<PAGE>
As filed with the Securities and Exchange Commission on May , 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
Galileo International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-4156005
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
(Address of principal executive offices) (Zip Code)
Galileo International, Inc. 1997 Stock Incentive Plan
Galileo International, Inc. 1997 Non-Employee Director Stock Plan
(Full title of the plans)
-----------------
Babetta R. Gray, Esq.
Senior Vice President Legal, General Counsel and Secretary
Galileo International, Inc.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
(Name and address of agent for service)
(847) 518-4000
(Telephone number, including area code, of agent for service)
With a copy to:
Robert A. McWilliams
Freeborn & Peters
311 South Wacker Drive, Suite 3000
Chicago, Illinois 60606-6677
(312) 360-6000
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
Proposed Proposed
Amount Maximum Maximum
Title of Securities to be Offering Price Aggregate Amount of
to be Registered Registered(1) Per Share(2) Offering Price(2) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 8,640,000 $42 $362,880,000.00 $107,049.60
==============================================================================================================================
</TABLE>
(1) In accordance with Rule 416(a) under the Securities Act of 1933 (the
"Securities Act"), this Registration Statement also covers an indeterminate
number of shares of Common Stock, $.01 par value (the "Common Stock")
issuable pursuant to certain anti-dilution provisions in the plans listed
above.
(2) Estimated pursuant to Rule 457(h) under the Securities Act solely for the
purpose of calculating the registration fee and based upon the average of
the high and low prices of the Common Stock on the New York Stock Exchange
on May 19, 1998.
(3) Paid on May 29, 1998.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Galileo International, Inc. (the "Company"
or "Registrant") with the Securities and Exchange Commission (the "Commission")
are incorporated in and made a part of this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 filed with the Commission on March 17, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the Quarter ended
March 31, 1998 filed with the Commission May 14, 1998;
(c) All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1996; and
(d) The description of the Company's common stock, par value $.01 per
share, contained in the Company's registration statement on Form 8-A filed
under the Securities Exchange Act of 1934 (File No. 1-13153).
All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment to this
Registration Statement indicating that all securities offered under this
Registration Statement have been sold, or deregistering all securities then
remaining unsold, are also incorporated herein by reference and shall be a part
hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Babetta R. Gray has rendered an opinion as to the legality of the common
stock registered hereunder. Ms. Gray, who is a Director and Senior Vice
President Legal, General Counsel and Secretary of the Company, is eligible to
participate in the Company's 1997 Stock Incentive Plan.
II-1
<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides, in summary,
that directors and officers of Delaware corporations are entitled, under certain
circumstances, to be indemnified against all expenses and liabilities (including
attorneys' fees) incurred by them as a result of suits brought against them in
their capacity as a director or officer, if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful; provided that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the Company,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, they are fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Any such indemnification may be made by the Company only as authorized
in each specific case upon a determination by the shareholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct.
The Company's Restated Certificate of Incorporation provides that no
director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (i) for any breach of the director's duty of loyalty to
the Company or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) in
respect of certain unlawful dividend payments or stock redemptions or purchases;
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Restated Certificate of Incorporation and Restated By-Laws
provide for indemnification of its directors and officers to the fullest extent
permitted by Delaware law, as the same may be amended from time to time.
Section 9 of the Underwriting Agreement between the Company and the
underwriters of the Company's initial public offering, filed as Exhibit 1.1 to
the Form S-1, contains provisions for certain indemnification rights to the
directors and officers of the Registrant.
In addition, the Company maintains liability insurance for its directors
and officers.
Item 7. Exemption from Registration Claimed.
Not applicable.
II-2
<PAGE>
Item 8. Exhibits.
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<C> <S>
4.1 Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1 (No.
333-27495) (the "Form S-1"))
4.2 Restated By-Laws (incorporated by reference to Exhibit 3.2 of the Form
S-1)
4.3 Galileo International, Inc. 1997 Stock Incentive Plan, as revised May 1,
1998
4.4 Galileo International, Inc. 1997 Non-Employee Director Stock Plan
(incorporated by reference to Exhibit 10.42 to the Form S-1)
5.1 Opinion of Babetta R. Gray, Senior Vice President Legal, General Counsel
and Secretary of the Registrant
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Babetta R. Gray (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page hereto)
</TABLE>
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(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 the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
II-3
<PAGE>
Provided, however, that paragraphs (1)(i) and (1)(ii) 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 Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this 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.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of the Regulation S-X is not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
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 Commission such indemnification is
against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
The Registrant. 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 requirements 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 Rosemont, State of Illinois, on this 26th day of
May, 1998.
GALILEO INTERNATIONAL, INC.
