    837     (35,414 )   (33,848 )   (8,375 )   6,964  

Cash flows from financing activities

    102,775     891     1,809     5,737     (27,239 )


    Cash flows from operating activities

        Cash flows from operating activities were $31.7 million for the nine months ended September 30, 2012 as compared to $27.0 million for the nine months ended September 30, 2011. Net income was $19.4 million and $3.8 million for the nine months ended September 30, 2012 and 2011, respectively. Non-cash charges decreased by $5.1 million in the first nine months of 2012 compared to the first nine months of 2011 due to an impairment of $15.0 million partially offset by $7.7 million in deferred taxes. Cash used for working capital was $1.9 million for the first nine months of 2012 as compared to $3.9 million in the first nine months of 2011. The decrease is due to the timing of receipts from customers and payment to vendors.

        Cash flows from operating activities were $32.9 million for the year ended December 31, 2011 as compared to $21.9 million for the year ended December 31, 2010, an increase of $11.0 million. The increase in operating cash flows is primarily related to cash from working capital of $2.6 million as of December 31, 2011 as compared to cash used for working capital of $5.4 million as of December 31, 2010. The change in cash from working capital relates primarily to an increase in payables. Non-cash charges increased to $20.6 million for the year ended December 31, 2011 from $19.3 million for the year ended December 31, 2010, primarily due to a decrease in SideStep deferred tax liabilities. Net income also increased to $9.7 million in 2011 from $8.0 million in 2010.

        Cash flows from operating activities were $21.9 million and $12.6 million in 2010 and 2009, including net income of $8.0 million and $6.9 million, respectively. The difference in net income was offset by non-cash charges, which were $10.7 million higher in 2010 than in 2009, primarily due to changes in net deferred tax assets, stock based compensation, and amortization from swoodoo intangible assets acquired in May 2010. Cash used for working capital was $5.4 million for 2010 as compared to $2.9 million in 2009, due to an increase in KAYAK's accounts receivable, partially offset by accrued expenses. As of December 31, 2010 and 2009, accounts receivable, net were $30.2 million and $18.7 million, respectively, and the majority of this increase was due to an increase in sales over the same period. The increase in accrued expenses is primarily attributable to increases in tax, marketing, and technology related accruals for the year ended December 31, 2010.


    Cash flows from investing activities

        Cash from investing activities was $0.8 million for the nine months ended September 30, 2012 compared to cash used in investing activities of $35.4 million for the same period in 2011. The decrease of cash used in investing activities is primarily due to the net decrease in the purchase and maturities of marketable securities of $13.2 million from 2012 to 2011. The first nine months of 2011 also included $9.2 million of cash used for the purchase of JaBo Software and $13.2 million used to repurchase shares related to KAYAK's acquisition of swoodoo in 2010.

        Cash used in investing activities was $33.8 million and $8.4 million for the years ended December 31, 2011 and 2010, respectively. The year ended December 31, 2011 included $13.2 million

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in cash used to repurchase shares related to the acquisition of swoodoo. Cash used in investing activities included the net purchase of $7.2 million in marketable securities in 2011, an increase of $4.3 million from 2010. Cash used for business combinations was $9.2 million in 2011 as compared to $6.8 million in 2010.

        Cash used in investing activities was $8.4 million for the year ended December 31, 2010 compared to cash provided by investing activities of $7.0 million in 2009. Capital expenditures were $2.3 million in both 2010 and 2009. During 2010, KAYAK had net purchases of marketable securities of $2.9 million, while in 2009 KAYAK had net sales of marketable securities of $9.2 million. In 2009, KAYAK sold marketable securities to generate cash used to pay down its term debt. During 2010, KAYAK acquired swoodoo for $6.8 million in cash, net, and received $3.6 million in cash from the sale of TravelPost.


    Cash flows from financing activities

        Cash from financing activities was $102.8 million for the nine months ended September 30, 2012 compared to $0.9 million for the same period in 2011. The increase is primarily related to the proceeds, net of offering expenses, from KAYAK's IPO of $94.2 million.

        Cash provided by financing activities was $1.8 million for the year ended December 31, 2011 as compared to $5.7 million for the year ended December 31, 2010. Proceeds and tax benefits from the exercise of stock options increased to $3.3 million in 2011 from $0.7 million in 2010. Cash used in connection with the IPO during 2011 was $1.5 million. The year ended December 31, 2010 included proceeds of $3.7 million from the repayment of stockholder loans and proceeds of $1.4 million from the exercise of common stock warrants.

        Cash provided by financing activities was $5.7 million for the year ended December 31, 2010 compared to cash used for financing activities of $27.2 million for the same period in 2009. The difference was due primarily to $25.3 million used to pay off term loans in 2009. Additionally, in 2009, KAYAK provided loans to its stockholders of $2.5 million. These loans, plus earlier loans, were repaid in 2010, resulting in cash proceeds of $3.7 million.


Contractual Obligations

        KAYAK's contractual obligations as of December 31, 2011 were as follows:

 
  Amounts due by period
(Dollar amounts in thousands)
 
 
  Total   Less than
1 year
  1 - 3
years
  3 - 5
years
  More than
5 years
 

Operating lease obligations

  $ 6,301   $ 1,697   $ 2,228   $ 1,841   $ 535  

Content licensing and technology agreements

  $ 7,000   $ 7,000   $   $   $  

Total contractual cash obligations

  $ 13,301   $ 8,697   $ 2,228   $ 1,841   $ 535  

        KAYAK leases its office and data center facilities under noncancelable leases that expire at various points through January 2016. See "Information about KAYAK—Facilities" for further discussion of KAYAK's leased premises. KAYAK is also responsible for certain real estate taxes, utilities and maintenance costs on KAYAK's office facilities. In addition, KAYAK has various content licensing and technology agreements that, if renewed, will continue to incur costs in future periods.

        On April 3, 2012, KAYAK entered into a Products and Services Agreement with a technology provider. This agreement obligates KAYAK to make minimum future payments of $1.6 million per year for the next four years. On May 31, 2012, KAYAK entered into a lease for office space for its international headquarters in Zurich, Switzerland. This lease obligates KAYAK to make annual payments of CHF 0.2 million in 2012 and CHF 0.6 million in each of 2013 through 2017. On June 4, 2012, KAYAK entered into a lease for office space in Stamford, Connecticut. This lease agreement

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obligates KAYAK to make annual payments of between $0.8 million and $0.9 million over the next 12 years.


Off-Balance Sheet Obligations

        KAYAK had no off-balance sheet obligations as of September 30, 2012 or December 31, 2011.


Critical Accounting Policies and Estimates

        KAYAK prepares its consolidated financial statements in accordance with GAAP. To do so KAYAK makes estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, KAYAK could reasonably have used different accounting policies and estimates. In addition, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from estimates. To the extent that there are material differences between these estimates and actual results, KAYAK's financial condition or results of operations will be affected. KAYAK bases its estimates on past experience and other assumptions that it believes are reasonable under the circumstances, and it evaluate these estimates on an ongoing basis. KAYAK describes significant accounting policies in Note 2 of the KAYAK audited consolidated financial statements found in this proxy statement/prospectus. KAYAK believes the following critical accounting estimates are the most significant areas of judgments and estimates used to prepare its financial statements.


    Revenue Recognition

        KAYAK's services are free for travelers. KAYAK earns revenues by sending referrals to travel suppliers and OTAs after a traveler selects a specific itinerary (distribution revenues), and through advertising placements on its websites and mobile applications (advertising revenues).

    Distribution Revenues

        KAYAK earns distribution revenues by sending qualified leads to travel suppliers and OTAs and by facilitating bookings directly through its websites and mobile applications. After a traveler has entered a query on KAYAK's website or mobile applications, reviewed the results, and decided upon a specific itinerary, KAYAK sends the user directly into the travel supplier's or OTA's purchase process to complete the transaction. In many cases, users may now complete bookings with the travel supplier or OTA without leaving KAYAK's websites and mobile applications. Travel suppliers and OTAs have the flexibility to pay KAYAK either when these qualified leads click on a query result at a set CPC basis, or when they purchase a travel product through KAYAK or on the travel supplier or OTA website as a CPA basis. KAYAK separately negotiates and enters into KAYAK's distribution agreements, and these agreements set forth the payment terms for the applicable travel supplier or OTA.

    Advertising Revenues

        Advertising revenues primarily come from payments for compare units, text-based sponsored links and display advertisements. A "compare unit" is an advertising placement that, if selected by a KAYAK user, launches the advertiser's website and initiates a query based on the same travel parameters provided on the KAYAK website. The major types of advertisers on KAYAK's websites consist of OTAs, third party sponsored link providers, hotels, airlines and vacation package providers. Generally, KAYAK's advertisers pay on a CPC basis, which means advertisers pay only when someone clicks on one of their advertisements, or on a CPM basis. Paying on a CPM basis means that advertisers pay based on the number of times their advertisements appear on KAYAK's websites.

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    Stock-Based Compensation

        KAYAK's stock-based compensation expense is estimated at the grant date based on an award's fair value as calculated under the Black-Scholes option-pricing model and is recognized as expense over the requisite service period. The Black-Scholes model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the Black-Scholes model changes significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. In addition, KAYAK is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. KAYAK estimates the forfeiture rate based on historical experience. To the extent the actual forfeiture rate is different from the estimate, stock-based compensation expense is adjusted accordingly.

        KAYAK accounts for stock options issued to non-employees in accordance with the guidance for equity-based payments to non-employees. Stock option awards to non-employees are accounted for at fair value using the Black-Scholes option-pricing model. KAYAK's management believes that the fair value of stock options is more reliably measured than the fair value of the services received. The fair value of the unvested portion of the options granted to non-employees is re-measured each period. The resulting increase in value, if any, is recognized as expense during the period the related services are rendered. The fair value of each non-employee stock-based compensation award is re-measured each period until a commitment date is reached, which is generally the vesting date.


    Income Taxes

        KAYAK is subject to income taxes in the United States and some foreign jurisdictions. KAYAK uses estimates and exercises significant judgment to calculate deferred taxes, tax from uncertain tax positions, and the overall income tax provision/(benefit). As a result, ultimate settlement of KAYAK's tax positions may differ from the amounts accrued and may result in an increase or decrease to income tax expense in the results of operations in the future.

        Realization of the future tax benefits depends on many factors, including KAYAK's ability to continue to generate taxable income of the type necessary to support the utilization of tax attributes within the applicable carryforward period. In 2012, KAYAK recorded a valuation allowance against operating losses and deferred tax assets in Europe in the amount of $0.9 million.

        KAYAK determines its provision for income taxes for interim periods using an estimate of the annual effective rate. KAYAK records any changes to the estimated annual rate in the interim period in which the change occurs, including any items discrete to the quarter. KAYAK's effective tax rate was 48.0% and 44.5% for the nine months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, 2012, the rate was higher than the statutory rate primarily due to state taxes, losses in Europe for which no benefit was recognized and disallowed stock compensation expense for incentive stock options, offset by federal and state research credits. For the nine months ended September 30, 2011, the effective tax rate was higher than the statutory rate primarily due to state taxes and disallowed stock compensation expense for incentive stock options.


