<PAGE> 1
As filed with the Securities and Exchange Commission on October 11, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
Form S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
THE SABRE GROUP HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 75-2662240
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
4255 Amon Carter Boulevard
Fort Worth, Texas 76155
(Address of Principal Executive Offices)
THE SABRE GROUP HOLDINGS, INC.
1996 LONG-TERM INCENTIVE PLAN
(Full Title of Plan)
-------------------------
<TABLE>
<S> <C> <C>
Michael J. Durham Copy to: Anne H. McNamara, Esq.
President and Chief Executive Officer Senior Vice President and
The SABRE Group Holdings, Inc. GeneralCounsel
4255 Amon Carter Boulevard AMR Corporation
Fort Worth, Texas 76155 4333 Amon Carter Boulevard
(817) 931-7300 Fort Worth, Texas 76155
(Name and Address including Zip Code, and Telephone (817) 963-1234
Number, including Area Code, of Agent for Service)
</TABLE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Title of Securities Amount Proposed Proposed Amount of
to be to be Maximum Maximum Aggregate Registration
Registered Registered(1) Offering Price per Offering Price (1)(2) Fee(2)
Share (2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, 13,000,000 $27.00 $351,000,000 $106,364
$.01 par value Shares
========================================================================================================================
</TABLE>
(1) There are also registered hereby such indeterminate number of shares of
Class A Common Stock as may be issuable by reason of operation of
anti-dilution provisions of the LTIP described herein.
(2) Calculated pursuant to Rule 457(h), based on the initial public offering
price for the Class A Common Stock on October 11, 1996.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information required by Part 1 to be contained in the Section 10(a)
prospectus is omitted from the registration statement in accordance
with Rule 428 under the Securities Act of 1933, as amended, and the
Note to Part 1 of Form S-8.
PART II
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities and
Exchange Commission are incorporated by reference in this registration
statement.
(1) The Registrant's latest prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act on October ll, 1996 (the "Prospectus").
(2) The description of the Registrant's Class A Common Stock
contained in the Registrant's Registration Statement on Form 8-A, as
filed with the Securities and Exchange Commission on September 14,
1996, which incorporated by reference the section titled "Description
of Capital Stock" contained in the Prospectus filed as part of the
Registrant's Registration Statement on Form S-1 (Registration No.
333-09747).
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Anne H. McNamara has rendered an opinion as to the legality of the
Class A Common Stock being registered hereby. Mrs. McNamara is the Senior Vice
President and General Counsel of AMR Corporation, the parent of the Registrant.
The financial statements of the Registrant appearing in the Prospectus
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such financial statements are, and audited financial statements to be included
in subsequently filed documents will be, incorporated herein in reliance upon
the reports of Ernst & Young LLP pertaining to such financial statements (to the
extent covered by consents filed with the Securities and Exchange Commission)
given upon the authority of such firm as experts in accounting and auditing.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a Delaware corporation may indemnify directors and
officers and certain other individuals against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by
<PAGE> 3
any such person in connection with any threatened, pending or completed action,
suit or proceeding (other than action by or in the right of the corporation) in
which such person is involved because such person is a director or officer of
the corporation, if such person acted in good faith and in a manner that such
person reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such person's conduct was unlawful. No
indemnification shall be made to an officer or director or other qualified
individual if such person shall have been adjudged to be liable to the
corporation unless such person acted in good faith and in a manner that such
person reasonably believed to be in or not opposed to the best interest of the
corporation and only to the extent the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought, determines that
despite the adjudication of liability such person is fairly and reasonably
entitled to such indemnification. If such person is successful on the merits
or otherwise in defense of any action, then Section 145 provides that such
person shall be indemnified against expenses including attorneys' fees actually
and reasonably incurred by that person in connection therewith. Section
102(b)(7) of the DGCL provides that the liability of a director may not be
limited or eliminated for the breach of such director's duty of loyalty to the
corporation or its stockholders, for such director's intentional acts or
omissions not in good faith, for such director's concurrence in or vote for an
unlawful payment of a dividend or unlawful stock purchase or redemption or for
any improper personal benefit derived by the director from any transaction.
The Registrant's Bylaws provide that the Registrant will indemnify any
person who was or is a party (or is threatened to be made a party) to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was or has agreed to serve at the request of the Registrant as a director
or officer of the Registrant, or is or was serving or has agreed to serve at
the request of the Registrant as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity. The
Registrant's Bylaws further provide that the Registrant may indemnify any
person who was or is a party (or is threatened to be made a party) to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was or has agreed to become an employee or agent of the Registrant, or is
or was serving or has agreed to serve at the request of the Registrant as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity.
The indemnification referred to in the preceding paragraph will be from
and against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the indemnitee or on his
or her behalf in connection with such action, suit or proceeding and any appeal
therefrom. However, such indemnification will only be provided if the
indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Registrant and, with respect
to any criminal action, suit or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. Notwithstanding the preceding two sentences,
in the case of an action or suit by or in the right of the Registrant to
procure a judgment in its favor (a) the indemnification referred to in this
paragraph will be limited to expenses (including attorneys' fees) actually and
reasonably incurred by such person in the defense or settlement of such action
or suit, and (b) no indemnification will be made in respect of any claim, issue
or matter as to which such person will have been adjudged to be liable to the
Registrant unless, and only to the extent that, the Delaware Court of Chancery
(or the court in which such action or suit was brought) determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery (or such other
court) deems proper. To the extent that a director, officer, employee or agent
of the Registrant has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to above or in defense of any claim,
issue or matter therein, he or she will be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith. Expenses incurred by a director or officer in defending
a civil or criminal action, suit or proceeding will be paid by the Registrant
in advance of the final
<PAGE> 4
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it will
ultimately be determined that he or she is not entitled to be indemnified by
the Registrant. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
The indemnification described in the preceding two paragraphs will not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, will continue as to
a person who has ceased to be a director, officer, employee or agent and will
inure to the benefit of the heirs, executors and administrators of such a
person.
The Registrant will purchase and maintain insurance on behalf of any
person who is or was or has agreed to serve at the request of the Registrant as
a director or officer of the Registrant, or is or was serving at the request of
the Registrant as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against, and incurred by, him or her or on his or her behalf in any such
capacity, or arising out of his or her status as such, whether or not the
Registrant would have the power to indemnify him or her against such liability
under the provisions of the Bylaws; provided, however, such insurance must be
available on acceptable terms, which determination shall be made by a vote of a
majority of the board of directors of the Registrant.
ITEM 8. EXHIBITS.