By: /c/ James E. Barlett
------------------------------------------------
James E. Barlett
Chairman, President and Chief Executive Officer
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints James E. Barlett and Babetta R. Gray, and each of
them, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them or their
or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on May 26th, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/c/ James E. Barlett Chairman, President and Chief Executive Officer
- -------------------------- (principal executive officer)
James E. Barlett
/c/ Paul H. Bristow Director, Senior Vice President, Chief Financial
- -------------------------- Officer and Treasurer (principal financial and
Paul H. Bristow accounting officer)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/c/ Babetta R. Gray Director, Senior Vice President Legal, General
- -------------------------- Counsel and Secretary
Babetta R. Gray
/c/ Frederic F. Brace Director
__________________________
Frederic F. Brace
/c/ David A. Coltman Director
- --------------------------
David A. Coltman
Director
__________________________
James E. Goodwin
Director
__________________________
Terry L. Hall
/c/ Frank H. Rovekamp Director
- --------------------------
Frank H. Rovekamp
Director
__________________________
Georges P. Schorderet
__________________________ Director
Derek M. Stevens
/c/ Kenneth Whipple Director
- --------------------------
Kenneth Whipple
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ----
<C> <S>
4.1 Restated Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1 (No.
333-27495) (the "Form S-1"))
4.2 Restated By-Laws (incorporated by reference to Exhibit 3.2 of the Form
S-1)
4.3 Galileo International, Inc. 1997 Stock Incentive Plan, as revised May 1,
1998
4.4 Galileo International, Inc. 1997 Non-Employee Director Stock Plan
(incorporated by reference to Exhibit 10.42 to the Form S-1)
5.1 Opinion of Babetta R. Gray, Senior Vice President Legal, General Counsel
and Secretary of the Registrant
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Babetta R. Gray (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page hereto)
</TABLE>
<PAGE>
Exhibit 4.3
================================================================================
GALILEO INTERNATIONAL, INC.
1997 STOCK INCENTIVE PLAN
Established Effective July 30, 1997
(As Revised May 1, 1998)
================================================================================
<PAGE>
GALILEO INTERNATIONAL, INC.
1997 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I--INTRODUCTION............................................................. 1
- -----------------------
Section 1.1 Establishment.................................................... 1
Section 1.2 Purpose.......................................................... 1
Section 1.3 Structure........................................................ 1
Section 1.4 Shares Available................................................. 1
ARTICLE II--ADMINISTRATION.......................................................... 2
- --------------------------
Section 2.1 Administrative Committee......................................... 2
Section 2.2 Authority........................................................ 3
Section 2.3 Protection....................................................... 4
ARTICLE III--ELIGIBILITY............................................................ 4
- ------------------------
Section 3.1 Eligibility for Stock Options.................................... 4
Section 3.2 Eligibility for Other Awards..................................... 5
Section 3.3 Factors to Consider.............................................. 5
ARTICLE IV--AWARD OF STOCK OPTIONS.................................................. 6
- ----------------------------------
Section 4.1 Option Awards.................................................... 6
Section 4.2 Incentive Options................................................ 6
(a) Exercise Price................................................... 6
(b) Maximum Term..................................................... 7
(c) Time of Exercise................................................. 7
(d) Limits on Stock Option Incentive Awards.......................... 7
(e) Payment.......................................................... 8
(f) Reload........................................................... 8
(g) Loans............................................................ 9
(h) Employee Status..................................................10
(i) Minimum Exercise Amount..........................................10
Section 4.3 Nonqualified Stock Options.......................................10
(a) Exercise Price...................................................10
(b) Maximum Term.....................................................10
(c) Employee Status..................................................10
(d) Taxation.........................................................10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE V--STOCK APPRECIATION RIGHTS.................................................11
- ------------------------------------
Section 5.1 SAR Awards........................................................11
Section 5.2 Price.............................................................11
Section 5.3 Number of Shares..................................................12
Section 5.4 Maximum Term......................................................12
Section 5.5 Time of Exercise..................................................12
Section 5.6 Benefit Amount....................................................13
Section 5.7 Payment of the Benefit............................................14
ARTICLE VI--STOCK AWARDS.............................................................14
- ------------------------
Section 6.1 Stock Awards......................................................14
Section 6.2 Grant or Sale.....................................................15
Section 6.3 Issuance of Stock.................................................15
Section 6.4 Shareholder Rights................................................16
Section 6.5 Purchase and Taxation.............................................16
Section 6.6 Forfeiture or Resale..............................................17
Section 6.7 Adjustments.......................................................17
ARTICLE VII--PERFORMANCE SHARE AWARDS................................................18
- -------------------------------------
Section 7.1 Awards Authorized.................................................18
Section 7.2 Performance Shares................................................18