    Acquisitions

        KAYAK accounts for acquisitions using the purchase method of accounting. In each case, KAYAK allocates the purchase price to the assets acquired, including intangible assets and liabilities assumed, based on estimated fair values at the date of the acquisition.


    Recoverability of Intangible Assets, Including Goodwill

        Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur,

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KAYAK compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there is impairment, the amount of the impairment is calculated as the difference between the carrying value and fair value. Goodwill is tested for impairment at least annually and whenever events or changes in circumstances indicate that goodwill may be impaired. Goodwill represents the excess of the cost of acquired business over the fair value of the assets acquired at the date of acquisition. Based on KAYAK's most recent annual analysis, KAYAK believes that the fair values of reporting units exceeded their carrying values by a significant amount and therefore no impairment of goodwill was recorded. KAYAK's goodwill is not deductible for tax purposes.


JOBS Act

        On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies.

        As defined in the JOBS Act, a public company whose initial public offering of common equity securities occurred after December 8, 2011 and whose annual gross revenues are less than $1.0 billion will, in general, qualify as an "emerging growth company" until the earliest of:

    the last day of its fiscal year following the fifth anniversary of the date of its initial public offering of common equity securities;

    the last day of its fiscal year in which it has annual gross revenue of $1.0 billion or more;

    the date on which it has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and

    the date on which it is deemed to be a "large accelerated filer," which will occur at such time as the company (a) has an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of its most recently completed second fiscal quarter, (b) has been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months, and (c) has filed at least one annual report pursuant to the Exchange Act.

Under this definition, KAYAK is an "emerging growth company" and could remain an emerging growth company until as late as December 31, 2017.

        As an "emerging growth company" KAYAK has elected under the JOBS Act to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. As a result, KAYAK's financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. Additionally, KAYAK is in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

        Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company", KAYAK chooses to rely on such exemptions KAYAK may not be required to, among other things, (i) provide an auditor's attestation report on its system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation

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between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee compensation. In the event the merger with priceline.com is completed, KAYAK will no longer be an emerging growth company and will be subject to the accounting policies and procedures established by priceline.com.


Quantitative and Qualitative Disclosures about Market Risk

        KAYAK is exposed to market risks in the ordinary course of business. These risks primarily consist of foreign exchange and interest rate risks.


    Foreign Exchange Risk

        KAYAK transacts business in various foreign currencies and has some international revenues and costs which are denominated in foreign currencies. This exposes KAYAK to foreign currency risk. If exchange rates were to fluctuate significantly, KAYAK would see higher gains or losses from transactions in the "Other income (expense)" line of the statement of operations, and larger cumulative translation adjustments in the "Accumulated Other Comprehensive Income" category of the consolidated balance sheet. The volatility of exchange rate is dependent on many factors that cannot be forecasted with reliable accuracy. At this time KAYAK does not, but may in the future, enter into derivatives or other financial instruments in an attempt to hedge foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on KAYAK's results of operations.


    Interest Rate Risk

        KAYAK invests excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies, municipalities in the U.S., debt instruments issued by foreign governments, time deposits, money market and other funds, and corporate debt securities. By policy, KAYAK limits the amount of credit exposure to any one issuer.

        Investments in both fixed rate and floating rate interest earning securities carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. Due in part to these factors, KAYAK's income from investments may decrease in the future.

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MARKET PRICE OF AND DIVIDENDS ON KAYAK'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Market Information

        KAYAK Class A common stock is listed for trading on NASDAQ under the symbol "KYAK." The table below shows, for the periods indicated, the high and low closing prices for KAYAK Class A common stock, as reported by NASDAQ.

 
  Fiscal Quarters  
 
  First   Second   Third   Fourth  

Fiscal 2012 (through December 31, 2012)

                         

High

    *     *   $ 35.46   $ 40.70  

Low

    *     *   $ 26.17   $ 29.62  

*
KAYAK was listed on NASDAQ on July 20, 2012 and has no publicly available share prices prior to the third quarter of fiscal year 2012.

        The closing price of KAYAK Class A common stock on NASDAQ on November 7, 2012, the last trading day prior to the date the KAYAK board authorized the execution of the merger agreement, was $31.54 per share of KAYAK Class A common stock. On November 8, 2012, the last full trading day prior to the public announcement of the merger agreement, the closing price of KAYAK Class A common stock on NASDAQ was $31.04 per share. On January 18, 2013, the closing price for KAYAK Class A common stock on NASDAQ was $40.11 per share. You are encouraged to obtain current market quotations for KAYAK Class A common stock in connection with voting your shares of KAYAK Class A common stock.


Holders of Common Equity

        As of January 18, 2013, there were 36 holders of record of KAYAK Class A common stock and 128 holders of record of KAYAK Class B common stock.


Dividends

        KAYAK has never declared or paid any cash dividends on shares of KAYAK Class A common stock. In accordance with the merger agreement, KAYAK cannot pay any cash dividends prior to the closing of the merger or termination of the merger agreement without the prior consent of priceline.com.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF KAYAK

        The following tables sets forth certain information regarding the beneficial ownership of KAYAK Class A common stock and Class B common stock as of January 18, 2013 (except as noted in the footnotes below) and with respect to:

    each person known by us to beneficially own 5% or more of the outstanding shares of KAYAK Class A common stock or Class B common stock;

    each member of KAYAK's board;

    each named executive officer; and

    the members of KAYAK's board and KAYAK's executive officers as a group.

        Unless otherwise noted below, the address of each beneficial owner listed in the table below is c/o KAYAK Software Corporation, 55 North Water Street, Suite 1, Norwalk, CT 06854.

        KAYAK has determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, KAYAK believes, based on the information furnished to KAYAK, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of KAYAK common stock that he, she or it beneficially owns.

        Applicable percentage ownership and voting power is based on 38,697,398 shares of common stock outstanding on January 18, 2013. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, KAYAK deemed outstanding shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of January 18, 2013 as well as shares of stock underlying restricted stock units that will settle within 60 days of January 18, 2013. KAYAK did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

 
  Class A Common
Stock
Beneficially Owned
  Class B Common
Stock
Beneficially Owned
   
 
Name and Address of Beneficial Owner
  # Class A
Shares
  %   # Class B
Shares
  %   % Total
Voting
Power**
 

5% Stockholders:

                               

General Catalyst Partners(1)

   
74,225
   
*

%
 
10,146,960
   
33.05

%
 
32.23

%

Sequoia Capital(2)

    74,225     * %   6,000,797     19.54 %   19.07 %

Accel Funds(3)

    18,556     * %   4,797,286     15.62 %   15.23 %

Oak Investment Partners XII, LP(4)

    292,027     3.65 %   3,585,272     11.68 %   11.47 %

T. Rowe Price Associates, Inc.(5)

    669,901     8.38 %           *  

President and Fellows of Harvard College(6)

    254,678     3.19 %           *  

AQR Capital Management, LLC(7)

    590,436     7.39 %           *  

Morgan Stanley(8)

    401,621     5.03 %           *  

CNH Partners, LLC(9)

    587,972     7.38 %           *  

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Directors and Named
Executive Officers:
  # Class A
Shares
  %   # Class B
Shares
  %   % Total
Voting
Power**
 

Daniel Stephen Hafner(10)(12)(13)

    602,267     7.54 %   1,785,598     5.79 %   5.83 %

Paul M. English(10)(14)(15)

    208,075     2.60 %   2,866,920     9.29 %   9.12 %

Joel E. Cutler(1)

    74,225     * %   10,146,960     33.05 %   32.23 %

Michael Moritz(2)

    74,225     * %   6,000,797     19.54 %   19.07 %

Hendrik W. Nelis(3)

    18,556     * %   4,797,286     15.62 %   15.23 %

Terrell B. Jones(7)(11)

    6,564     * %   309,000     *     *  

Brian H. Sharples(11)

    2,188     * %           *  

Gregory S. Stanger(11)

    6,564     * %           *  

Melissa H. Reiter(10)

            120,831     *     *  

Robert M. Birge(10)

            154,755     *     *  

Keith D. Melnick(10)

            344,078     1.11 %   1.08 %

Willard H. Smith(16)

            50,000     *     *  

All executive officers and directors as a group (17 individuals)

    992,664     12.42 %   28,324,531     87.17 %   83.70 %

 


*
Indicates ownership of less than one percent.

**
Percentage total voting power represents voting power with respect to all shares of KAYAK Class A common stock and Class B common stock, voting as a single class. Each holder of Class B common stock is entitled to ten votes per share of Class B common stock and each holder of Class A common stock is entitled to one vote per share of Class A common stock on all matters submitted to KAYAK stockholders for a vote. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of KAYAK stockholders, except as may otherwise be required by law. The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis.

(1)
Such Class A common stock is held by General Catalyst Partners as follows:

337 shares held by GC Entrepreneurs Fund II, L.P.

324 shares held by GC Entrepreneurs Fund III, L.P.

1,138 shares held by GC Entrepreneurs Fund V, LP

8,941 shares held by General Catalyst Group II, L.P.

8,954 shares held by General Catalyst Group III, L.P.

36,354 shares held by General Catalyst Group V Supplemental L.P.

18,177 shares held by General Catalyst Group V, L.P.

Such Class B common stock is held by General Catalyst Partners as follows:

155,863 shares held by GC Entrepreneurs Fund II, L.P.

149,701 shares held by GC Entrepreneurs Fund III, L.P.

32,150 shares held by GC Entrepreneurs Fund V, LP

4,131,405 shares held by General Catalyst Group II, L.P.

4,137,570 shares held by General Catalyst Group III, L.P.

1,026,847 shares held by General Catalyst Group V Supplemental L.P.

513,424 shares held by General Catalyst Group V, L.P.

Each of David Fialkow, David Orfao and Joel Cutler, KAYAK's director, is a Managing Director of General Catalyst GP II, LLC, General Catalyst GP III, LLC and General Catalyst GP V, LLC and may be deemed to share voting and dispositive power over the shares held of record by General Catalyst Group II, L.P., General Catalyst Group III, L.P., General Catalyst Group V, L.P., General Catalyst Group V Supplemental, L.P., GC Entrepreneurs Fund II, L.P., GC Entrepreneurs Fund III, L.P., and GC Entrepreneurs Fund V, L.P. Each of the Managing Directors disclaims

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    beneficial ownership of any such shares except to the extent of his proportionate pecuniary interest therein. The address for Mr. Cutler and General Catalyst Partners is 20 Cambridge Road, 4th Floor, Cambridge, MA 02138.