4.1 The SABRE Group Holdings, Inc. 1996 Long-Term Incentive Plan
5.1 Opinion of Anne H. McNamara, Senior Vice President and General Counsel
of AMR Corporation.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Anne H. McNamara (included as part of Exhibit 5.1)
24.1 Powers of Attorney
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
<PAGE> 5
provided, however, that the undertakings set forth in paragraphs (1)(i)
and (1)(ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirement for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas, on this 10th day of
October, 1996.
THE SABRE GROUP HOLDINGS, INC.
By: /s/ Michael J. Durham
--------------------------------
Michael J. Durham
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title
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<S> <C> <C>
ROBERT L. CRANDALL Chairman of the Board of
Directors
MICHAEL J. DURHAM President, Chief Executive
Officer and Director (Principal
Executive Officer)
T. PATRICK KELLY Senior Vice President, Chief By: /s/ Michael J. Durham
Financial Officer and Treasurer -----------------------
(Principal Financial Officer and Michael J. Durham
Principal Accounting Officer) Attorney-in-Fact
GERARD J. ARPEY Director Date: October 10, 1996
ANNE H. MCNAMARA Director
</TABLE>
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
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Number Description of Exhibit
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<S> <C>
4.1 The SABRE Group Holdings, Inc. 1996 Long-Term Incentive Plan
5.1 Opinion of Anne H. McNamara, Senior Vice President and General
Counsel of AMR Corporation
23.1 Consent of Ernst & Young LLP
23.2 Consent of Anne H. McNamara (included in Exhibit 5.1)
24.1 Powers of Attorney
</TABLE>
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<PAGE> 1
EXHIBIT 4.1
1996 LONG-TERM INCENTIVE PLAN
The SABRE Group Holdings, Inc.
October 1996
<PAGE> 2
CONTENTS
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PAGE
Section 1. Purpose; Definitions 1
Section 2. Administration 3
Section 3. Stock Subject to Plan 4
Section 4. Eligibility 5
Section 5. Stock Options 5
Section 6. Stock Appreciation Rights 8
Section 7. Restricted Stock 9
Section 8. Deferred Stock 11
Section 9. Stock Purchase Rights 13
Section 10. Other Stock-Based Awards 13
Section 11. Change in Control Provisions 14
Section 12. Amendments and Termination 16
Section 13. Unfunded Status of Plan 17
Section 14. General Provisions 17
Section 15. Effective Date of Plan 18
Section 16. Term of Plan 18
Section 17. Performance Related Awards 18
<PAGE> 3
THE SABRE GROUP
1996 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of The SABRE Group Holdings, Inc.'s 1996 Long-Term Incentive
Plan (the "Plan") is to enable The SABRE Group Holdings, Inc. (the "Company") to
attract, retain, and reward key employees of the Company and its Subsidiaries
and Affiliates, and strengthen the mutuality of interests between such key
employees and the Company's shareholders, by offering such key employees
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Company, as well as performance-based incentives payable in
cash.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(A) "AFFILIATE" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least twenty
percent (20%) of the combined voting power of all classes of stock of such
entity or at least twenty percent (20%) of the ownership interests in such
entity.
(B) "BOARD" means the Board of Directors of the Company.
(C) "BOOK VALUE" means, as of any given date, on a per share basis (a)
the Stockholders' Equity in the Company as of the end of the immediately
preceding fiscal year as reflected in the Company's consolidated balance sheet,
subject to such adjustments as the Committee shall specify at or after grant,
divided by (b) the number of then outstanding shares of Stock as of such
year-end date (as adjusted by the Committee for subsequent events).
(D) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(E) "COMMITTEE" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
(F) "COMPANY" means The SABRE Group Holdings, Inc., a corporation
organized under the laws of the State of Delaware, or any successor corporation.
(G) "DEFERRED STOCK" means an award made pursuant to Section 8 below
of the right to receive Stock at the end of a specified deferral period.
(H) "DISABILITY" means disability as determined under procedures
established by the Committee for purposes of this Plan.
(I) "EARLY RETIREMENT" means retirement, with the express consent for
purposes of the Plan of the Company at or before the time of such retirement,
from active employment
1
<PAGE> 4
with the Company and any Subsidiary or Affiliate pursuant to the early
retirement provisions of the applicable pension plan of such entity.
(J) "FAIR MARKET VALUE" means, as of any given date, unless otherwise
determined by the Committee in good faith, the mean between the highest and
lowest quoted selling price, regular way, of the Stock on the New York Stock
Exchange or, if no such sale of Stock occurs on the New York Stock Exchange on
such date, the fair market value of the Stock as determined by the Committee in
good faith.
(K) "INCENTIVE STOCK OPTION" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(L) "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
(M) "NORMAL RETIREMENT" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 65.
(N) "OTHER STOCK-BASED AWARD" means an award under Section 10 below
that is valued in whole or in part by reference to, or is otherwise based on,
Stock.
(O) "PARENT" means AMR Corporation.
(P) "PLAN" means The SABRE Group Holdings, Inc.'s 1996 Long-Term
Incentive Plan, as hereinafter amended from time to time.
(Q) "RESTRICTED STOCK" means an award of shares of Stock that is
subject to restrictions under Section 7 below.
(R) "RETIREMENT" means Normal or Early Retirement.
(S) "STOCK" means the Class A Common Stock, $.01 par value per share,
of the Company.
(T) "STOCK APPRECIATION RIGHT" means the right pursuant to an award
granted under Section 6 below to surrender to the Company all (or a portion) of
a Stock Option in exchange for an amount equal to the difference between (i)
the Fair Market Value, as of the date such Stock Option (or such portion
thereof) is surrendered, of the shares of Stock covered by such Stock Option
(or such portion thereof), subject, where applicable, to the pricing provisions
in Section 6(b)(ii) and (ii) the aggregate exercise price of such Stock Option
(or such portion thereof).
(U) "STOCK OPTION" or "OPTION" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 below.
(V) "STOCK PURCHASE RIGHT" means the right to purchase Stock pursuant
to Section 9.
2
<PAGE> 5
(W) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
In addition, the terms "Change in Control," "Potential Change in Control,"
and "Change in Control Price" shall have the meanings set forth, respectively,
in Sections 11(b), (c) and (d) below and the term "Cause" shall have the
meaning set forth in Section 5(i) below.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a committee of not less than two members
of the Board, who shall be appointed by, and serve at the pleasure of, the
Board. In selecting the members of the Committee, the Board shall take into
account the requirements for the members of the Committee to be treated as
"Outside Directors" within the meaning of Section 162(m) of the Code and
"Non-Employee Directors" for purposes of Rule 16b-3, as promulgated under
Section 16 of the 1934 Act. The functions of the Committee specified in the
Plan shall be exercised by the Board, if and to the extent that no Committee
exists which has the authority to so administer the Plan or to the extent that
the Committee is not comprised solely of Non-Employee Directors for purposes of
Rule 16b-3, as promulgated under Section 16 of the 1934 Act.