Section 7.3 Performance Goals.................................................18
Section 7.4 Settlement in Cash or Stock.......................................19
Section 7.5 Taxation..........................................................19
ARTICLE VIII--OTHER AWARDS...........................................................19
- --------------------------
Section 8.1 Other Awards.......................................................19
ARTICLE IX--ADJUSTMENTS..............................................................20
- -----------------------
Section 9.1 Affecting Stock...................................................20
Section 9.2 Affecting the Company.............................................20
ARTICLE X--CHANGES IN CONTROL........................................................21
- -----------------------------
Section 10.1 Consequences......................................................21
Section 10.2 Changes in Control................................................21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE XI--TERMINATION OF EMPLOYMENT.........................................23
- -------------------------------------
Section 11.1 Termination................................................23
Section 11.2 Non-Employees..............................................24
ARTICLE XII--TERMS AND CONDITIONS OF AWARDS...................................24
- -------------------------------------------
Section 12.1 Contracts and Legends......................................24
Section 12.2 Stock Registration and Rights..............................24
ARTICLE XIII--NONTRANSFERABILITY..............................................25
- --------------------------------
Section 13.1 Nonalienation of Benefits..................................25
ARTICLE XIV--AMENDMENT AND TERMINATION OF PLAN................................25
- ----------------------------------------------
Section 14.1 Board Authority............................................25
Section 14.2 Effect.....................................................25
ARTICLE XV--MISCELLANEOUS.....................................................25
- -------------------------
Section 15.1 No Contract of Employment..................................25
Section 15.2 Effective Date of Plan.....................................26
Section 15.3 Leaves of Absence..........................................26
Section 15.4 Governing Law..............................................26
Section 15.5 Successors.................................................26
Section 15.6 Notices....................................................26
Section 15.7 Unfunded Plan..............................................27
Section 15.8 Other Employee Benefit Plans...............................27
Section 15.9 Securities Law Restrictions................................27
Section 15.10 Compliance with Rule 16b-3.................................27
Section 15.11 Award Agreement............................................28
Section 15.12 Expenses...................................................28
</TABLE>
<PAGE>
GALILEO INTERNATIONAL, INC.
1997 STOCK INCENTIVE PLAN
ARTICLE I--INTRODUCTION
-----------------------
Section I.1 Establishment. Galileo International, Inc. (the "Company") has
adopted the Galileo International, Inc. 1997 Stock Incentive Plan (the "Plan"),
as set forth in this document, effective as of the consummation of the initial
public offering of common stock by the Company on July 30, 1997.
Section I.2 Purpose. The purposes of the Plan are to attract, retain and
motivate officers, other key and non-key employees, non-employee directors, and
consultants of the Company or any Subsidiary, by compensating them for their
contributions to the growth and profitability of the Company and by encouraging
their ownership of Company common stock. For this purpose, "Subsidiary" includes
any "subsidiary corporation" with respect to the Company, as defined in Code
Section 424(f), and any other corporation or entity in which the Company,
directly or indirectly, has an equity or similar interest and for which that
entity's coverage by the Plan is approved by the Company.
Section I.3 Structure. To achieve those purposes, the Plan is structured
to provide participating individuals with one or more forms of stock-based
benefits, including incentive stock options, nonqualified stock options, stock
appreciation rights, awards of restricted stock, performance share awards and
such other stock-based or cash awards as may from time to time be deemed
appropriate under the Plan.
Section I.4 Shares Available. The maximum aggregate number of shares of
common stock, par value $.01 per share, of the Company (the "Common Stock") as
to which awards may be granted under the Plan is 8,140,000 shares. The shares so
awarded may be authorized but unissued shares, treasury shares (issued shares
reacquired by the Company) or any combination of such shares, as determined from
time to time by the Committee authorized to administer the Plan, which Committee
is described in Article II.
Such total available number of shares shall be adjusted in accordance with
Article IX below. A share of Common Stock subject to an option which is
accompanied by tandem stock appreciation rights shall only be counted once (not
as two shares--an option share and an SAR share) towards that maximum. Any
shares underlying a substitute award, however shall not count against that
maximum limit. For this purpose, a substitute award is any award granted upon
assumption of, or in substitution for, outstanding awards previously granted
where the new grant is made in connection with a corporate transaction, such as
a merger, combination, consolidation or acquisition of property or stock. The
maximum limit shall be increased by:
(1) the number of shares subject to an Award (or portion thereof)
which lapses, expires or is otherwise terminated without the issuance of such
shares, and
<PAGE>
-2-
(2) the number of shares tendered, actually or by attestation, to pay
the exercise price of a stock option or other award.
In the event that any shares of Common Stock for any reason cease to be
subject to an award without being issued to or on behalf of a Participant in the
Plan, or are reacquired in any way by the Company from the recipient of an award
under the Plan, such shares shall be added to the remaining number of shares of
Common Stock then available for subsequent awards under the Plan. However,
restricted shares subject to a stock award that expires or is otherwise
forfeited under the Plan shall not be available for such re-use under the Plan
if those shares were dividend paying.