(2)
Such Class A common stock is held by Sequoia Capital as follows:

69,853 shares held by Sequoia Capital Growth Fund III

3,607 shares held by Sequoia Capital Growth III Principals Fund

765 shares held by Sequoia Capital Growth Partners III

Such Class B common stock is held by Sequoia Capital as follows:

2,269,059 shares held by Sequoia Capital Growth Fund III

111,677 shares held by Sequoia Capital Growth III Principals Fund

22,338 shares held by Sequoia Capital Growth Partners III

3,154,842 shares held by Sequoia Capital XI

343,224 shares held by Sequoia Capital XI Principals Fund

99,657 shares held by Sequoia Technology Partners XI

SCGF III Management, LLC is the general partner of Sequoia Capital Growth Fund III and Sequoia Capital Growth Partners III and managing member of Sequoia Capital Growth III Principals Fund and has sole voting and investment power. SCXI Management, LLC is the general partner of Sequoia Capital XI and Sequoia Technology Partners XI and managing member of Sequoia Capital XI Principals Fund has sole voting and investment power. Voting and investment power over the shares beneficially owned by SCGF III Management, LLC is shared by Michael Moritz, KAYAK's director, Roelof Botha, James Goetz, Douglas Leone, Scott Carter, and Mike Goguen, its managing members. Voting and investment power over the shares beneficially owned by SCXI Management, LLC is shared by Michael Moritz, KAYAK's director, Douglas Leone, and Mike Goguen, its managing members. The managing members disclaim beneficial ownership of such shares except to the extent of their respective proportionate pecuniary interests therein. The address for Mr. Moritz and Sequoia Capital is 3000 Sand Hill Road, 4-250, Menlo Park, CA 94025.

(3)
Such Class A common stock is held by Accel Funds as follows:

18,176 shares held by Accel London II L.P.

380 shares held by Accel London Investors 2006 L.P.

Such Class B common stock is held by Accel Funds as follows:

4,698,942 shares held by Accel London II L.P.

98,344 shares held by Accel London Investors 2006 L.P.

Accel London II Associates L.L.C. is the general partner of Accel London II Associates L.P., which is the general partner of Accel London II L.P. and has the sole voting and investment power. Accel London II Associates L.L.C. is the general partner of Accel London Investors 2006 L.P. and has the sole voting and investment power. Voting and investment power over the shares beneficially owned by Accel London II Associates L.L.C. is shared by the managers, Jonathan Biggs, Kevin Comolli, Bruce Golden and Hendrik W. Nelis, KAYAK's director. The general partner and managers disclaim beneficial ownership of the shares owned by the Accel Funds except to the extent of their proportionate pecuniary interest therein. The address for Mr. Nelis is 16 St. James's Street, London SW1A 1ER, United Kingdom. The address for the Accel Funds is 428 University Avenue, Palo Alto, CA 94301.

(4)
Oak Investment Partners XII, LP, a Delaware limited partnership, is controlled by Oak Associates XII, LLC, its General Partner. Voting and dispositive power over the shares held of record by Oak Investment Partners XII, LP may be deemed to be held by Bandel L. Carano, Edward F. Glassmeyer, Frederic W. Harman, Ann H. Lamont and Iftikar A. Ahmed, managing members of Oak Associates XII, LLC. The managing members disclaim beneficial ownership of

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    the shares held by Oak Investment Partners XII, LP except to the extent of their respective proportionate pecuniary interests therein. The principal address for Oak Investment Partners XII, LP is One Gorham Island, Westport, Connecticut 06880.

(5)
As reported on a Schedule 13G filed with the SEC on December 10, 2012, jointly by T. Rowe Price Associates, Inc. and T. Rowe Price New Horizons Fund, Inc., T. Rowe Price Associates, Inc. is the beneficial owner of 669,901 shares of Class A common stock. T. Rowe Price Associates, Inc. has sole dispositive power over all 669,901 shares and sole voting power with respect to 86,222 shares. Pursuant to the Schedule 13G, T. Rowe Price New Horizons Fund, Inc. beneficially owns 583,679 shares and has sole voting power with respect to all such shares.

The principal address for T. Rowe Price Funds is 100 E. Pratt Street, Baltimore, Maryland 21202.

(6)
As reported on a Schedule 13D filed with the SEC on December 3, 2012 by President and Fellows of Harvard College, President and Fellows of Harvard College is the beneficial owner of 254,678 shares of Class A common stock and has sole power to vote and sole power to dispose of such shares.

The principal address for President and Fellows of Harvard College is c/o Harvard Management Company, Inc., 600 Atlantic Avenue, Boston, Massachusetts 02210.

(7)
As reported on a Schedule 13G filed with the SEC on January 8, 2013 by AQR Capital Management, LLC, AQR Capital Management, LLC is the beneficial owner of 590,436 shares of Class A common stock and possesses shared power to vote and shared power to dispose of such shares. The principal address for AQR Capital Management, LLC is 2 Greenwich Plaza, 3rd Floor, Greenwich, Connecticut 06830.

(8)
As reported on a Schedule 13G filed with the SEC on January 23, 2013 by Morgan Stanley, Morgan Stanley is the beneficial owner of 401,621 shares of Class A common stock and possesses sole dispositive power over all 401,621 shares and sole voting power with respect to 401,491 shares. The principal address for Morgan Stanley is 1585 Broadway, New York, NY 10036.

(9)
As reported on a Schedule 13G filed with the SEC on January 9, 2013 by CNH Partners, LLC, CNH Partners, LLC is the beneficial owner of 589,972 shares of Class A common stock and possesses shared power to vote and shared power to dispose of such shares, of which AQR Diversified Arbitrage Fund, an open-ended registered investment company, holds 9.0%. CNH Partners, LLC serves as the investment manager to AQR Diversified Arbitrage Fund. The principal address for CNH Partners, LLC is 2 Greenwich Plaza, 3rd Floor, Greenwich, Connecticut 06830.

(10)
Includes the following number of shares of Class B common stock which such director or executive officer has the right to acquire upon the exercise of stock options that were exercisable as of January 18, 2013, or that will become exercisable within 60 days after that date:

Name
  Class B Shares  

Daniel Stephen Hafner

    158,333  

Paul M. English

    158,333  

Terrell B. Jones

    299,000  

Melissa H. Reiter

    120,831  

Robert M. Birge

    140,312  

Keith D. Melnick

    344,078  

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(11)
Includes the following number of shares of Class A common stock which such director or executive officer has the right to acquire upon the settlement of restricted stock units that will settle within 60 days of January 18, 2013:

Name
  Class A Shares  

Terrell B. Jones

    1,094  

Brian H. Sharples

    0  

Gregory S. Stanger

    1,094  
(12)
Includes 1,627,265 shares of Class B common stock beneficially owned by Mr. Hafner as follows:

1,002,265 shares held directly by Mr. Hafner;

500,000 shares held by the DS Hafner Trust, which beneficial ownership Mr. Hafner disclaims;

100,000 shares of common stock held by Daniel Stephen Hafner, as trustee for the JM Hafner Trust, which beneficial ownership Mr. Hafner disclaims; and

25,000 shares of common stock held by Daniel Stephen Hafner as trustee for the McKane 2007 Grandchildren Trust, which beneficial ownership Mr. Hafner disclaims.

(13)
Includes 602,267 shares of Class A common stock over which Mr. Hafner has limited voting power pursuant to a voting agreement and proxy dated April 13, 2011. Mr. Hafner disclaims beneficial ownership of such shares.

(14)
Includes 2,013,859 shares of common stock beneficially owned by Mr. English as follows:

912,940 shares of Class B common stock held directly by Mr. English;

100,000 shares of Class B common stock and 208,075 shares of Class A common stock, held by Paul M. English, as trustee for The Paul M. English 2007 Irrevocable Family Trust, which beneficial ownership Mr. English disclaims;

315,880 shares of Class B common stock held by Paul M. English as trustee for The Paul M. English 2009 Charitable Remainder Unitrust I, which beneficial ownership Mr. English disclaims;

315,880 shares of Class B common stock held by Paul M. English as trustee for The Paul M. English 2009 Charitable Remainder Unitrust II, which beneficial ownership Mr. English disclaims; and

161,084 shares of Class B common stock held by Paul M. English as trustee for the Paul M. English Family 2006 Remainder Trust—General Trust fbo Michael, which beneficial ownership Mr. English disclaims.

(15)
Includes 902,803 shares of Class B common stock over which Mr. English has sole voting power pursuant to a proxy dated November 5, 2010. Mr. English disclaims beneficial ownership of such shares.

(16)
Willard H. Smith, having resigned his position during the last completed fiscal year, is not currently an officer of KAYAK.

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KAYAK GOLDEN PARACHUTE COMPENSATION

        The following table sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for each named executive officer that may be paid or become payable in connection with the merger, assuming the following:

    the price per share of KAYAK common stock is $40.00, the cash consideration offered under the merger agreement;

    the merger closed on January 18, 2013, which is the latest practicable date prior to the filing of this prospectus/proxy statement; and

    the named executive officers of KAYAK were terminated without cause immediately following a change in control on January 18, 2013, which is the latest practicable date prior to the filing of this prospectus/proxy statement.


Golden Parachute Compensation

Name
  Cash(1)
($)
  Equity(2)
($)
  Perquisites/
Benefits
($)
  Total
($)
 

Daniel Stephen Hafner,

    456,752     4,500,000     19,609 (3)   4,976,360  

Chief Executive Officer, Cofounder and Director

                         

Paul M. English,

    459,244     4,500,000     19,609 (3)   4,978,852  

Chief Technology Officer, Cofounder and Director

                         

Keith D. Melnick,

    337,419     2,309,000     180,519 (4)   2,826,938  

Chief Commercial Officer

                         

(1)
These amounts represent cash severance payments that are payable upon a qualifying termination of the executive's employment, without regard to the consummation of the merger with priceline.com. The estimated amounts for each executive are as follows:

Daniel Stephen Hafner—Includes 12 months of base salary of $400,000, a bonus amount equal to 125% of the current year's base salary, pro-rated for time elapsed in the current year, of $25,000, and accrued but unused vacation time of $31,752.

Paul M. English—Includes 12 months of base salary of $400,000, a bonus amount equal to 125% of the current year's base salary, pro-rated for time elapsed in the current year, of $25,000, and accrued but unused vacation time of $34,244.

Keith D. Melnick—Includes 12 months of base salary of $320,000, a bonus amount equal to 100% of the current year's base salary, pro-rated for time elapsed in the current year, of $16,000, and accrued but unused vacation time of $1,419.

(2)
The amounts included in the table above assume the full vesting of any outstanding, unvested stock options and represent the net value of outstanding, unvested stock options assuming a KAYAK common stock price of $40.00 per share. Under the terms of the merger agreement, all outstanding options to acquire shares of KAYAK common stock, whether vested or unvested, will be automatically converted into (1) an option to purchase shares of priceline.com common stock and (2) a cash amount. The number of shares subject to each option to purchase shares of priceline.com common stock and the exercise price per share will be determined using a conversion ratio equal to the exchange ratio, or if the exchange ratio is fixed at 0.05728 or 0.07001, a ratio adjusted by reference to the fixed exchange ratio and the priceline.com average trading price as further described herein. See "The Merger Agreement—Treatment of KAYAK Stock

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    Options and Restricted Stock Units in the Merger" beginning on page 133. The estimated amounts for each executive are as follows:

    Daniel Stephen Hafner—accelerated stock options with an aggregate intrinsic "in-the-money" value of $4,500,000.