The Committee shall have full authority to grant, pursuant to the terms of
the Plan, to officers and other key employees eligible under Section 4: (i)
Stock Options; (ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv)
Deferred Stock; (v) Stock Purchase Rights and/or (vi) Other Stock-Based Awards.
In particular the Committee shall have the authority:
(i) To select the officers and other key employees of
the Company and its Subsidiaries and Affiliates to
whom Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase
Rights, and/or Other Stock-Based Awards may from
time to time be granted hereunder;
(ii) To determine whether and to what extent Incentive
Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred
Stock, Stock Purchase Rights and/or Other
Stock-Based Awards, or any combination thereof, are
to be granted hereunder to one or more eligible
employees;
(iii) Subject to the provisions of Sections 3, 5 and 17,
to determine the number of shares to be covered by
each such award granted hereunder;
(iv) To determine the terms and conditions, not
inconsistent with the terms of the Plan, of any
award granted hereunder (including, but not limited
to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of
forfeiture restrictions regarding any Stock Option
or other award and/or the shares of Stock relating
thereto, based in each case on such factors as the
3
<PAGE> 6
Committee shall determine in its sole discretion).
(v) To determine whether and under what circumstances a
Stock Option may be settled in cash, Restricted
Stock and/or Deferred Stock under Section 5(k) or
(l), as applicable, instead of Stock;
(vi) To determine whether and under what circumstances an
award of Restricted Stock or Deferred Stock may be
settled in cash;
(vii) To determine whether, to what extent and under what
circumstances Option grants and/or other awards
under the Plan and/or other cash awards made by the
Company are to be made, and operate, on a tandem
basis vis-a-vis other awards under the Plan and/or
cash awards made outside of the Plan, or on an
additive basis;
(viii) To determine whether, to what extent and under what
circumstances Stock and other amounts payable with
respect to an award under this Plan shall be
deferred either automatically or at the election of
the participant (including providing for and
determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral
period); and
(ix) To determine the terms and restrictions applicable
to Stock Purchase Rights and the Stock purchased by
exercising such Rights.
The Committee shall have the authority to adopt, alter, and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Company and Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 13,000,000 shares.
Subject to Section 6(b)(iv) below, if any shares of Stock that have been
optioned cease to be subject to a Stock Option, or if any such shares of Stock
that are subject to any Restricted Stock or Deferred Stock award, Stock
Purchase Right or Other Stock-Based Award granted hereunder are forfeited or
any such award otherwise terminates without a payment being made to the
participant in the form of Stock, such shares shall again be available for
distribution in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be made in
the aggregate number of shares reserved for
4
<PAGE> 7
issuance under the Plan, in the number and option price of shares subject to
outstanding Options granted under the Plan, in the number and purchase price of
shares subject to outstanding Stock Purchase Rights under the Plan, and in the
number of shares subject to other outstanding awards granted under the Plan as
may be determined to be appropriate by the Committee, in its sole discretion,
provided that the number of shares subject to any award shall always be a whole
number. Such adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
SECTION 4. ELIGIBILITY
Officers and other key employees of the Company and its Subsidiaries and
Affiliates (but excluding members of the Committee and any person who serves
only as a director) who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company and/or its
Subsidiaries and Affiliates are eligible to be granted awards under the Plan.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Nonqualified Stock Options.
The Committee shall have the authority to grant to any optionee Incentive
Stock Options, Nonqualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided that, in no
event shall the number of shares of Stock subject to any Stock Options granted
to any key employee during any twelve (12) month period exceed 400,000 shares,
as such number may be adjusted pursuant to Section 3.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(A) OPTION PRICE. The Option price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant but shall be not less than one hundred percent (100%) of the Fair
Market Value of the Stock at grant, provided, however, that in connection
with an initial public offering of Stock, "Fair Market Value" for Stock
Options granted hereunder at the time of the initial public offering shall be
priced at the Stock's offering price and provided further, however, that the
Option price per share of Stock purchasable under a Stock Option which is
granted to an optionee upon cancellation of any option(s) or fraction thereof
to purchase common stock of AMR Corporation ("AMR Common Stock") held by the
applicable optionee may be less than one hundred percent (100%) of the Fair
Market Value of the Stock at the time of grant if the Committee deems it
necessary so that the value of the Stock Option so granted, calculated using a
modified Black-Scholes model, equals the value of the option(s) or fraction
thereof to purchase AMR Common Stock canceled on the date of grant.
(B) OPTION TERM. The term of each Stock Option shall be fixed by
the Committee, but no Stock Option shall be exercisable more than ten (10)
years after the date the Option is granted.
(C) EXERCISABILITY. Stock Options shall be exercisable at such
time or times and subject
5
<PAGE> 8
to such terms and conditions as shall be determined by the Committee at or
after grant; provided, however, that, except as provided in Section 5(f), (g)
and (h) and Section 11, or unless otherwise determined by the Committee at or
after grant, no Stock Option shall be exercisable prior to the first
anniversary date of the granting of the Option. If the Committee provides, in
its sole discretion, that any Stock Option is exercisable only in installments,
the Committee may waive such installment exercise provisions at any time at or
after grant in whole or in part, based on such factors as the Committee shall
determine, in its sole discretion.
(D) METHOD OF EXERCISE. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised in whole or
in part at any time during the option period, by giving written notice of
exercise to the Company specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the
purchase price, either by check, note or such other instrument as the Committee
may accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of unrestricted
Stock already owned by the optionee or, in the case of the exercise of a
Nonqualified Stock Option, Restricted Stock, or Deferred Stock subject to an
award hereunder (based, in each case, on the Fair Market Value of the Stock on
the date the Option is exercised, as determined by the Committee).
If payment of the option exercise price of a Nonqualified Stock
Option is made in whole or in part in the form of Restricted Stock or Deferred
Stock, such Restricted Stock or Deferred Stock (and any replacement shares
relating thereto) shall remain (or be) restricted or deferred, as the case may
be, in accordance with the original terms of the Restricted Stock award or
Deferred Stock award in question, and any additional Stock received upon the
exercise shall be subject to the same forfeiture restrictions or deferral
limitations, unless otherwise determined by the Committee, in its sole
discretion, at or after grant.
No shares of Stock shall be issued until full payment therefore
has been made. An optionee shall generally have the rights to dividends or
other rights of a shareholder with respect to the shares subject to the Option
when the optionee has given written notice of exercise, has paid in full for
such shares, and, if requested, has given the representation described in
Section 14(a).