The following limits on available awards under the Plan shall also apply:
(1) in accordance with applicable regulations under Section 162(m) of
the Internal Revenue Code of 1986 (the "Code"), no participant may be awarded,
in any five-year period, stock options or stock appreciation rights which in
aggregate relate to more than 750,000 shares of Common Stock;
(2) in accordance with applicable Code Section 162(m) regulations, no
participant may be awarded restricted stock (subject to performance
requirements) or performance share units which in aggregate relate to more than
50,000 shares of Common stock for any one performance period; and
(3) aggregate awards of restricted stock that are not subject to
performance requirements shall not exceed 814,000 shares of Common Stock, and
such awards may be used only for special situations such as new hires or the
conversion of obligations, including cash denominated awards or payments under
other plans or arrangements maintained by the Company.
ARTICLE II--ADMINISTRATION
--------------------------
Section II.1 Administrative Committee. The Plan shall be administered by
the Compensation Committee of the Company's Board of Directors (the "Board"),
except to the following extent:
(1) To the extent required by law, the entire Board shall have
exclusive authority to grant and set the terms and conditions of stock options
for officers and any other individuals who are subject to Section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act");
(2) The Board may, from time to time, assume administration of the
<PAGE>
-3-
Plan or assign to another committee of one or more Company officers, employees
or directors responsibility for administration of all or designated portions of
the Plan;
(3) whatever Board or committee is responsible for administration of
the Plan, or any portion thereof, may delegate some or all of its authority;
provided, however, that the administration of stock options to officers and
other individuals who are subject to Section 16(b) of the Exchange Act shall at
all times rest with either the Board (as provided in (a) above) or a committee
designated by the Board consisting of not less than two individuals all of whom
are nonemployee directors of the Company, to the extent necessary to satisfy any
applicable conditions of Rule 16b-3, or any successor rule, under Section 16(b)
of the Exchange Act.
For purposes of this Plan, the term "Committee" shall refer to whatever
committee, entity or individual is then authorized to administer the subject
portion of the Plan.
Section II.2 Authority. The Committee shall have complete authority and
power, to be exercised in its discretion, to administer the Plan according to
its terms and applicable law, including, without limitation, the following
responsibilities:
(a) to select who shall be eligible for stock options, to grant stock
options and to set the terms and conditions of those options, to designate
options as incentive or nonqualified options and to determine what other stock-
based rights, if any, will be awarded to accompany particular options;
(b) to select who shall be eligible for stock appreciation rights, to
grant such rights and to set the terms and conditions of those awards;
(c) to select who shall be eligible for awards of restricted stock,
to grant such awards and to set the terms and conditions of those awards;
(d) to select who shall be eligible for performance share awards, to
grant such awards and to set the terms and conditions of those awards, including
establishing and amending performance periods, measures and objectives on which
such awards are based;
(e) to determine eligibility for and the terms and conditions of any
other Common Stock-based or other awards, and to make any such awards, under the
Plan;
(f) to interpret the Plan and all options, rights and awards and
agreements entered into in connection with awards made under the Plan;
(g) to make such rules, regulations and procedures (including benefit
<PAGE>
-4-
claim and appeal procedures) as it deems necessary or appropriate for
administering the Plan;
(h) to make such other determinations as it deems necessary or
appropriate for administering the Plan; and
(i) to employ such professional and clerical assistance as it deems
necessary for administering the Plan, including attorneys, consultants,
accountants and other persons (any or each of whom may also serve the Company).
The determinations of the Committee shall be final and binding on all interested
persons, subject to reconsideration only through the benefit claim and appeal
procedures established for the Plan.
Section II.3 Protection. The Committee shall be entitled to rely on:
(1) Company records relating to eligible individuals, to financial
performance and to other matters pertinent to the Plan, and
(2) advice, opinions and other work product of any professionals
employed by the Committee.
No member of the Committee shall be personally liable for any action,
determination or interpretation taken or made in good faith with respect to the
Plan or awards made thereunder, and all Committee members shall be fully
indemnified and protected by the Company for any and all reasonable expenses and
liabilities (including settlement payments) incurred by them with respect to
their conduct on the Committee, except their own willful misconduct.
ARTICLE III--ELIGIBILITY
------------------------
Section III.1 Eligibility for Stock Options. All employees, consultants
and nonemployee directors of the Company or any Subsidiary shall be eligible for
awards of stock options under the Plan. Options may be awarded from time to time
in the Committee's discretion to one or more officers or other employees in the
Company's Executive Group. Subject to Section 3.2, options may be awarded to
employees not in the Executive Group only when the Committee determines to award
stock options to all such employees of the same covered employer at the same
time. Nonemployee consultants and nonemployee directors shall be eligible for
stock options on the same individualized basis as members of the Executive
Group, except members of the Committee (not including those to whom limited
administrative authority has been delegated from the Board or Compensation
Committee) shall not be eligible for any awards under the Plan.
<PAGE>
-5-
For purposes of Plan eligibility, the term "Executive Group" of the Company
shall mean all officers of the Company and such other management employees of
the Company or any Subsidiary as the Committee shall designate from time to
time. For the same purpose, the term "Non-Executive Employees" shall refer to
all full-time employees of the Company or any Subsidiary who are not members of
the Executive Group. The term "Nonemployee Directors" shall mean those members
of the Board who are not employed by the Company or by any airline which is, and
was, a Company stockholder on July 30, 1997, the date of the closing of the
Company's initial public offering of common stock.