    Paul M. English—accelerated stock options with an aggregate intrinsic "in-the-money" value of $4,500,000.

    Keith D. Melnick—accelerated stock options with an aggregate intrinsic "in-the-money" value of $2,309,000.

(3)
These amounts represent the value of the continuation of KAYAK welfare benefits for a period of 12 months following a qualifying termination of the executive's employment, without regard to the consummation of the merger with priceline.com.

(4)
Amount represents the continuation of KAYAK welfare benefits for a period of 12 months following a qualifying termination of the executive's employment, without regard to the consummation of the merger with priceline.com. In addition, effective as of August 1, 2012, Mr. Melnick was relocated, for a two-year assignment, from KAYAK's office in Norwalk, Connecticut, to KAYAK's office in Zurich, Switzerland. In connection with this relocation, KAYAK agreed to pay Mr. Melnick additional compensation in the form of (i) an expatriation allowance equal to 45% of Mr. Melnick's base salary, (ii) reasonable relocation expenses to and from Zurich, Switzerland, (iii) reasonable accommodation expenses, and (iv) reasonable tuition expenses for Mr. Melnick's school aged children. In the event of a qualifying termination, KAYAK anticipates that it shall continue to pay Mr. Melnick for these added benefits for the remainder of the semester in which Mr. Melnick's children are then currently enrolled. As a result, Mr. Melnick's perquisites include an additional (i) $63,912 equal to 45% of his base salary pro rated for the time period from February 1, 2013 through June 30, 2013 (the estimated time at which Mr. Melnick's children would no longer be enrolled in school in Zurich), (ii) estimated relocation costs of $40,000, and (iii) accommodation expenses of $56,322 for the period from February 1, 2013 through June 30, 2013.

        Any changes in the assumptions or estimates above would affect the amounts shown in the table.


Narrative to Golden Parachute Compensation Table

    Employment and Non-competition Agreements

        Mr. Hafner and Mr. English are employed under the terms of their respective Employment and Non-competition Agreements, dated May 14, 2012, and amended by a First Amendment, dated May 17, 2012, and a Second Amendment, dated November 7, 2012, and Mr. Melnick is employed under the terms of an Employment and Non-competition Agreement, dated May 14, 2012 as amended by a letter agreement dated June 18, 2012. These employment agreements are silent as to payments to be made to the executive officers in the event of a change of control of KAYAK, but do provide for payment of certain benefits in the event that the officer's employment is terminated without cause or the officer resigns for good reason. The benefits are payable within 60 days of termination, except for the continuation of payment of base salary and the provision of welfare benefits which will occur over a 12-month period as if the executive were still employed with KAYAK. The benefits are as follows:

    any unpaid base salary and the value of any accrued but unused vacation;

    a lump-sum payment equal to the pro-rata portion of any performance bonus that would be payable with respect to the bonus year in which the termination occurs (based on the number of days of the bonus year elapsed through the effective date of termination and the amount of the target bonus set by KAYAK's board or compensation committee);

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    acceleration of 50% of all unvested equity held by the executive as of termination;

    continuation of payment of base salary for 12 months;

    reimbursement of expenses to which the executive is entitled from KAYAK; and

    continuation of the welfare benefit plans of KAYAK for 12 months.

        Effective as of August 1, 2012, Mr. Melnick was relocated, for a two-year assignment, from KAYAK's office in Norwalk, Connecticut, to KAYAK's office in Zurich, Switzerland. In connection with this relocation, KAYAK agreed to pay Mr. Melnick additional compensation in the form of (i) an expatriation allowance equal to 45% of Mr. Melnick's base salary, (ii) reasonable relocation expenses to and from Zurich, Switzerland, (iii) reasonable accommodation expenses, and (iv) reasonable tuition expenses for Mr. Melnick's school aged children. In the event of a qualifying termination, KAYAK anticipates that it shall continue to pay Mr. Melnick for these added benefits for the remainder of the semester in which Mr. Melnick's children are then currently enrolled. As a result, Mr. Melnick's perquisites include an additional (i) $63,912 equal to 45% of his base salary pro rated for the time period from February 1, 2013 through June 30, 2013 (the estimated time at which Mr. Melnick's children would no longer be enrolled in school in Zurich), (ii) estimated relocation costs of 40,000, and (iii) accommodation expenses of $56,322 for the period from February 1, 2013 through June 30, 2013.

        The table above provides quantitative disclosure of payouts to named executive officers assuming triggering events on January 18, 2013, and assuming the price per share of KAYAK common stock is $40.00, the cash consideration offered under the merger agreement.


    Acceleration of Equity

        As described in the sections of this proxy statement/prospectus entitled "The Merger—Interests of Certain Persons in the Merger" and "The Merger Agreement—Treatment of KAYAK Stock Options and Restricted Stock Units in the Merger" in connection with the merger, 50% of the unvested portion of certain outstanding stock options at the time of the merger will vest. As detailed in footnote 2 to the Golden Parachute Compensation Table above, in the event of a qualifying termination within 60 days prior to, or one year following, a change of control, 100% of any remaining unvested options will vest upon the date of a qualifying termination. The stock option awards that are subject to 50% vesting at the time of the merger consist of (a) awards that were granted prior to July 19, 2012 and (b) awards that were granted on or after July 19, 2012 to individuals who had not previously received an equity award under any of KAYAK's equity plans. Each outstanding stock option, whether vested or unvested, will be converted into (1) an option to purchase shares of priceline.com common stock and (2) a cash amount, based on a conversion ratio equal to the exchange ratio (as described previously in this proxy statement/prospectus) unless the exchange ratio is fixed at 0.05728 or 0.07001, in which case, the conversion ratio will be equal to the sum of (i) the product of such fixed exchange ratio multiplied by 67% plus (ii) the quotient obtained by dividing the product of the cash consideration multiplied by 33% by the priceline.com average trading price.

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INFORMATION ABOUT THE SPECIAL MEETING OF KAYAK STOCKHOLDERS

Time, Place and Purpose of the Special Meeting

        This proxy statement/prospectus is being furnished to KAYAK stockholders as part of the solicitation of proxies by the KAYAK board for use at a special meeting to be held on March 4, 2013, starting at 10:00 a.m., Eastern Standard Time, at the offices of Bingham McCutchen LLP, 13th Floor, One Federal Street, Boston, Massachusetts 02110 or at any postponement or adjournment thereof.

        At the special meeting, holders of shares of KAYAK common stock, will be asked to consider and vote on a proposal to adopt the merger agreement and to approve the adjournment of the special meeting, if necessary, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

        Only holders of record of KAYAK common stock at the close of business on January 24, 2013, the record date, are entitled to vote at the special meeting. A majority of the voting power of the outstanding shares of KAYAK common stock, voting together as a single class, must be voted in favor of the adoption of the merger agreement in order for the merger to be completed. If KAYAK stockholders fail to approve the proposal to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus, which we encourage you to read carefully in its entirety.


Record Date and Quorum

        KAYAK has fixed the close of business on January 24, 2013, as the record date for the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of KAYAK Class A common stock or Class B common stock at the close of business on the record date. If you transfer your shares of KAYAK common stock after the record date but before the special meeting, you will, unless the transferee requests a proxy, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares.

        Each holder of shares of KAYAK Class A common stock is entitled to one vote for each share of KAYAK Class A common stock held of record as of the record date. Each holder of shares of KAYAK Class B common stock is entitled to ten votes for each share of KAYAK Class B common stock held of record as of the record date. As of the close of business on the record date, there were 8,063,665 shares of KAYAK Class A common stock issued and outstanding and 30,634,733 shares of KAYAK Class B common stock issued and outstanding.

        The holders of a majority of the shares of KAYAK common stock outstanding and entitled to vote at the special meeting, present in person or represented by proxy, will constitute a quorum. Once a share of KAYAK common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.


Attendance

        Only KAYAK stockholders of record or their duly authorized proxies have the right to attend the special meeting. To gain admittance, you must present valid photo identification, such as a driver's license or passport. If your shares of KAYAK common stock are held through a bank, brokerage firm or other nominee, please bring to the special meeting a copy of your brokerage statement evidencing your beneficial ownership of KAYAK common stock and valid photo identification. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification

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along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.


Vote Required

        Approval of the adoption of the merger agreement will require the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of KAYAK Class A common stock and Class B common stock entitled to vote at the special meeting, voting together as a single class.

        For the proposal to adopt the merger agreement, you may vote FOR, AGAINST or ABSTAIN. Abstentions will not be counted as votes cast in favor of the proposal to adopt the merger agreement but will count for the purpose of determining whether a quorum is present.

        The failure by a KAYAK stockholder to submit a proxy card or vote by telephone or internet or to vote in person at the special meeting, an abstention from voting, or the failure of a KAYAK stockholder who holds his or her shares in "street name" through a broker or other nominee to give voting instructions to such broker or other nominee will have the same effect as a vote AGAINST the adoption of the merger agreement. Whether or not you plan to attend the special meeting, please cast your vote by indicating on the enclosed proxy card how you wish to vote or follow the instructions on the proxy card to vote by telephone or internet.

        If your shares of KAYAK common stock are registered directly in your name with our transfer agent, Computershare Trust Company N.A., you are considered, with respect to those shares of KAYAK common stock, the "stockholder of record." This proxy statement/prospectus and proxy card have been sent directly to you by KAYAK. If your shares of KAYAK common stock are held through a bank, brokerage firm or other nominee, you are considered the "beneficial owner" of shares of KAYAK common stock held in street name. In that case, this proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of KAYAK common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting. Under the rules of NASDAQ, banks, brokerage firms or other nominees who hold shares in street name for customers have the authority to vote on "routine" proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms or other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the proposal to adopt the merger agreement, and, as a result, absent specific instructions from the beneficial owner of such shares of KAYAK common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of KAYAK common stock on non-routine matters. These broker non-votes will be counted for purposes of determining a quorum, but will have the same effect as a vote AGAINST the proposal to adopt the merger agreement.

        The proposal to adjourn the special meeting, if necessary, to solicit additional proxies requires the affirmative vote of the holders of a majority of the voting power of the shares of KAYAK common stock present in person or represented by proxy at the special meeting and entitled to vote at the special meeting. For the proposal to adjourn the special meeting, if necessary, you may vote FOR, AGAINST or ABSTAIN. If you fail to submit a proxy card or vote in person at the special meeting, or abstain, or there are broker non-votes on the issue, as applicable, the shares of KAYAK common stock not voted will not be counted in respect of, and will have no effect on, the proposal to adjourn the special meeting.