(E) NON-TRANSFERABILITY OF OPTIONS. Except to the extent the
Committee may authorize or permit Nonqualified Stock Options to be transferred
to, or for the benefit of, members of the participant's family, no Stock Option
shall be transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during
the optionee's lifetime, only by the optionee.
(F) TERMINATION BY DEATH. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of death, any Stock Option held by such optionee may thereafter be
exercised to the extent such Option was exercisable at the time of death or on
such accelerated basis as the Committee may determine at or after grant (or as
may be determined in accordance with procedures established by the
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Committee), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of three (3) years (or
such other period as the Committee may specify at grant) from the date of such
death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(G) TERMINATION BY REASON OF DISABILITY. Subject to Section
5(j), if an optionee's employment by the Company and any Subsidiary terminates
by reason of Disability, any Stock Option held by such optionee may thereafter
be exercised by the optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may determine at or
after grant (or as may be determined in accordance with procedures established
by the Committee) for a period of three (3) years (or such other period as the
Committee may specify at grant) from the date of such termination of employment
or until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided, however, that, if the optionee dies within
such three (3) year period (or such other period as the Committee shall specify
at grant), any unexercised Stock Option held by such optionee shall thereafter
be exercisable, to the extent to which it was exercisable at the time of death,
for a period of twelve (12) months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Disability, if
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option
will thereafter be treated as a Nonqualified Stock Option.
(H) TERMINATION BY REASON OF RETIREMENT. Subject to Section
5(j), if an optionee's employment by the Company and any Subsidiary or
Affiliate terminates by reason of Normal or Early Retirement, any Stock Option
held by such optionee may thereafter be exercised by the optionee, to the
extent it was exercisable at the time of such Retirement or on such accelerated
basis as the Committee may determine at or after grant (or as may be determined
in accordance with procedures established by the Committee) for a period of
three (3) years (or such other period as Committee may specify at grant) from
the date of such termination of employment or the expiration of the stated term
of such Stock Option, whichever period is the shorter; provided, however, that
if the optionee dies within such three-year period (or such other period as the
Committee may specify at grant), any unexercised Stock Option held by such
optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of twelve (12) months from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter. In the event of termination of
employment by reason of Retirement, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as Nonqualified
Stock Option.
(I) OTHER TERMINATION. Unless otherwise determined by the
Committee (or pursuant to procedures established by the Committee) at or after
grant, if an optionee's employment by the Company or any Subsidiary or
Affiliate terminates for any reason other than death, Disability or Normal or
Early Retirement, the Stock Option shall thereupon terminate. Notwithstanding
the foregoing sentence, a Stock Option may be exercised, to the extent
otherwise then exercisable, for the lesser of three (3) months or the balance
of such Stock
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Option's term, if the optionee is involuntarily terminated by the Company or
any Subsidiary or Affiliate without Cause. For purposes of this Plan, "Cause"
means a felony conviction of a participant or the failure of a participant to
contest prosecution for a felony, or a participant's willful misconduct or
dishonesty, any of which is directly and materially harmful to the business or
reputation of the Company or any Subsidiary or Affiliate.
(J) INCENTIVE STOCK OPTIONS. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the optionee(s)
affected, to disqualify any Incentive Stock Option under such Section 422.
(K) BUYOUT PROVISIONS. The Committee may at any time offer to
buy out for payment in cash, Stock, Deferred Stock or Restricted Stock, an
Option previously granted, based on such terms and conditions as the Committee
shall establish and communicate to the optionee at the time that such offer is
made.
(L) SETTLEMENT PROVISIONS. If the option agreement so provides
at grant or is amended after grant but prior to the exercise to so provide
(with the optionee's consent), the Committee may require that all or part of
the shares to be issued with respect to the spread value of an exercised Option
take the form of Deferred or Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value (as determined by the
Committee) of such Deferred or Restricted Stock determined without regard to
the deferral limitations and/or forfeiture restrictions involved.
SECTION 6. STOCK APPRECIATION RIGHTS
(A) GRANT AND EXERCISE. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Nonqualified Stock Option, such rights may be granted either at
or after the time of the grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of grant of
such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted
with respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
subject to such provisions as the Committee may specify at grant where a Stock
Appreciation Right is granted with respect to less than the full number of
shares covered by a related Stock Option.
A Stock Appreciation Right may be exercised by an optionee,
subject to Section 6(b), in accordance with the procedures established by the
Committee for such purposes. Upon such exercise, the optionee shall be entitled
to receive an amount determined in the manner prescribed in Section 6(b). Stock
Options relating to exercised Stock Appreciation Rights shall no longer be
exercisable to the extent that the related Stock Appreciation Rights have been
exercised.
(B) TERMS AND CONDITIONS. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from
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time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 and this
Section 6 of the Plan and only within a ten business
day period commencing on the third business day
following the release of quarterly or annual financial
results (the "Window Period").
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in
cash and/or shares of Stock equal in value to the
excess of the Fair Market Value of one share of Stock
over the option price per share specified in the
related Stock Option multiplied by the number of shares
in respect of which the Stock Appreciation Right shall
have been exercised, with the Committee having the
right to determine the form of payment. When payment is
to be made in shares, the number of shares to be paid
shall be calculated on the basis of the Fair Market
Value of the shares on the date of exercise. When
payment is to be made in cash, such amount shall be
calculated on the basis of the average of the Fair
Market Values of a share of Stock on each business day
during the Window Period in which such Stock
Appreciation Right is exercised.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock
Option would be transferable under Section 5(e) of the
Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have
been exercised for the purpose of the limitation set
forth in Section 3 of the Plan on the number of shares
of Stock to be issued under the Plan, but only to the
extent of the number of shares issued under the Stock
Appreciation Right at the time of exercise based on the
value of the Stock Appreciation Right at such time.
(v) In its sole discretion, the Committee may grant
"Limited" Stock Appreciation Rights under this
Section 6, i.e., Stock Appreciation Rights that become
exercisable only in the event of a Change in Control
and/or a Potential Change in Control, subject to such
terms and conditions as the Committee may specify at
grant. Such Limited Stock Appreciation Rights shall be
settled solely in cash.
(vi) The Committee, in its sole discretion, may also
provide that, in the event of a Change in Control
and/or a Potential Change in Control, the amount to
be paid upon the exercise of a Stock Appreciation
Right or Limited Stock Appreciation Right shall be
based on the Change in Control Price, subject to such
terms and conditions as the Committee may specify at
grant.