Section III.2 Eligibility for Other Awards. Only members of the Executive
Group and eligible individuals who both work and reside outside the United
States are eligible for any awards other than stock options under the Plan,
except that the Committee may award stock appreciation rights in tandem with any
grant of stock options to any individual who is eligible for stock options.
Foreign employees or other foreign eligible individuals may be granted
corresponding awards other than stock options, in the Committee's discretion, at
times when stock options are being awarded to their domestic United States
counterparts.
Awards to eligible individuals who work and reside outside the United
States may be granted and administered subject to additional or overriding terms
and conditions as made necessary by the laws of applicable foreign
jurisdictions. Such special provisions for foreign awards in particular
jurisdictions shall be appended to the Plan from time to time and are hereby
incorporated by this reference.
Section III.3 Factors to Consider. In determining who shall receive what
awards and when under the Plan, the Committee shall take into account the nature
of the individual's duties, the person's past, present and potential
contributions to the Company's growth and success, and such other factors as it
shall deem relevant for accomplishing the purposes of the Plan.
Awards may be granted singly, in combination or in tandem and may be made
in combination or in tandem with, in replacement of, or as alternatives to,
awards or grants previously made under this Plan or under any other plan or
agreement maintained by the Company (including its parents, its affiliates,
subsidiaries and successors). The Committee may grant to any eligible individual
a new award under this Plan, in exchange for the surrender and cancellation of
any prior award under this Plan or any other plan, having such terms and
conditions as the Committee deems appropriate.
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ARTICLE IV--AWARD OF STOCK OPTIONS
----------------------------------
Section IV.1 Option Awards. The Committee shall be authorized to grant
stock options from time to time to any one or more individuals or groups
eligible for stock options as described in Article III. Each option shall be
evidenced by a written agreement which generally shall specify the type of
option granted, the number of shares of Common Stock to which the option
pertains, the option exercise price, the terms for payment of the exercise
price, the vesting schedule for eligibility to exercise the option, the duration
of the option, the terms of any related stock appreciation rights or other
awards granted in tandem with the option, and such additional provisions as the
Committee shall determine. The terms and conditions of option grants and related
option agreements need not be identical or uniform, even as to options granted
at the same time to individuals within the same eligible class. Examples of
additional option provisions the Committee may choose to include, from time to
time, shall include, without limitation, a noncompetition agreement, a
confidentiality provision, and provisions for forfeiture in the event of
termination of employment involuntarily for Cause or voluntarily without Good
Reason, as those capitalized terms may be defined elsewhere in this Plan or as
may be later defined in a particular award agreement. The Committee also shall
have the power, in its discretion, to accelerate vesting and the dates for
exercise of any or all options, or any part thereof.
Section IV.2 Incentive Options. All options granted in accordance with
the following terms shall, unless otherwise specified by the Committee in the
option agreement, be incentive stock options intended and interpreted to comply
with Section 422 of the Code and the regulations thereunder.
(a) Exercise Price. Except for substitute awards (as described in
Section 1.4) and as provided below, the purchase price of the Common Stock
covered by each option shall be no less than 100% of the fair market value of
the Common Stock on the date the option is granted. That fair market value shall
equal the mean between the highest and lowest sales price of the Common Stock as
reported on the New York Stock Exchange for the date on which the option is
granted. If there are no sales on such date, then the fair market value shall be
the same mean value based on sales for the next preceding day for which sales
were reported on the NYSE. If the Common Stock is not so traded or quoted, then
fair market value shall be determined by the Committee in its sole discretion.
The exercise price shall be subject to adjustment as provided in Article IX. The
date the option is granted shall be the date on which the Committee adopts a
resolution granting the option, provided the recipient is promptly notified and
an option agreement is duly executed as of such date; otherwise the Committee
shall determine the grant date in a manner consistent with any applicable
requirements of the Code and regulations thereunder.
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If the recipient of a stock option grant is, at the time of the grant, the
owner (directly or by attribution) of stock of the Company (or its parents or
subsidiaries) possessing more than 10% of the combined voting power of all
classes of stock issued by any such corporation, then the exercise price instead
shall be at least 110% of the fair market value of the Common Stock covered by
the option, determined in the same manner as specified above. In no event may
the exercise price for any option awarded under the Plan be less than the par
value of the Common Stock covered by the option.
(b) Maximum Term. Subject to earlier termination as provided in
Articles IX - XI, each stock option shall expire on the date set in the
applicable option agreement. No option may continue more than ten (10) years
from the date it is granted. However, no option to any 10% owner described in
(a) above may continue more than five (5) years from the date it is granted.