        If you are a stockholder of record, you may have your shares of KAYAK common stock voted on matters presented at the special meeting in any of the following ways:

    in person—you may attend the special meeting and cast your vote there; or

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    by proxy—stockholders of record have a choice of voting by proxy:

    over the internet—please follow the instructions on your proxy card;

    by telephone—please use the toll-free telephone number noted on your proxy card; or

    by signing and dating the proxy card you receive and returning it in the enclosed pre-addressed postage-paid envelope.

        If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of KAYAK common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee. A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of KAYAK common stock, and to confirm that your voting instructions have been properly recorded when voting over the internet or by telephone.

        If you plan to vote by telephone or internet, please follow the instructions on the proxy card according to the instructions. Please also fill out and mail the election form in the pre-addressed postage-paid envelope delivered with the election form so we know what merger consideration you wish to receive.

        If you do not plan to vote by telephone or internet, please sign and mail the proxy card in the enclosed pre-addressed postage-paid envelope as soon as possible so that your shares may be represented at the special meeting. If you do not vote or if you abstain, the effect will be a vote AGAINST adoption of the merger agreement. Please also fill out and mail the election form in the pre-addressed postage-paid envelope delivered with the election form so we know what merger consideration you wish to receive.

        If you properly sign your proxy card but do not mark the boxes showing how your shares of KAYAK common stock should be voted on a matter, the shares of KAYAK common stock represented by your properly signed proxy will be voted FOR the proposal to adopt the merger agreement and FOR the proposal to adjourn the special meeting, if necessary, to solicit additional proxies. If you have any questions or need assistance voting your shares, please call Investor Relations, KAYAK Software Corporation, 55 North Water Street, Suite 1, Norwalk, CT 06854, telephone: (203) 899-3100.

        If you have any questions about the election form or if you need additional copies of the election form, you should contact KAYAK's information agent, Georgeson, 199 Water Street, 26th Floor, New York, NY 10038, telephone: (888) 293-6908 (Toll Free) and for banks and brokerage firms, telephone: (212) 440-9800.

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF KAYAK COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR INTERNET. STOCKHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.


Proxies and Revocations

        If you choose to vote your proxy, you can take it back at any time until the stockholders vote at the special meeting and you can either change your vote or attend the special meeting and vote in person.

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        You may change your vote in any of the following ways:

    by sending written notice to KAYAK's Secretary at KAYAK Software Corporation, 55 North Water Street, Suite 1, Norwalk, CT 06854 prior to the special meeting stating that you would like to revoke your proxy;

    by completing, signing and dating another proxy card bearing a later date and returning it by mail pursuant to the instructions on your proxy card;

    by casting your proxy by telephone or internet at any time after you have voted your proxy; or

    by attending the special meeting and voting in person.


Adjournments and Postponements

        Although it is not currently expected, the special meeting may be adjourned or postponed, including for the purpose of soliciting additional proxies, if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting. Other than an announcement to be made at the special meeting of the time, date and place of an adjourned meeting, an adjournment generally may be made without notice. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow KAYAK's stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.


Anticipated Date of Completion of the Merger

        Priceline.com and KAYAK are working to complete the merger as soon as possible. We anticipate that the merger will be completed by end of the first quarter of 2013. However, the merger is subject to various regulatory approvals and other conditions which are described in more detail in this proxy statement/prospectus and it is possible that factors outside the control of both companies could result in the merger being completed at a later time or not at all. See "The Merger—Regulatory Matters" beginning on page 124 and "The Merger Agreement—Conditions to Completion of the Merger" beginning on page 149.


Rights of Stockholders Who Seek Appraisal

        KAYAK stockholders are entitled to appraisal rights under Section 262 of the DGCL. This means that you are entitled to have the fair value of your shares of KAYAK common stock determined by the Court of Chancery of the State of Delaware and to receive payment based on that valuation. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement. To exercise your appraisal rights, you must submit a written demand for appraisal to KAYAK before the vote is taken on the merger agreement and you must not vote in favor of the proposal to adopt the merger agreement. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. If you hold your shares of KAYAK common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors. See "Appraisal Rights of KAYAK Stockholders" beginning on page 154 and the text of Section 262 of the DGCL reproduced in its entirety as Annex C to this proxy statement/prospectus.

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Solicitation of Proxies; Payment of Solicitation Expenses

        KAYAK will bear all costs of soliciting proxies for the special meeting. KAYAK also may reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares of KAYAK common stock for their expenses in forwarding soliciting materials to owners of KAYAK common stock and in obtaining voting instructions from those owners. KAYAK directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.


Questions and Additional Information

        If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement/prospectus, the enclosed proxy card or the election form, please see the section entitled "Where You Can Find More Information" beginning on page 169.

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INFORMATION ABOUT PRICELINE.COM

Overview of the Business

        Priceline.com is a leading online travel company that offers its customers hotel room reservations at over 270,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, priceline.com also offers its customers reservations for car rentals, airline tickets, vacation packages, destination services and cruises through the priceline.com brand. priceline.com offers car rental reservations worldwide through rentalcars.com (formerly known as TravelJigsaw).

        Priceline.com's principal executive offices are located at 800 Connecticut Avenue, Norwalk, Connecticut 06854, and its telephone number is (203) 299-8000.

        Priceline.com launched its business in the United States in 1998 under the priceline.com brand and has since expanded its operations to include the Booking.com, Agoda and rentalcars.com companies. priceline.com's principal goal is to serve its customers with worldwide leadership in online hotel and rental car reservations. Priceline.com's business is driven primarily by international results. During the year ended December 31, 2011, its international business (the significant majority of which is generated by Booking.com) represented approximately 78% of its gross bookings (an operating and statistical metric referring to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by its customers), and approximately 88% of its consolidated operating income. Given that the business of priceline.com's international operations is primarily comprised of hotel reservation services, gross profit earned in connection with the reservation of hotel room nights represents a substantial majority of its gross profit.

        The priceline.com brand in the United States offers merchant Name Your Own Price® travel services (sometimes referred to as "opaque" travel services), which are recorded in revenue on a "gross" basis and have associated cost of revenue. Retail, or price-disclosed, travel services offered by both its U.S. and international brands are recorded in revenue on a "net" basis and have no associated cost of revenue. Therefore, revenue increases and decreases are impacted by changes in the mix of its revenues between Name Your Own Price® and retail travel services. Gross profit reflects the net margin earned for both its Name Your Own Price® and retail travel services. Consequently, gross profit has become an increasingly important measure of evaluating growth in its business. At present, priceline.com derives substantially all of its gross profit from the following sources:

    Commissions earned from price-disclosed hotel room reservations, rental cars, cruises and other travel services;

    Transaction gross profit and customer processing fees from its price-disclosed merchant hotel room and rental car reservation services;

    Transaction gross profit and customer processing fees from its Name Your Own Price® hotel room reservations, rental car and airline ticket services, as well as its vacation packages service;

    Global distribution system or GDS reservation booking fees related to both its Name Your Own Price® airline ticket, hotel room reservation and rental car services, and price-disclosed airline tickets and rental car services; and

    Other gross profit derived primarily from selling advertising on its websites.

        For the year ended December 31, 2011, priceline.com had gross profit of approximately $3.1 billion comprised of "agency" gross profit, "merchant" gross profit, and "other" gross profit. Agency gross profit is derived from travel related transactions where priceline.com is not the merchant of record and where the prices of its services are determined by third parties. Agency gross profit, which represented the substantial majority of its total gross profit in 2011, consisted of:

    travel commissions;

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    GDS reservation booking fees related to certain of the agency services listed above; and

    customer processing fees.

        Merchant gross profit is derived from transactions where priceline.com is the merchant of record and therefore charge the customer's credit card for the travel services provided, and consisted of:

    transaction gross profit representing revenue charged to a customer, less the cost of revenue amount charged by suppliers in connection with the reservations provided through its Name Your Own Price® hotel room reservation, rental car and airline ticket services, as well as through its price-disclosed vacation packages services;

    transaction gross profit representing the amount charged to a customer, less the amount charged by suppliers in connection with its merchant price-disclosed services;

    customer processing fees charged in connection with the sale of its Name Your Own Price® airline tickets, hotel room reservations and rental cars and its merchant price-disclosed services; and

    ancillary fees, including GDS reservation booking fees related to certain of the services listed above. Other gross profit is derived primarily from selling advertising on its websites.

        Priceline.com Incorporated was formed as a Delaware limited liability company in 1997 and was converted into a Delaware corporation in July 1998. Its common stock is listed on NASDAQ under the symbol "PCLN". Its principal executive offices are located at 800 Connecticut Avenue, Norwalk, Connecticut 06854.

        Additional information about priceline.com is included in documents incorporated by reference into this proxy statement/prospectus. For more information, see "Where You Can Find More Information" beginning on page 169.


Risks Relating to priceline.com's Business

        For risks relating to priceline.com's business, please see priceline.com's Form 10-K filed with the SEC on February 27, 2012, and Form 10-Q filed with the SEC on November 1, 2012 which risk factors are incorporated by reference into this prospectus/proxy statement. See "Where You Can Find More Information" beginning on page 169.

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THE MERGER

General

        If the merger agreement is adopted by the holders of a majority of the outstanding voting power of the shares of KAYAK Class A common stock and Class B common stock, which we refer to collectively as KAYAK common stock, at the special meeting, voting together as a single class, and the other conditions to closing are either satisfied or waived, KAYAK will be merged with and into Merger Sub, a direct, wholly owned subsidiary of priceline.com. Merger Sub will continue as the surviving corporation and a wholly owned subsidiary of priceline.com. Merger Sub will be renamed "KAYAK Software Corporation" upon completion of the merger.


Merger Consideration

        Upon completion of the merger, each issued and outstanding share of KAYAK common stock other than shares owned by priceline.com, KAYAK, or any of their subsidiaries, or by stockholders that have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the DGCL, will be converted into the right to receive, at the election of the stockholder, either $40.00 in cash, which we refer to as the cash consideration, or a fraction of a share of priceline.com common stock, which we refer to as the stock consideration, in each case subject to the pro ration mechanism provided in the merger agreement and described below. We refer to shares as to which appraisal rights have been perfected and not withdrawn as dissenter shares. Shares of KAYAK common stock as to which the holder elects to receive cash consideration are referred to as cash election shares, shares of KAYAK common stock as to which the holder elects to receive stock consideration are referred to as stock election shares and shares of KAYAK common stock as to which no election has been made, other than dissenter shares, are referred to as no election shares.