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SECTION 7. RESTRICTED STOCK
(A) ADMINISTRATION. Shares of Restricted Stock may be issued
either along, in addition to, or in tandem with, other awards granted under the
Plan and/or cash awards made outside of the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the price
(if any) to be paid by the recipient of Restricted Stock (subject to Section
7(b)), the time or times within which such awards may be subject to forfeiture,
and all other terms and conditions of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the
Committee may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with respect
to each recipient.
(B) AWARDS AND CERTIFICATES. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock
shall be equal to or less than their par value and
may be zero.
(ii) Awards of Restricted Stock must be accepted within a
period of sixty (60) days (or such shorter period as
the Committee may specify at grant) after the award
date, by executing an award agreement and paying
whatever price (if any) is required under Section
7(b)(i).
(iii) Each participant receiving a Restricted Stock award
shall be issued a stock certificate in respect of
such shares of Restricted Stock. Such certificate
shall be registered in the name of such participant,
and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable
to such award.
(iv) The Committee shall require that the stock
certificates evidencing such shares be held in
custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition
of any Restricted Stock award, the participant shall
have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
(C) RESTRICTIONS AND CONDITIONS. The shares of Restricted
Stock awarded pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee
commencing with the date of such award (the
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"Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge or assign shares
of Restricted Stock awarded under the Plan. Within
these limits, the Committee, in its sole discretion,
may provide for the lapse of such restrictions in
installments and may accelerate or waive such
restrictions in whole or in part, based on service,
performance and/or such other factors or criteria as
the Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and
Section 7(c)(i), the participant shall have, with
respect to the shares of Restricted Stock, all of
the rights of a shareholder of the Company,
including the right to vote the shares, and the
right to receive any cash dividends. The Committee,
in its sole discretion, as determined at the time of
award, may permit or require the payment of cash
dividends to be deferred and, if the Committee so
determines, reinvested, subject to Section 14(e), in
additional Restricted Stock to the extent shares are
available under Section 3, or otherwise reinvested.
Pursuant to Section 3 above, Stock dividends issued
with respect to Restricted Stock shall be treated as
additional shares of Restricted Stock that are
subject to the same restrictions and other terms and
conditions that apply to the shares with respect to
which such dividends are issued.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a
participant's employment with the Company and any
Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to
restriction will vest, or be forfeited, in
accordance with the terms and conditions established
by the Committee at or after grant.
If and when the Restriction Period expires without a
(iv) prior forfeiture of the Restricted Stock subject to
such Restriction Period, certificates for an
appropriate number of unrestricted shares shall be
delivered to the participant promptly.
(D) MINIMUM VALUE PROVISIONS. In order to better ensure that
award payments actually reflect the performance of the Company and service of
the participant, the Committee may provide, in its sole discretion, for a
tandem performance-based or other award designed to guarantee a minimum value,
payable in cash or Stock to the recipient of a restricted stock award, subject
to such performance, future service, deferral and other terms and conditions as
may be specified by the Committee.
SECTION 8. DEFERRED STOCK
(A) ADMINISTRATION. Deferred Stock may be awarded either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. The Committee shall determine the
eligible persons to whom and the time or times at which Deferred Stock shall be
awarded, the number of shares of Deferred Stock to be awarded to any person,
the duration of the period (the "Deferral Period") during which, and the
conditions under which, receipt of the Stock will be deferred, and the other
terms and conditions of the award in addition to those set forth in Section
8(b).
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The Committee may condition the grant of Deferred Stock upon the attainment
of specified performance goals or such other factors or criteria as the
Committee shall determine, in its sole discretion.
The provisions of Deferred Stock awards need not be the same with respect to
each recipient.
(B) TERMS AND CONDITIONS. The shares of Deferred Stock awarded
pursuant to this Section 8(b) shall be subject to the following terms and
conditions:
(i) Subject to the provision of this Plan and the award
agreement referred to in Section 8(b)(vi) below,
Deferred Stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the
Deferral Period (or the Elective Deferral Period
referred to in Section 8(b)(v), where applicable),
share certificates shall be delivered to the
participant, or his legal representative, in a
number equal to the shares covered by the Deferred
Stock award.
(ii) Unless otherwise determined by the Committee at
grant, amounts equal to any dividends declared
during the Deferral Period with respect to the
number of shares covered by a Deferred Stock award
will be paid to the participant currently, or
deferred and deemed to be reinvested in additional
Deferred Stock, or otherwise reinvested, all as
determined at or after the time of the award by the
Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and
this Section 8, upon termination of a participant's
employment with the Company and any Subsidiary or
Affiliate for any reason during the Deferral Period
for a given award, the Deferred Stock in question
will vest, or be forfeited, in accordance with the
terms and conditions established by the Committee at
or after grant.
(iv) Based on service, performance, and/or such other
factors or criteria as the Committee may determine,
the Committee may, at or after grant, accelerate the
vesting of all or any part of any Deferred Stock
award and/or waive the deferral limitations for all
or any part of such award.
(v) A participant may elect to further defer receipt of
an award (or an installment of an award) for a
specified period or until a specified event (the
"Elective Deferral Period"), subject in each case to
the Committee's approval and to such terms as are
determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the
Committee, such election must generally be made at
least twelve (12) months prior to completion of the
Deferral Period of such Deferred Stock award (or
such installment).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the
Company and the participant.
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(C) MINIMUM VALUE PROVISIONS. In order to better ensure that
award payments actually reflect the performance of the Company and service of
the participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Deferred Stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
SECTION 9. STOCK PURCHASE RIGHTS
(A) AWARDS AND ADMINISTRATION. Subject to Section 3 above, the
Committee may grant eligible participants Stock Purchase Rights which shall
enable such participants to purchase Stock (including Deferred Stock and
Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at fifty percent (50%) of such Fair Market Value on
such date;
(iii) at an amount equal to Book Value on such date; or
(iv) at an amount equal to the par value of such stock on
such date.
The Committee shall also impose such deferral, forfeiture,
and/or other terms and conditions as it shall determine, in its sole
discretion, on such Stock Purchase Rights or the exercise thereof.
The terms of Stock Purchase Rights awards need not be the
same with respect to each participant.
Each Stock Purchase Right award shall be confirmed by, and
be subject to the terms of, a Stock Purchase Rights agreement.
(B) EXERCISABILITY. Stock Purchase Rights shall generally be
exercisable for such period after grant as is determined by the Committee not
to exceed thirty (30) days.
SECTION 10. OTHER STOCK-BASED AWARDS
(A) ADMINISTRATION. Other awards of Stock and other awards that
are valued in whole or in part by reference to, or are otherwise based on,
Stock ("Other Stock-Based Awards"), including, without limitation, stock
purchase rights, performance shares, convertible preferred stock, convertible
debentures, exchangeable securities and Stock awards or options valued by
reference to Book Value or subsidiary performance, may be granted either along
with, or in addition to, or in tandem with, Stock Options, Stock Appreciation
Rights, Restricted Stock, Deferred Stock, or Stock Purchase Rights granted
under the Plan and/or cash awards made outside of the Plan.
Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such awards, and all other conditions
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of the awards. The Committee may also provide for the grant of Stock upon the
completion of a specified performance period.
The provision of Other Stock-Based Awards need not be the same in
respect to each recipient.
(B) TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant
to this Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Section 10(b)(v) below,
shares subject to awards made under this Section 10
may not be sold, assigned, transferred, pledged, or
otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which
any applicable restriction, performance, or deferral
period lapses.
(ii) Subject to the provision of this Plan and the award
agreement and unless otherwise determined by the
Committee at grant, the recipient of an award under
this Section 10 shall be entitled to receive,
currently, or on a deferred basis, interest or
dividends or interest or dividend equivalents with
respect to the number of shares covered by the
award, as determined at the time of the award by the
Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Stock
or otherwise reinvested.
(iii) Any award under Section 10 and any Stock covered by
any such award shall vest or be forfeited to the
extent so provided in the award agreement as
determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement,
Disability or death, or in cases of special
circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of
the remaining limitations imposed hereunder (if any)
with respect to any or all of an award under this
Section 10.
(v) Each award under this Section 10 shall be confirmed
by, and subject to the terms of, an agreement or
other instrument by the Company and by the
participant.
(vi) Stock (including securities convertible into Stock)
issued on a bonus basis under this Section 10 may be
issued for no cash consideration. Stock (including
securities convertible into Stock) purchased
pursuant to a purchase right awarded under this
Section 10 shall be priced at least fifty percent
(50%) of the Fair Market Value of the Stock on the
date of grant.
SECTION 11. CHANGE IN CONTROL PROVISIONS
(A) IMPACT OF EVENT. In the event of:
(1) a "Change in Control" as defined in Section 11(b), or
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(2) a "Potential Change in Control" as defined in Section 11(c),
but only if and to the extent so determined by the Committee
or the Board at or after grant (subject to any right of
approval expressly reserved by the Committee or the Board at
the time of such determination).
(i) Any Stock Appreciation Rights (including, without
limitation, any Limited Stock Appreciation Rights) and
any Stock Options awarded under the Plan not
previously exercisable and vested shall become fully
exercisable and vested.
(ii) The restrictions or deferral limitations applicable
to any Restricted Stock, Deferred Stock, Stock
Purchase Rights and Other Stock-Based Awards, in each
case to the extent not already vested under the Plan,
shall lapse and such shares and awards shall be deemed
fully vested.
(iii) The value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred
Stock, Stock Purchase Rights and Other Stock-Based
Awards, in each case to the extent vested, shall,
unless determined otherwise by the Committee in its
sole discretion at or after grant but prior to any
Change in Control, be cashed out on the basis of the
"Change in Control Price" as defined in Section 11(d)
as of the date such Change in Control or such Potential
Change in Control is determined to have occurred or
such other date as the Committee may determine prior to
the Change in Control.
(B) DEFINITION OF "CHANGE IN CONTROL". For purposes of Section
11(a), a "Change in Control" means the happening of any of
the following:
(i) When any "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and
14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the
Company and any Subsidiary and any employee benefit
plan sponsored or maintained by the Company or any
Subsidiary (including any trustee of such plan acting
as trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time) of
securities of the company representing twenty percent
(20%) or more of the combined voting power of the
Company's then outstanding securities;
(ii) When, during any period of twenty-four (24)
consecutive months during the existence of the
Plan, the individuals who, at the beginning of such
periods, constitute the Board (the "Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof, provided,
however, that a director who was not a director at the
beginning of such twenty-four (24) month period shall
be deemed to have satisfied such twenty-four (24) month
requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or
with the approval of, at least two- thirds of the
directors who then qualified as Incumbent Directors
either actually (because they were director at the
beginning of such twenty-four (24) month period) or by
prior operation of this Section 11(b)(ii); or
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(iii) The occurrence of a transaction requiring
stockholder approval for the acquisition of the
Company by an entity other than the Company or a
Subsidiary through purchase of assets, or by merger, or
otherwise.
(iv) Notwithstanding anything else contained herein
to the contrary, in no event shall a Change of
Control be deemed to occur solely by reason of (1) a
distribution to the Parent's shareholders, whether as
dividend or otherwise, of all or any portion of the
Stock or any other voting securities of the Company
held, directly or indirectly, by the Parent or (2) a
sale of all or any portion of the Stock or any other
voting securities of the Company held, directly or
indirectly, by the Parent in an underwritten public
offering.
(C) DEFINITION OF POTENTIAL CHANGE IN CONTROL. For purposes of
Section 11(a), a "Potential Change in Control" means the
happening of any one of the following:
(i) The approval by shareholders of an agreement
by the Company, the consummation of which would
result in a Change in Control of the Company as defined
in Section 11(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than
the Company or a Subsidiary or any Company employee
benefit plan (including any trustee of such plan
acting as such trustee) of securities of the Company
representing five percent (5%) or more of the
combined voting power of the Company's outstanding
securities and the adoption by the Board of Directors
of a resolution to the effect that a Potential Change
in Control of the Company has occurred for purposes of
this Plan.
(D) CHANGE IN CONTROL PRICE. For the purposes of the Section 11,
"Change in Control Price " means the highest price per share
paid in any transaction reported on the New York Stock
Exchange Composite Index, or paid or offered in any bona
fide transaction related to a potential or actual Change in
Control of the Company at any time during the sixty (60) day
period immediately preceding the occurrence of the Change in
Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as
determined by the Committee except that, in the case of
Incentive Stock Options and Stock Appreciation Rights
relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which
the optionee exercises such Stock Appreciation Rights (or
Limited Stock Appreciation Rights) or, where applicable, the
date on which a cashout occurs under Section 11(a)(iii).
SECTION 12. AMENDMENTS AND TERMINATION
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which would impair the
rights of an optionee or participant under a Stock Option, Stock Appreciation
Right (or Limited Stock Appreciation Right), Restricted or Deferred Stock award,
Stock Purchase Right, or Other Stock-Based Award theretofore granted, without
the optionee's or participant's consent.