(c) Time of Exercise. Subject to acceleration at the Committee's
discretion or in the event of a change in control, as defined in Section 10.2,
each stock option may be exercised, in whole or in part, within such periods or
after such dates (but only during its term) as set forth in the applicable
option agreement. In no event, however, will any option be exercisable before
the one (1) year anniversary of the date of its grant.
Unless otherwise required by the option agreement, multiple options awarded
to the same individual need not be exercised in the order in which they were
granted, but the individual exercising an option must specify, at the time of
exercise, which option or portion of an option is being exercised. Absent such
designation by the individual, his options will be treated as though exercised
in chronological order.
(d) Limits on Incentive Stock Option Awards. The aggregate fair
market value (determined at the time of grant in the manner described in 4.2(a)
above) of Common Stock covered by any and all incentive stock options which
become exercisable for the first time by any particular individual during a
calendar year shall not exceed $100,000. Incentive stock options granted under
any other plans of the Company, its parents, subsidiaries, predecessors or
successors also shall be counted for purposes of applying this $100,000 limit.
To the extent any options granted under this Plan cause that limit to be
exceeded for any particular individual during any calendar year, such excess
portion of the option(s) shall be considered a nonqualified stock option rather
than an incentive stock option. The most recently granted options shall be
converted to nonqualified status for this purpose before any longer-standing
options. Other than this change to nonqualified status, the option agreement for
any such affected option, or portion thereof, shall remain in full force and
effect.
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(e) Payment. The exercise price shall be paid in full at the time of
exercise. Payment may be made, subject to the Committee's approval:
(i) in cash, using a personal, certified or cashier's check or
other instrument acceptable to the Committee;
(ii) in shares of Common Stock (previously owned for a period of
at least six (6) months, if so required by the Committee),
valued on the date of exercise for this purpose using the
closing sales price for the last business day preceding the
exercise date;
(iii) by surrender of any other outstanding awards under this
Plan or any other plan of the Company (or any parent,
subsidiary, predecessor or successor) to such extent and in
such manner as is acceptable to the Committee; or
(iv) by any combination of those three methods.
The Committee may allow and approve arrangements for "cashless" exercise,
using a broker acceptable to the Committee, for payment of stock options and/or
of any tax withholding obligations of the Participant. In accordance with
Section 4.2(g) below, the Company may, but is not obligated to, issue loans to
selected substantial option holders, on such terms and conditions as it deems
appropriate, to provide them with cash for exercising options under the Plan.
(f) Reload. In the discretion of the Committee, the grant of any
option may be accompanied by a reload option. A reload option may be granted for
use by any option holder who satisfies all or part of the exercise price with
shares of Common Stock.
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The reload option represents an additional option to acquire the same number of
shares of Common Stock as is used to pay the exercise price on the original
option. The reload option will be subject to all the same terms and conditions
as the original option, except that:
(i) the exercise price of the shares of Common Stock subject to
the reload option will be determined using the mean value
(or such other method for determining fair market value as
provided in Section 4.2(a)) on the date the original option
is exercised, and
(ii) the reload option will conform to all provisions of the
Plan in effect at the time the original option is
exercised.
(g) Loans. The Company may make loans to such option holders as the
Committee, in its discretion, recommends to the Company (including an option
holder who is an officer or director of the Company) in connection with the
option holder's exercise of one or more options granted under the Plan. No such
loan shall be made where it would constitute a "modification" (as defined in
Code Section 424) of any incentive stock option.
Such loans shall be subject to the following terms and conditions and such
other terms and conditions as the Committee shall determine and which are not
inconsistent with the Plan. Such loans shall bear interest at such rates as the
Committee shall determine from time to time, which rates may be below then
current market rates (except in the case of incentive stock options). In no
event may any such loan exceed the fair market value, at the date of exercise,
of the shares covered by the option, or portion thereof, exercised by the option
holder. No loan shall have an initial term exceeding five years, but any such
loan may be renewable at the discretion of the Committee. When a loan shall have
been made, shares of Common Stock having a fair market value at least equal to
the principal amount of the loan shall be pledged by the option holder to the
Company as security for payment of the unpaid balance of the loan. Every loan
shall comply with all applicable laws, regulations and rules of the Board of
Governors of the Federal Reserve System and any other governmental agency having
jurisdiction.
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(h) Employee Status. Except as provided in Article XI below, no
incentive stock option may be exercised at a time when the option holder is not
an employee of the Company, its parent, subsidiary or successor, as determined
in accordance with applicable regulations under Code Section 421.
(i) Minimum Exercise Amount. Subject to the terms of the option
agreement, during any period in which an option may be exercised the option
holder may exercise his option to purchase any or all of the shares of Common
Stock as to which the option has become exercisable.
Section IV.3 Nonqualified Stock Options. The provisions of Section 4.2
above shall apply equally to the award of nonqualified stock options under the
Plan, with the following exceptions:
(a) Exercise Price. If the Committee so chooses, the exercise price
of a nonqualified stock option can be set at less than the fair market value of
the shares of Common Stock covered by the option, determined as of the date of
the grant.