        The number of shares of KAYAK common stock that will be converted into the right to receive the cash consideration, which we refer to as the total cash number, will equal 33% of the number of shares of KAYAK common stock outstanding on October 31, 2012 plus 33% of the number of shares of KAYAK common stock issued thereafter pursuant to KAYAK options and KAYAK RSUs outstanding on such date, minus the number of dissenter shares, and the remainder of the shares of KAYAK common stock (other than dissenter shares) will be converted into the right to receive the stock consideration. In the event that the number of cash election shares exceeds the total cash number, then a portion of the cash election shares equal to such excess will be converted into the right to receive stock consideration rather than cash consideration, with such adjustment being made on a pro-rata basis among the cash election shares. In the event that the number of cash election shares is less than the total cash number, then such cash election share shortfall amount will be made up by first converting no election shares into the right to receive cash consideration (on a pro-rata basis among such shares, in the event less than all such shares are so converted), and then any remaining cash election share shortfall will be made up by converting a portion of the stock election shares into the right to receive cash consideration rather than stock consideration, with such adjustment being made on a pro-rata basis among the stock election shares. As a result, KAYAK stockholders may receive a different combination of consideration than elected, depending on the elections made by other KAYAK stockholders.

        KAYAK stockholders who receive the merger consideration as stock will receive for each share of KAYAK common stock a fraction of a share of priceline.com common stock determined by dividing $40.00 by the aggregate volume weighted average price per share of priceline.com common stock for the 30 day trading period ending on the second full trading day prior to the effective date, which we refer to as the priceline.com average trading price, provided that the priceline.com average trading price is between (or including) $571.35 and $698.32 per share. If the priceline.com average trading price is below $571.35 then the exchange ratio will be fixed at 0.07001 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. If the priceline.com average trading

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price is above $698.32 then the exchange ratio will be fixed at 0.05728 shares of priceline.com common stock to be delivered for each share of KAYAK common stock. Accordingly, the actual number of shares and the value of the priceline.com common stock delivered to KAYAK stockholders who receive stock consideration will depend on the priceline.com average trading price, and the value of the portion of a share of priceline.com common stock delivered for each such share of KAYAK common stock may be greater than or less than $40.00.

        For example, if the priceline.com average trading price is $672.72 (which was the closing price per share of priceline.com common stock on NASDAQ on January 18, 2013), the exchange ratio will be 0.05946 shares of priceline.com common stock to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock. Accordingly, a holder of 100 shares of KAYAK common stock who elects the stock consideration would be entitled to receive 5 shares of priceline.com common stock and cash consideration in lieu of a fraction of a share of priceline.com stock of $636.39. Because, in this example, the priceline.com average trading price is between $571.35 and $698.32, the value of the stock consideration to be delivered to the KAYAK stockholder would be $40.00 (assuming the closing price per share of priceline.com common stock on the effective date of the merger also is $672.72), which is equal to the cash consideration. As noted above, if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both below $571.35, then the value of the stock consideration to be delivered for each share of KAYAK common stock for which the holder will receive the merger consideration as stock will be less than $40.00, and if the priceline.com average trading price and the closing price per share of priceline.com common stock on the effective date of the merger are both above $698.32, the value of such stock consideration will be greater than $40.00.

        Priceline.com common stock is traded on NASDAQ under the trading symbol "PCLN." KAYAK stockholders will hold less than 4%, based on the number of shares of priceline.com common stock and KAYAK common stock as of January 18, 2013 in the aggregate, of the issued and outstanding shares of priceline.com common stock immediately after consummation of the merger.


Schedule of Important Dates

        The following schedule shows important dates and events in connection with the special meeting. These dates assume that the closing of the merger will take place on March 5, 2013, the next business day following the special meeting. If the other conditions to closing have not been satisfied or waived

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as of that date, then closing will take place later and the applicable dates will be determined as provided in the merger agreement.

Dates
  Events

January 24, 2013

  Record date for special meeting

February 1, 2013

 

Mailing of proxy statement/prospectus and election form to each holder of shares of KAYAK common stock as of the record date for the special meeting

January 17, 2013 - March 1, 2013 or, if later, 30 consecutive trading days ending on the second-to-last full trading day prior to the closing date. 

 

The period that we will use to compute the volume weighted average price of priceline.com common stock which, in turn, is a factor used in the determination of the number of shares of priceline.com common stock that will be delivered in exchange for each share of KAYAK common stock that receives stock consideration in the merger

February 26, 2013, by 5:00 p.m. in New York City or, if later, 5 days preceding the closing date

 

Deadline for KAYAK stockholders to submit election forms to exchange agent

March 4, 2013 before voting

 

Deadline for submission of written demand for appraisal by KAYAK stockholders who wish to exercise dissenters' rights

March 4, 2013

 

Special meeting

        The merger is expected to close by the end of the first quarter of 2013. Priceline.com and KAYAK cannot predict the exact timing because the merger is subject to various regulatory approvals and other conditions which are described in more detail elsewhere in this proxy statement/prospectus.

        The exchange agent must allocate cash and stock consideration as soon as practicable, and in no event later than 5 days, after completion of the merger. As soon as practicable after the final allocation of consideration, the exchange agent shall pay the applicable merger consideration to the KAYAK stockholders who have otherwise complied with the exchange procedures as more fully described in the merger agreement.


Background of the Merger

        The board of directors of priceline.com from time to time reviews and evaluates potential strategic alternatives with priceline.com's senior management, including possible business combination transactions. Similarly, the KAYAK board from time to time reviews and evaluates potential strategic alternatives with KAYAK's senior management, including possible business combination transactions.

        From time to time over the past few years, KAYAK and priceline.com have had high-level discussions about the possibility of a potential merger. However, none of those prior communications progressed to the point of a detailed proposal and, in each such prior instance, the KAYAK board decided to continue with KAYAK's strategic plan, including, among other things, the consummation of its initial public offering.

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        On March 8, 2012, Jeffery H. Boyd, the president and chief executive officer of priceline.com, raised the conceptual idea of a potential acquisition of KAYAK by priceline.com with Steve Hafner, the chief executive officer of KAYAK. In June and early July of 2012, Mr. Boyd had approximately three conceptual discussions about a potential acquisition of KAYAK by priceline.com, separately with Joel Cutler, a member of KAYAK's board, and with Mr. Hafner. Mr. Hafner indicated that consideration in connection with any such potential business combination would be viewed by the KAYAK board in light of discussions KAYAK had been having with the investment bankers in KAYAK's proposed initial public offering. Mr. Boyd informed Mr. Hafner that priceline.com would not be able to negotiate a potential business combination before KAYAK's anticipated closing of its initial public offering due to the level of analysis and the time required. Accordingly, Mr. Boyd informed Mr. Hafner that priceline.com may be in touch regarding a potential business combination at a future date. As a result of these conversations, the parties agreed not to proceed with discussions about a transaction.

        On July 20, 2012, KAYAK completed its initial public offering, in which KAYAK issued and sold 4,025,000 shares of KAYAK Class A common stock at an offering price of $26.00 per share.

        In late August 2012, Mr. Boyd contacted Mr. Cutler regarding a meeting with Mr. Hafner and Mr. Cutler to discuss a potential business combination. On August 27, 2012, Mr. Hafner held a conference call with Karen Klein, KAYAK's general counsel, and Bingham McCutchen LLP, referred to as Bingham McCutchen, KAYAK's outside legal counsel, during which priceline.com's interest in a potential business combination was discussed.

        On August 31, 2012, Mr. Boyd, Mr. Hafner and Mr. Cutler met to further discuss a potential business combination between KAYAK and priceline.com. Mr. Boyd also discussed priceline.com's historic approach to acquisitions, including allowing acquired companies to operate independently, having management pay based on the continuing operating results of the acquired company and having management retain an investment in the acquired company. At this meeting, Mr. Boyd discussed the priceline.com operating philosophy, priceline.com's continued interest in KAYAK, and the potential advantages that such a transaction would have to the stockholders of both KAYAK and priceline.com, and to consumers. At this meeting, Mr. Boyd discussed a possible acquisition price of approximately $35.00 per share of KAYAK common stock. On September 4, 2012, the general counsels of both KAYAK and priceline.com discussed the proposed terms of a non-disclosure agreement and the members of the KAYAK board were informed of the recent discussions with priceline.com's management.

        Also on September 4, 2012, KAYAK and priceline.com entered into a non-disclosure agreement, which had been discussed that day between the general counsels of priceline.com and KAYAK.

        On September 5, 2012, members of the KAYAK executive team met with members of the priceline.com executive team. At this meeting, KAYAK provided priceline.com with a business update and with certain preliminary financial information. After this meeting, KAYAK provided additional information to priceline.com, including 2012 and 2013 fiscal forecasts, mobile trend data and budget targets. Also at this meeting, Mr. Hafner requested that priceline.com provide a written, non-binding indication of interest that he could present to the KAYAK board. Throughout its discussions and negotiations with priceline.com, management of priceline.com and its legal advisors made it clear to management of KAYAK that priceline.com would not provide KAYAK with internal priceline.com management forecasts with respect to the future financial performance of priceline.com.

        On September 12, 2012, priceline.com sent KAYAK a written, non-binding indication of interest, offering to acquire all of KAYAK's equity for a price per share of $36.00 to $38.00. Mr. Boyd then orally confirmed with Mr. Hafner that this consideration would be in cash. In addition to the indication of interest, priceline.com sent KAYAK an exclusivity agreement containing a sixty-day exclusivity period. Also on September 13, 2012, the KAYAK board was informed of the indication of interest. On September 13, 2012, the closing price of KAYAK Class A common stock on NASDAQ was $29.95.

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        On September 14, 2012, the KAYAK board met telephonically to discuss KAYAK's discussions with priceline.com, the indication of interest and the proposed exclusivity agreement. Ms. Klein and representatives of Bingham McCutchen and KAYAK's executive team also attended this meeting. The KAYAK board discussed the type and amount of consideration offered and discussed how KAYAK's stockholders would likely evaluate a transaction on the proposed terms, indicating a preference for a cash/stock consideration mix as the KAYAK board believed some consideration in the form of priceline.com common stock could ultimately result in more long term value to KAYAK's stockholders. The KAYAK board evaluated the challenges facing KAYAK as a standalone entity and the potential synergies that might be achieved through a combination with priceline.com or with another company. The KAYAK board discussed whether or not to engage, at that time, an investment banking firm as a financial advisor and, independently of that decision, whether or not the Company should seek an evaluation of the fairness of transaction consideration from a financial advisor. The KAYAK board discussed other potential acquirers, the ability of such potential acquirers to consummate a transaction and other related matters. The KAYAK board considered whether or not an active process to explore a transaction with other potential acquirers might result in damaging information leaks or result in priceline.com ceasing discussions with KAYAK.

        In view of the fact that Mr. Boyd had indicated that, if the transaction were consummated, KAYAK would be retained as a separate brand and operated independently and thus Mr. Hafner and Paul M. English, KAYAK's chief technology officer, might become employees of priceline.com, the KAYAK board formed a special committee of the KAYAK board, referred to as the special committee, to evaluate the proposed business combination and other strategic alternatives, consisting of the members of the KAYAK board other than Messrs. Hafner and English. After discussions, the KAYAK board directed Mr. Hafner to continue confidential, non-binding discussions with priceline.com. The KAYAK board further instructed Mr. Hafner to communicate to Mr. Boyd that priceline.com would have to increase the proposed consideration, and include priceline.com stock as part of such consideration, noting the KAYAK board's belief that a combination of cash and stock could provide more value to KAYAK stockholders, before KAYAK would enter into an exclusivity agreement. On September 14, 2012, the closing price of KAYAK Class A common stock was $32.92.