16
<PAGE> 19
The Committee may amend the terms of any Stock Option or other
award theretofore granted, prospectively or retroactively, but subject to
Section 3 above, no such amendment shall impair the rights of any holder without
the holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
SECTION 13. UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payments not yet made
to a participant or optionee by the Company, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments in lieu of or with respect
to awards hereunder; provided, however, that unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 14. GENERAL PROVISIONS
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to represent to and
agree with the Company in writing that the optionee or participant is acquiring
the shares without a view to distribution thereof. The certificates for such
shares may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee
of the Company or any Subsidiary or Affiliate any right to continued employment
with the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the
17
<PAGE> 20
Committee regarding the payment of any federal, state, or local taxes of any
kind required by law to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations may be settled
with Stock, including Stock that is part of the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional on such payment of arrangements and the Company and its
Subsidiaries or Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
the participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in Deferred Stock or other types
of Plan awards) at the time of any dividend payment shall only be permissible
if sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Stock Options, Stock
Purchase Rights, and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Texas.
SECTION 15. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of October 9, 1996.
SECTION 16. TERM OF PLAN
No Stock Option, Stock Appreciation Right, Restricted Stock award,
Deferred Stock award, Stock Purchase Right, or Other Stock-Based Award shall be
granted pursuant to the Plan on or after the tenth (10th) anniversary of the
date of shareholder approval, but awards granted prior to such tenth (10th)
anniversary may extend beyond that date.
SECTION 17. PERFORMANCE RELATED AWARDS
(A) PERFORMANCE OBJECTIVES. Notwithstanding anything else
contained in the Plan to the contrary, unless the Committee otherwise determines
at the time of grant, any award of Restricted Stock, Deferred Stock, or Other
Stock-Based Awards to an officer who is subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as amended, other than an
award which will vest solely on the basis of the passage of time, shall become
vested, if at all, upon the determination by the Committee that performance
objectives established by the Committee have been attained, in whole or in part
(a "Performance Award"). Such performance objectives shall be determined over a
measurement period or periods established by the Committee and related to at
least one of the following criteria, which may be determined solely by
reference to the performance of (i) the Company, (ii) a Subsidiary, (iii) an
Affiliate, (iv) a division or unit of any of the foregoing or based on
comparison performance of any of the foregoing relative to other companies: (A)
return on equity; (B) total shareholder return; (C) revenues; (D) cash flows
and earnings relative to other parameters; (E) operating income; (F) return on
investment; and (G) changes in the value of the Corporation's Common Stock (the
"Performance Criteria"). The maximum number of shares of Stock that may be
awarded to any one participant and that may be subject to any such Performance
Award in any twelve (12) month period shall not exceed 100,000 shares, as such
number may be adjusted pursuant to Section 3.
18
<PAGE> 21
(B) ANNUAL INCENTIVE COMPENSATION. The Committee may, in
addition to the Performance Awards described above, pay cash amounts under the
Plan to any officer of the Company or any Subsidiary who is subject to the
reporting requirements of Section 16(a) of the Exchange Act upon the
achievement, in whole or in part, of performance goals or objectives established
in writing by the Committee with respect to such performance periods as the
Committee shall determine. Any such goals or objectives shall be based on one or
more of the Performance Criteria. Notwithstanding anything else contained herein
to the contrary, the maximum amount of any such cash payment to any single
officer with respect to any twelve (12) month period shall not exceed the lesser
of (A) $1,000,000 and (B) twice the officer's annual base salary as in effect
on the last day of the preceding fiscal year.
(C) INTERPRETATION. Notwithstanding anything else in the Plan to
the contrary, to the extent required to so qualify any Performance Award as
other performance-based compensation within the meaning of Section 162(m)(4)(C)
of the Code, the Committee shall not be entitled to exercise any discretion
otherwise authorized under the Plan (such as the right to accelerate vesting
without regard to the achievement of the relevant performance objectives) with
respect to such Performance Award if the ability to exercise such discretion
(as opposed to the exercise of such discretion) would cause such award to fail
to qualify as other performance-based compensation.
19
<PAGE> 1
[AMR Corporation Letterhead]
October 8, 1996
AMR Corporation
P.O. Box 619616
Dallas/Fort Worth Airport, Texas 75261-9616
Registration Statement on Form S-8 pertaining to
The SABRE Group Holdings, Inc. 1996 Long-Term Incentive Plan
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of AMR Corporation, a
Delaware corporation, and as such I am delivering this opinion to you in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a Registration
Statement on Form S-8 (the "Registration Statement") relating to 13,000,000
shares (the "Shares") of the Class A Common Stock, par value $.01 per share, of
The SABRE Group Holdings, Inc., a Delaware corporation, to be awarded under The
SABRE Group Holdings, Inc. 1996 Long-Term Incentive Plan (the "Plan").
In so acting, I have examined the Plan and have examined and relied upon
the originals, or copies certified to my satisfaction, of such records,
documents or other instruments as in my judgement are necessary or appropriate
to enable me to render the opinion set forth below.
Based on the foregoing, I am of the opinion that the Shares have been
duly authorized and, when duly awarded in accordance with the terms of the
Plan, will be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Anne H. McNamara
Anne H. McNamara
Senior Vice President and
General Counsel
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Registration Statement (Form S-8) pertaining
to The SABRE Group Holdings, Inc. 1996 Long-Term Incentive Plan of our reports
dated January 15, 1996 (except as to Note 1, for which the date is July 22,
1996) with respect to the consolidated financial statements and schedule of The
SABRE Group Holdings, Inc. included in its Registration Statement on Form S-1
(Registration No. 333-09747) filed with the Securities and Exchange Commission.
Dallas, Texas
October 10, 1996
<PAGE> 1
POWER OF ATTORNEY
The undersigned, Senior Vice President, Chief Financial Officer and
Treasurer of The SABRE Group Holdings, Inc., a Delaware corporation (the
"Corporation"), does hereby constitute and appoint Michael J. Durham and Andrew
B. Steinberg, and each of them, as his true and lawful attorneys-in-fact and
agents, with full power of substitution, to execute and deliver in his name and
on his behalf:
(a) one or more Registration Statements of the Corporation on
an appropriate form proposed to be filed with the Securities and
Exchange Commission ("SEC") for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"), Class A
Common Stock of the Corporation to be offered pursuant to the 1996 Long
Term Incentive Plan, as it may from time to time be amended; and
(b) any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statements;
and any and all other documents and instruments in connection with the issuance
of such Class A Common Stock which such attorneys-in-fact and agents, or any
one of them, deem necessary or advisable to enable the Corporation to comply
with (a) the Securities Act, the Securities Exchange Act of 1934, as amended,
and the other federal securities laws of the United States of America and the
rules, regulations and requirements of the SEC in respect of any thereof, (b)
the securities or Blue Sky laws of any state or other governmental subdivision
of the United States of America and (c) the securities or similar applicable
laws of Canada, Mexico and any other foreign jurisdiction; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof. Each one of such attorneys-in-fact and agents shall have, and
may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power
of attorney this 10th day of October, 1996.