(b) Maximum Term. The term of a nonqualified stock option, as set
forth in the option agreement, need not be limited to the five (5) and ten (10)
year maximums stated in Section 4.3(a) above. In no event, however, shall the
term exceed twenty-five (25) years from the date of the grant.
(c) Employee Status. Nonqualified stock options may be awarded to
eligible individuals under Section 3.1 who are not employees of the Company, or
its parent, Subsidiary or any successor. Hence, at the time of exercise the
option holder also need not be such an employee. However, such options shall
expire shortly after the option holder ceases his or her service relationship
with the Company as though the option holder had been an employee and his
employment terminated when the service relationship ended, applying the rules
stated in Article XI.
(d) Taxation. Upon exercise of a nonqualified stock option, any
federal, state or local income tax withholding obligations of the Company
relating to income becoming taxable to the option holder in connection with such
exercise shall be satisfied:
(i) by withholding any portion of the cash benefit, or
(ii) by withholding from the option holder's allotment of
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purchased shares a number of full shares of Common Stock.
Such withholding shall be sufficient in fair market value to meet the
amount of such withholding obligation. The Company shall pay cash to the option
holder for the value of any fractional share remaining purchased but withheld
and not needed to satisfy the withholding amount. Such tax withholding may be
satisfied instead by any other method authorized in Section 4.2(e) or 6.5 for
such purpose.
For purposes of measuring any income tax withholding and reporting
obligations arising in connection with use of a "cashless" exercise method in
connection with the exercise of stock options or any other award under this
Plan, where the shares underlying the award are all sold (an "exercise and sale"
or "sell to cover" situation) the fair market value of the shares at time of
exercise shall be determined from the actual sale price, and where the shares
underlying the award are not all sold (an "exercise and hold" situation) that
fair market value shall be determined from the closing sale price of the Common
Stock as reported on the NYSE for the business day next preceding the exercise
date or, if the Common Stock is not so traded, by such other method as the
Committee determines in its discretion.
ARTICLE V--STOCK APPRECIATION RIGHTS
Section V.1 SAR Awards. The Committee shall be authorized to grant awards
of stock appreciation rights ("SARs") from time to time, in accordance with this
Article, to any one or more of the same individuals or groups who are eligible
for stock options as described in Article III, subject to Section 3.2. Each SAR
will be evidenced by a written agreement specifying such features as the number
of shares of Common Stock to which the SAR pertains, the base price per share,
the vesting schedule for eligibility to exercise the SAR, the duration of the
SAR, whether the SAR is freestanding or is granted in tandem with a stock
option, the terms for payment and settlement of the SAR benefits upon exercise,
and such additional provisions as the Committee shall determine, including the
sort of additional provisions and discretionary acceleration as may apply to
stock options under Section 4.1 above. The terms and conditions of SAR awards
and related SAR agreements (which may consist of part of the stock option
agreement where the SAR is granted in tandem with a stock option) need not be
identical or uniform even as to SARs granted at the same time to individuals
within the same eligible class. SAR awards may be granted in tandem with stock
option awards or may be freestanding.
Section V.2 Price. The base price per share for any SAR award shall be
set by the Committee at not less than 100% of the fair market value per share of
the Common Stock which is subject to the SAR. That fair market value shall be
determined in accordance with Section 4.2(a) for the date on which the SAR is
granted. The date an
<PAGE>
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SAR is granted shall be the date on which the Committee adopts a resolution
awarding the SAR, provided the recipient is promptly ratified and an SAR
agreement is duly executed as of such date; otherwise the Committee shall
determine and declare the grant date in the SAR agreement.
Section V.3 Number of Shares. The number of shares of Common Stock to
which the SAR is subject shall be determined by the Committee and stated in the
SAR agreement. If the SAR is granted in tandem with a stock option award, the
number of shares covered by the SAR shall equal the number of shares covered by
the stock option.
Section V.4 Maximum Term. Subject to earlier termination or acceleration
as provided in Articles IX - XI, each SAR shall expire on the date set by the
Committee in the applicable SAR agreement. No SAR may continue more than twenty-
five (25) years from the date it is granted. Each tandem SAR shall have the same
duration as the stock option to which it is linked.
Section V.5 Time of Exercise. Subject to acceleration at the Committee's
discretion, or as provided in Articles IX - XI below, each SAR may be exercised,
in whole or in part, within such periods or after such dates (but only during
its term) as set forth in the applicable SAR agreement. In no event, however,
will any SAR be exercisable before the one (1) year anniversary of the date of
its grant.
Unless otherwise required by the SAR agreement, multiple SARs awarded to
the same individual need not be exercised in the order in which they were
granted, but the individual exercising an SAR must specify, at the time of
exercise, which SAR or portion of an SAR is being exercised. Absent such
designation by the individual, his SARs will be treated as though exercised in
chronological order.