        In mid-September 2012, Mr. Hafner approached the head of corporate development of a company that we refer to as "Company X" to determine if Company X was interested in discussing a potential business combination between KAYAK and Company X. The president and chief executive officer of Company X indicated that there was no interest on the part of Company X in discussing a potential business combination with KAYAK.

        On September 17, 2012, Mr. Hafner called Mr. Boyd and said that KAYAK would need a higher price and a significant portion of stock consideration, rather than only cash consideration as described in the September 13, 2012 indication of interest, and stressed a price range of $40.00 to $42.00 per share of KAYAK common stock. During this conversation, Mr. Hafner told Mr. Boyd that the special committee would be responsible for evaluating any post-closing compensation or related arrangements with KAYAK's management. Mr. Boyd told Mr. Hafner that priceline.com would like senior management of KAYAK to continue to manage KAYAK following the closing of a transaction, but that priceline.com would not discuss the terms of any such continued employment until after the closing of the transaction. Mr. Hafner indicated that he understood and agreed with this approach. Mr. Boyd noted that priceline.com's retention arrangements with management of previously acquired companies were publicly available. No agreements, arrangements or understandings were reached regarding post-closing employment of KAYAK management.

        On September 19, 2012, Mr. Boyd called Mr. Hafner and delivered a revised proposal. Priceline.com's revised proposal consisted of a price per share range of $38.00 to $40.00, with consideration consisting of 60% priceline.com stock and 40% cash, with a 15% value "collar" on the stock consideration based on the trading price for priceline.com common stock on NASDAQ, and an exclusivity agreement with a forty-five-day exclusivity period.

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        On September 20, 2012, the special committee met telephonically to discuss the revised oral offer from priceline.com that was delivered by Mr. Boyd to Mr. Hafner on September 19, 2012. Representatives of Bingham McCutchen and KAYAK's executive team also attended this meeting. The special committee engaged in a thorough review of potential strategic alternatives to the proposed priceline.com transaction, and explored other paths to enhance stockholder value, such as continuing as an independent public company and growing organically. The special committee discussed the revised priceline.com proposal, KAYAK's valuation generally and KAYAK's value to priceline.com in particular. The special committee also discussed the value to its stockholders of cash consideration as compared to priceline.com common stock, and the long-term value that KAYAK's stockholders might achieve through a continuation of KAYAK as part of the priceline.com group. The special committee considered other potential acquirers, identifying those companies that might be able to make a comparable offer, considering each on an individual basis, including each company's possible interest in such a transaction and its ability to close such a transaction. The special committee discussed whether, at this time, to engage an investment banking firm as a financial advisor. Michael Moritz, a member of the special committee and a managing member of Sequoia Capital, offered to have members of Sequoia Capital's internal financial team prepare an analysis of certain financial matters for consideration by the special committee. In accepting this offer, the special committee considered Sequoia Capital's position as a stockholder in KAYAK and its reputation and decades of experience as a successful evaluator of, investor in, and partner for internet and technology based firms like KAYAK. The special committee evaluated Sequoia Capital's interests relative to the interests of KAYAK's other stockholders in any strategic transaction and noted that, due to Sequoia Capital's substantial holdings of KAYAK common stock, Sequoia Capital had incentives that matched those of other stockholders to provide accurate, thorough, complete and detailed financial analyses to assist the special committee in its evaluation of strategic transactions.

        Due to its view as to the insufficient amount of overall consideration and the inadequate portion of priceline.com common stock offered in the proposal, the special committee determined that it was not in the best interest of KAYAK or its stockholders to enter into the exclusivity agreement at that time, and directed Mr. Hafner to continue negotiations with priceline.com to, among other things, seek to improve the terms offered by priceline.com with respect to the amount and type of consideration. Sequoia proceeded to prepare its financial analysis.

        Following the special committee's meeting on September 20, 2012, Mr. Hafner called Mr. Boyd and stressed that KAYAK wanted the transaction consideration to be at least $40.00 per share of KAYAK common stock, and for 75% of the consideration to consist of priceline.com common stock. On September 20, 2012, the closing price of KAYAK Class A common stock was $32.77.

        On September 21, 2012, the special committee met telephonically to discuss a revised oral proposal that was delivered by Mr. Boyd to Mr. Hafner that day, consisting of a price per share of $40.00, with consideration for two thirds of the outstanding shares of KAYAK common stock to be delivered in shares of priceline.com common stock and the remainder to be paid in cash, and structured to allow each KAYAK stockholder to elect the mix of cash and priceline.com stock desired, subject to pro ration, and including the 15% collar. Mr. Boyd also indicated when making the revised priceline.com proposal that priceline.com would not continue to engage in discussions with KAYAK unless KAYAK entered into an exclusivity agreement, and that priceline.com was not willing to pay more than $40.00 per share under any circumstances. The special committee discussed the revised offer and the strategy for further discussions at length. The special committee then directed Mr. Hafner to enter into an exclusivity agreement with a forty-five-day exclusivity period and to continue discussions with priceline.com to determine if mutually agreeable terms could be reached. Representatives of Bingham McCutchen and KAYAK's executive team also attended this meeting. Later on September 21, 2012, KAYAK and priceline.com entered into the exclusivity agreement. On September 21, 2012, the closing price of KAYAK Class A common stock was $33.69.

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        On September 24, 2012 and September 26, 2012, additional due diligence meetings were held between the financial executives of the parties.

        On September 27, 2012, Mr. Boyd met in person with Messrs. English and Moritz, having a general discussion about KAYAK, its approach to technology, how priceline.com managed companies it acquired in the past and other due diligence matters.

        Also on September 27, 2012, the KAYAK board met and received an update on the proposed business combination with priceline.com, including an update from Ms. Klein with respect to the on-going due diligence investigation that was being performed by priceline.com. A representative of Bingham McCutchen also attended this meeting. The KAYAK board discussed the financial prospects of KAYAK in the context of a combination with priceline.com and the financial prospects of KAYAK in the context of continuing as an independent entity. The KAYAK board also reviewed and discussed a preliminary analysis prepared by Sequoia Capital. This analysis included preliminary KAYAK valuation information based on a price-to-earnings multiple method, an EBITDA multiple method and a discounted cash flow analysis. It also included information about other potential acquirors and recent comparable transactions. Following this meeting, management reviewed and commented on the preliminary analysis. Sequoia Capital was not paid for this work. The KAYAK board also discussed priceline.com's historical financial statements and expectations regarding priceline.com's future financial performance and equity value as compared to expectations regarding KAYAK's future financial performance and equity value. The KAYAK board drew on its deep understanding of KAYAK and its market to identify other potential suitors for a business combination transaction with KAYAK, and discussed whether a comparable transaction with each such potential suitor would be accretive and/or otherwise attractive to such suitor and to KAYAK. The KAYAK board discussed the timing of the proposed transaction, and whether priceline.com's interest would continue, be improved or diminished if the proposed business combination were deferred to a future date.

        The special committee also met on this date and directed Mr. Hafner to explore the engagement of Houlihan Lokey to render an opinion to the special committee and KAYAK's board as to the fairness, from a financial point of view, to the holders of KAYAK common stock of the consideration to be received by the holders of KAYAK common stock in a merger with priceline.com in the event a definitive agreement were to be reached between KAYAK and priceline.com. The special committee directed Mr. Hafner to reach out to Houlihan Lokey based on its experience in rendering opinions in connection with mergers and acquisitions and its overall reputation in the industry. The special committee also discussed engaging an investment banking firm as a financial advisor to assist in negotiations or to approach other potential transaction partners, if any. Based on such discussions the special committee determined that the engagement of an investment bank to assist in negotiations or approach other potential transaction partners at that time would not extract enhanced value for the stockholders of KAYAK and therefore was not in the best interest of KAYAK or its stockholders, in particular because (1) Company X indicated in September that it was not interested in pursuing a transaction, (2) the members of the special committee, many of whom had deep industry knowledge and financial expertise, did not think other potential acquirors would be likely to consummate a transaction in the near-term and (3) Mr. Boyd indicated that priceline.com would not pay any more than $40.00 per share of KAYAK common stock under any circumstances. On September 27, 2012, the closing price of KAYAK Class A common stock was $35.46.

        On October 3, 2012 and October 5, 2012, due diligence calls were held between KAYAK and priceline.com on various matters, including technology and marketing.

        On October 7, 2012, Sullivan & Cromwell LLP, counsel for priceline.com, which we refer to as Sullivan & Cromwell, sent a draft agreement and plan of merger, referred to as the merger agreement, to Bingham McCutchen, which included, among other things, a termination fee of 4.0% of the transaction value, a no solicitation covenant together with strict limitations on KAYAK's ability to

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respond to competing proposals and a requirement that KAYAK's key stockholders enter into voting agreements within the limits of applicable law to help ensure that any executed transaction would close.

        On October 10, 2012, at a telephonic meeting of the special committee, representatives of Bingham McCutchen reviewed the draft merger agreement in detail and discussed with the special committee, among other things, the transaction consideration, limitations on KAYAK's ability to engage in discussions regarding competing offers, the termination provisions and the termination fee provisions. The special committee discussed alternatives and potential revisions to many of the provisions contained in the draft merger agreement, as well as the addition of other provisions beneficial to the stockholders of KAYAK. Representatives of KAYAK's executive team also attended this meeting. Mr. Hafner was instructed to continue negotiations with priceline.com with the purpose of improving the terms of the proposed business combination. On October 10, 2012, the closing price of KAYAK Class A common stock was $31.30.

        On October 11, 2012, Mr. Hafner and Mr. Boyd had a detailed telephone discussion about the terms of the draft merger agreement.

        During the period beginning with delivery of the initial draft of the merger agreement, and over the next week, there were numerous telephone conferences between Bingham McCutchen and Sullivan & Cromwell to negotiate certain terms of the merger agreement, with particular focus on the non-solicitation provisions, the size of the termination fee and the requirement for voting agreements from KAYAK's key stockholders.

        On October 16, 2012, the special committee met telephonically to discuss and consider an update from Mr. Hafner with respect to the status of negotiations between KAYAK and priceline.com.            Representatives of Bingham McCutchen and KAYAK's executive team also attended this meeting. The special committee directed Mr. Hafner to engage Houlihan Lokey to render an opinion to the special committee and KAYAK's board as to the fairness, from a financial point of view, to the holders of KAYAK common stock of the consideration to be received by the holders of KAYAK common stock in a merger with priceline.com in the event a definitive agreement was to be reached between KAYAK and priceline.com. Following Houlihan Lokey's engagement, Sequoia Capital was not requested to update its preliminary analysis with respect to KAYAK. Also on this date, the general counsels of KAYAK and priceline.com, with their respective outside legal counsel, engaged in negotiations regarding the draft merger agreement. On October 16, 2012, the closing price of KAYAK Class A common stock was $31.24.