<PAGE> 2
/s/ T. Patrick Kelly
--------------------------
T. Patrick Kelly
Witness:
/s/ Andrew B. Steinberg
- -------------------------
Andrew B. Steinberg
<PAGE> 3
POWER OF ATTORNEY
The undersigned, Chairman of the Board of The SABRE Group Holdings,
Inc., a Delaware corporation (the "Corporation"), does hereby constitute and
appoint Michael J. Durham, T. Patrick Kelly and Andrew B. Steinberg, and each
of them, as his true and lawful attorneys-in-fact and agents, with full power
of substitution, to execute and deliver in his name and on his behalf:
(a) one or more Registration Statements of the Corporation on
an appropriate form proposed to be filed with the Securities and
Exchange Commission ("SEC") for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"), Class A
Common Stock of the Corporation to be offered pursuant to the 1996 Long
Term Incentive Plan, as it may from time to time be amended; and
(b) any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statements;
and any and all other documents and instruments in connection with the issuance
of such Class A Common Stock which such attorneys-in-fact and agents, or any
one of them, deem necessary or advisable to enable the Corporation to comply
with (a) the Securities Act, the Securities Exchange Act of 1934, as amended,
and the other federal securities laws of the United States of America and the
rules, regulations and requirements of the SEC in respect of any thereof, (b)
the securities or Blue Sky laws of any state or other governmental subdivision
of the United States of America and (c) the securities or similar applicable
laws of Canada, Mexico and any other foreign jurisdiction; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof. Each one of such attorneys-in-fact and agents shall have, and
may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power
of attorney this 10th day of October, 1996.
<PAGE> 4
/s/ Robert L. Crandall
--------------------------
Robert L. Crandall
Witness:
/s/ Andrew B. Steinberg
- -------------------------
Andrew B. Steinberg
<PAGE> 5
POWER OF ATTORNEY
The undersigned, President, Chief Executive Officer and a director of
The SABRE Group Holdings, Inc., a Delaware corporation (the "Corporation"),
does hereby constitute and appoint T. Patrick Kelly and Andrew B. Steinberg,
and each of them, as his true and lawful attorneys-in-fact and agents, with
full power of substitution, to execute and deliver in his name and on his
behalf:
(a) one or more Registration Statements of the Corporation on
an appropriate form proposed to be filed with the Securities and
Exchange Commission ("SEC") for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"), Class A
Common Stock of the Corporation to be offered pursuant to the 1996 Long
Term Incentive Plan, as it may from time to time be amended; and
(b) any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statements;
and any and all other documents and instruments in connection with the issuance
of such Class A Common Stock which such attorneys-in-fact and agents, or any
one of them, deem necessary or advisable to enable the Corporation to comply
with (a) the Securities Act, the Securities Exchange Act of 1934, as amended,
and the other federal securities laws of the United States of America and the
rules, regulations and requirements of the SEC in respect of any thereof, (b)
the securities or Blue Sky laws of any state or other governmental subdivision
of the United States of America and (c) the securities or similar applicable
laws of Canada, Mexico and any other foreign jurisdiction; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof. Each one of such attorneys-in-fact and agents shall have, and
may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power
of attorney this 10th day of October, 1996.
<PAGE> 6
/s/ Michael J. Durham
--------------------------
Michael J. Durham
Witness:
/s/ Andrew B. Steinberg
- -------------------------
Andrew B. Steinberg
<PAGE> 7
POWER OF ATTORNEY
The undersigned, a director of The SABRE Group Holdings, Inc., a
Delaware corporation (the "Corporation"), does hereby constitute and appoint
Michael J. Durham, T. Patrick Kelly and Andrew B. Steinberg, and each of them,
as his true and lawful attorneys-in-fact and agents, with full power of
substitution, to execute and deliver in his name and on his behalf:
(a) one or more Registration Statements of the Corporation on
an appropriate form proposed to be filed with the Securities and
Exchange Commission ("SEC") for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"), Class A
Common Stock of the Corporation to be offered pursuant to the 1996 Long
Term Incentive Plan, as it may from time to time be amended; and
(b) any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statements;
and any and all other documents and instruments in connection with the issuance
of such Class A Common Stock which such attorneys-in-fact and agents, or any
one of them, deem necessary or advisable to enable the Corporation to comply
with (a) the Securities Act, the Securities Exchange Act of 1934, as amended,
and the other federal securities laws of the United States of America and the
rules, regulations and requirements of the SEC in respect of any thereof, (b)
the securities or Blue Sky laws of any state or other governmental subdivision
of the United States of America and (c) the securities or similar applicable
laws of Canada, Mexico and any other foreign jurisdiction; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof. Each one of such attorneys-in-fact and agents shall have, and
may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power
of attorney this 10th day of October, 1996.
<PAGE> 8
/s/ Gerard J. Arpey
--------------------------
Gerard J. Arpey
Witness:
/s/ Andrew B. Steinberg
- -------------------------
Andrew B. Steinberg
<PAGE> 9
POWER OF ATTORNEY
The undersigned, a director of The SABRE Group Holdings, Inc., a
Delaware corporation (the "Corporation"), does hereby constitute and appoint
Michael J. Durham, T. Patrick Kelly and Andrew B. Steinberg, and each of them,
as her true and lawful attorneys-in-fact and agents, with full power of
substitution, to execute and deliver in her name and on her behalf:
(a) one or more Registration Statements of the Corporation on
an appropriate form proposed to be filed with the Securities and
Exchange Commission ("SEC") for the purpose of registering under the
Securities Act of 1933, as amended (the "Securities Act"), Class A
Common Stock of the Corporation to be offered pursuant to the 1996 Long
Term Incentive Plan, as it may from time to time be amended; and
(b) any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statements;
and any and all other documents and instruments in connection with the issuance
of such Class A Common Stock which such attorneys-in-fact and agents, or any
one of them, deem necessary or advisable to enable the Corporation to comply
with (a) the Securities Act, the Securities Exchange Act of 1934, as amended,
and the other federal securities laws of the United States of America and the
rules, regulations and requirements of the SEC in respect of any thereof, (b)
the securities or Blue Sky laws of any state or other governmental subdivision
of the United States of America and (c) the securities or similar applicable
laws of Canada, Mexico and any other foreign jurisdiction; and the undersigned
does hereby ratify and confirm as her own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof. Each one of such attorneys-in-fact and agents shall have, and
may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power
of attorney this 10th day of October, 1996.
<PAGE> 10
/s/ Anne H. McNamara
--------------------------
Anne H. McNamara
Witness:
/s/ Andrew B. Steinberg
- -------------------------
Andrew B. Steinberg