        On October 17, 2012, KAYAK engaged Houlihan Lokey to render an opinion to the special committee and KAYAK's board as to the fairness, from a financial point of view, to the holders of KAYAK common stock of the consideration to be received by the holders of KAYAK common stock in a merger with priceline.com in the event that a definitive agreement were to be reached with priceline.com.

        On October 18, 2012, after several rounds of discussions between KAYAK, priceline.com and their respective advisors, Bingham McCutchen sent a revised merger agreement to Sullivan & Cromwell, with terms including, among other things, a termination fee of 2.0%, instead of the originally proposed 4.0%, of the transaction value of the proposed transaction, increased flexibility in responding to any competing proposals, the elimination of voting agreements from KAYAK's key stockholders and enhanced commitments of priceline.com to obtain regulatory clearance.

        On October 25, 2012, the special committee met telephonically to discuss and consider an update on the status and progress of the negotiations between KAYAK and priceline.com. Representatives of Bingham McCutchen and KAYAK's executive team also attended this meeting. The special committee discussed the timing of signing a definitive merger agreement in relation to priceline.com's and KAYAK's upcoming earnings releases. Mr. Hafner, along with representatives from Bingham McCutchen, discussed an oral proposal from priceline.com to remove the pricing collar in the proposed

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merger agreement, such that the transaction would be set at a fixed exchange ratio of KAYAK's stock to priceline.com's stock. The special committee discussed, in light of that structure, the priceline.com price per share to be used in determining such ratio. The special committee discussed the implications of a fixed exchange ratio structure, and the differences to KAYAK's stockholders between such structure and the prior proposed collar pricing structure. Also on October 25, 2012, after several rounds of discussions between KAYAK, priceline.com and their respective advisors, Sullivan & Cromwell sent a revised merger agreement to Bingham McCutchen, which included, among other things, a termination fee of 3.5% of the transaction value, but did not reflect any change in the pricing structure. On October 25, 2012, the closing price of KAYAK Class A common stock was $31.10.

        On October 27, 2012, the special committee met telephonically to discuss and consider an update on negotiations with priceline.com from Mr. Hafner. Representatives of Bingham McCutchen and KAYAK's executive team also attended this meeting. Bingham McCutchen reviewed the current draft of the merger agreement with the special committee and discussed financial and legal issues in the agreement, and noted that the parties had made significant progress toward agreement on the parameters of the non-solicitation covenant and related matters and that priceline.com had agreed to drop its request for voting agreements from KAYAK's key stockholders, but that the size of the termination fee remained open. The special committee discussed the suggested pricing mechanism and deal-certainty, among other provisions. The special committee authorized Mr. Cutler to negotiate with priceline.com with respect to any potential employee arrangements. On October 27, 2012, the closing price of KAYAK Class A common stock was $33.26.

        Throughout its engagement Houlihan Lokey requested access to internal priceline.com management forecasts with respect to the future financial performance of priceline.com or, if such forecasts were not available, confirmation from the management of priceline.com, as to which publicly available research analyst estimates with respect to the future financial performance of priceline.com would be a reasonable basis on which to evaluate priceline.com. In early November, 2012, following further discussions among representatives of priceline.com, KAYAK and Houlihan Lokey, it was agreed that Houlihan Lokey would review certain publicly available research analyst estimates with respect to the future financial performance of priceline.com for the fiscal years ending 2012 through 2014 that were published after priceline.com's November 1, 2012 earnings announcement, which we refer to as the analyst estimates for priceline.com, that management of priceline.com had directed Houlihan Lokey to, and discussed with Houlihan Lokey, and that with the consent of the KAYAK special committee and the KAYAK board, Houlihan Lokey would assume that the analyst estimates for priceline.com were a reasonable basis upon which to evaluate the future financial performance of priceline.com and rely upon the analyst estimates for priceline.com for purposes of its analyses and opinion.

        On November 2, 2012, after several further rounds of discussions between KAYAK, priceline.com and their respective advisors, Bingham McCutchen sent a revised merger agreement to Sullivan & Cromwell, with terms including, among other things, a termination fee of $40,000,000, or approximately 2.4% of the transaction value, an increased ability to respond to a competing proposal and enhancements to the deal-certainty obligations of priceline.com.

        On November 4, 2012, the special committee met telephonically and discussed with representatives of Bingham McCutchen the remaining open issues in the merger agreement. Pricing mechanisms and deal-certainty were further discussed. Members of KAYAK's executive team also attended this meeting. As a result of these discussions, the special committee directed Mr. Hafner to negotiate with priceline.com with the purpose of obtaining, among other things, a symmetrical collar of 10% for the stock consideration based on the trading price of priceline.com common stock, and enhancements to the deal-certainty obligations on priceline.com. On November 4, 2012, the closing price of KAYAK Class A common stock was $35.48.

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        On November 5, 2012, the special committee met telephonically to discuss and consider an update from representatives of Bingham McCutchen regarding the status of Houlihan Lokey's review processes. Members of KAYAK's executive team also attended this meeting. Mr. Hafner and Bingham McCutchen updated the special committee with respect to the status of negotiations with priceline.com and the probable next steps. On November 5, 2012, the closing price of KAYAK Class A common stock was $35.45.

        On November 6, 2012, after further discussions, Sullivan & Cromwell sent a revised merger agreement to Bingham McCutchen, which included a termination fee of $58,400,000, which is approximately 3.2% of equity value determined on a fully-diluted basis (or 3.5% of the transaction value). Later on November 6, 2012 negotiations continued between Bingham McCutchen and Sullivan & Cromwell regarding the merger agreement, including as to the amount and calculation of the termination fee and as to certain enhancements to the deal-certainty obligations of priceline.com.

        Also on November 6, 2012, Mr. Cutler and Mr. Boyd spoke briefly about employee compensation and retention issues, such as equity grants for senior employees of KAYAK, with Mr. Boyd noting that such arrangements would be determined following the closing of the transaction. No agreements, arrangements or understandings were reached regarding post-closing employment of KAYAK management.

        On November 7, 2012, the special committee met at the offices of Bingham McCutchen to consider matters relating to the draft merger agreement and the proposed merger with priceline.com. At the request of the special committee, representatives of Bingham McCutchen, Houlihan Lokey and KAYAK's executive team also attended this meeting. At the request of the special committee, Houlihan Lokey reviewed and discussed its financial analyses with respect to KAYAK, priceline.com and the proposed merger. The special committee, with the assistance of KAYAK's legal advisors, engaged in discussions regarding KAYAK, priceline.com, the merger and the material terms of the proposed merger agreement. Representatives of Bingham McCutchen reviewed with the special committee the remaining open items in the draft merger agreement and discussed steps to execution, in the event the special committee resolved to recommend that the KAYAK board enter into the merger agreement. Following that discussion, it was determined that the special committee would reconvene the next day to reach a determination of their respective views on the merger agreement and the proposed merger. On November 7, 2012, the closing price of KAYAK Class A common stock was $31.54.

        Following further negotiations between Bingham McCutchen and Sullivan & Cromwell, on November 7, 2012, Sullivan & Cromwell sent a revised merger agreement to Bingham McCutchen, which included a termination fee of $52,700,000, or approximately 2.9% of the equity value of the proposed transaction on a fully-diluted basis (or 3.2% of the transaction value).

        On November 8, 2012, the special committee met telephonically to consider the proposed merger agreement and determine whether to recommend that the KAYAK board approve the merger agreement. Representatives of Bingham McCutchen, Houlihan Lokey and KAYAK's executive team also attended this meeting. At the request of the special committee, Houlihan Lokey rendered its oral opinion to the special committee (which was confirmed in writing by delivery of Houlihan Lokey's written opinion to the special committee and the KAYAK board dated the same date), as to, as of November 8, 2012, the fairness, from a financial point of view, to the holders of KAYAK common stock of the aggregate merger consideration to be received by such holders in the merger pursuant to the merger agreement. The full text of the written opinion of Houlihan Lokey, which describes, among other things, the assumptions, qualifications, limitations and other matters considered in connection with the preparation of its opinion is attached as Annex B. Bingham McCutchen reviewed the merger agreement and the proposed resolutions with the special committee. After discussions, the special committee determined that the merger agreement and the transactions contemplated thereunder, including the merger, were in the best interest of KAYAK and its stockholders, unanimously recommended that the KAYAK board approve the merger agreement and recommended that the

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KAYAK board submit for approval the merger agreement to the stockholders of KAYAK. Immediately thereafter, a telephonic meeting of the KAYAK board was held. At that meeting, the KAYAK board determined that the merger agreement and the transactions contemplated thereunder, including the merger, were in the best interest of KAYAK and its stockholders, unanimously approved the merger agreement and resolved to recommend that KAYAK's stockholders vote in favor of the merger agreement. On November 8, 2012, the closing price of KAYAK Class A common stock was $31.04.

        The merger agreement was executed shortly after the conclusion of the November 8, 2012 meeting of the KAYAK board.

        On November 8, 2012, priceline.com and KAYAK issued press releases announcing the execution of the merger agreement.


Priceline.com's Reasons for the Merger

        At its meeting held on November 7, 2012, after due consideration and consultation with priceline.com's management and legal and financial advisors, the board of directors of priceline.com unanimously approved entry into the merger agreement, subject to delivery to a subcommittee of the board of directors of an opinion by priceline.com's financial advisor as to the fairness from a financial point of view of the aggregate merger consideration to priceline.com (which opinion was delivered on November 8, 2012, in connection with the execution of the merger agreement). In doing so, the priceline.com board of directors considered the business, assets, liabilities, results of operations, financial performance, strategic direction and prospects of KAYAK and determined that the merger was in the best interests of priceline.com. In making its determination, priceline.com's board of directors focused on a number of factors, including the following:

    KAYAK's strong brand and position in metasearch in the U.S. and the popularity of KAYAK's services with travelers and advertisers;

    KAYAK's demonstrable expertise in technology and mobile applications;

    KAYAK's history of strong revenue growth and margin expansion;

    the potential for KAYAK to build a global online travel brand with the assistance of priceline.com's other brands;

    the potential to build additional value for priceline.com through participation in KAYAK's services;

    the opportunity to provide more innovative products and services to customers through the potential combination of best practices, content integration and technology expertise across priceline.com; and

    the opportunity to continue to diversify the revenue sources of priceline.com.

        This description of information and factors considered by the board of directors of priceline.com includes all of the material factors that were considered, but is not intended to be exhaustive. In view of the wide variety of factors considered by the board of directors of priceline.com in evaluating the merger, and the complexity of these matters, priceline.com's board of directors did not attempt to quantify, rank or otherwise assign relative weight to these factors. In addition, different members of the priceline.com board of directors may have given different weight to different factors.

        The foregoing description of factors supporting the priceline.com board of directors' approval of the merger is forward-looking in nature, and should be read in light of the matters discussed in the "Cautionary Statement Concerning Forward-Looking Statements" on page 38.

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