If a freestanding SAR has not been exercised, or neither a tandem SAR nor
the related stock option has been exercised, before the end of the day on which
the SAR ceases to be exercisable, then the SAR shall be deemed exercised in full
on such expiration date, provided that the fair market value (as determined
under Section 5.6 below) of the SAR shares exceeds:
(1) the base price set for the freestanding SAR, or
(2) the option exercise price in the case of a tandem SAR.
A tandem SAR shall be exercisable only at such time(s) as the stock option
to which it relates is exercisable, and shall be subject to the restrictions,
conditions and other terms of exercise that are applicable to that stock option.
Upon the exercise of a tandem SAR, the unexercised option, or the portion of the
option to which the exercised portion of the tandem SAR is related, shall
simultaneously expire and shall be surrendered
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unexercised by the tandem SAR holder. Similarly, the exercise of all or any part
of the stock option shall cause the simultaneous expiration of the corresponding
portion of the tandem SAR, which shall be surrendered unexercised by the holder.
The exercise of any part of a tandem SAR shall cause the corresponding option to
expire with respect to the same number of shares of Common Stock as was subject
to the exercised portion of the SAR, and the same one-to-one relationship holds
true for shares under a tandem SAR expiring when all or part of the
corresponding stock option is exercised.
Notwithstanding the foregoing:
(1) no right shall be exercisable by an SAR holder who is subject to
Section 16(b) of the Exchange Act without the prior consent of the Committee if
such exercise would take place within one year after the date of the initial
sale of shares of Common Stock of the Company to the public; and
(2) a tandem SAR related to an incentive stock option may only be
exercised if the fair market value of a share of Common Stock on the exercise
date exceeds the option price.
Section V.6 Benefit Amount. Upon exercise of an SAR, its holder shall be
entitled to receive from the Company a benefit having an aggregate value equal
to:
(a) the excess of:
(i) the fair market value on the exercise date of one share of
Common Stock, over
(ii) the base price per share of the freestanding SAR or the
option exercise price where the SAR was granted in tandem
with a stock option, as appropriate, times
(b) the number of shares of Common Stock with respect to which the
SAR at that time is being exercised.
Such benefit, once so determined, shall then be adjusted (before payment) for
any tax withholding in accordance with Section 5.7 below.
The fair market value of a share of Common Stock on the date of exercise of
an
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SAR shall be determined in accordance with Section 4.2(a), subject to using the
methods described in Section 4.3(d) where appropriate. The date of exercise
shall be the date on which the SAR holder releases for delivery to the Committee
his written election to exercise, provided delivery follows promptly in the
normal course; otherwise the Committee shall determine the exercise date based
on consideration of all relevant facts and circumstances.
Section V.7 Payment of the Benefit. The benefit determined under Section
5.6 above may be paid in the form of cash, full shares of Common Stock having
the equivalent fair market value (with cash paid in lieu of any fractional
share) or any combination thereof, as elected by the SAR holder. If the SAR
holder is subject to Section 16(b) of the Exchange Act, then no part of his
benefit may be paid in cash unless:
(1) his exercise of the SAR and his election to receive cash both
occur more than six (6) months after the grant date of the SAR and both occur
during the window period beginning on the third business day following the date
of release by the Company for publication of its quarterly or annual statement
of sales and earnings and ending on the twelfth business day following such
release date, and
(2) the Committee approves such cash form of payment.
Upon exercise of an SAR, any federal, state or local income tax withholding
obligations of the Company relating to income becoming taxable to the SAR holder
in connection with such exercise shall be satisfied by withholding from the
benefit payment, in cash or an appropriate value of Common Stock as determined
by the Committee, a sufficient amount to satisfy the tax withholding obligation.
The benefit shall consist of the net amount after such tax withholding. Tax
withholding may be satisfied instead by any other method described for that
purpose in Section 4.3(d) or 6.5.
ARTICLE VI--STOCK AWARDS
------------------------
Section VI.1 Stock Awards. The Committee shall be authorized to grant
stock awards from time to time, in accordance with this Article, to any one or
more of the same individuals or groups who are eligible for stock options as
described in Article III, subject to Section 3.2. Each stock award shall be
evidenced by a written agreement specifying such features as the number of
shares of Common Stock being awarded, the price per share (if any), whether the
stock award is freestanding or is granted in tandem with or in substitution of
any other award under this Plan, and such other terms and conditions as the
Committee shall determine, including any restrictions on vesting of the award
and on transferability of the shares so awarded. The terms and conditions of
stock awards may vary with each individual recipient and with each award.
<PAGE>
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Section VI.2 Grant or Sale. Common Stock may be awarded by grant or sale
to any eligible individual, either separately from or in tandem with any other
award under this Plan. If granted, the award shall be considered a bonus for
services rendered to the Company. If offered for sale, the Committee shall set
the purchase price at the date the award is made, and such price may be less
than the fair market value of the Common Stock on such date. The Committee shall
set the other terms of the offer, including the exercise period and payment
terms.
If the award is made in tandem with another award under the Plan:
(1) the exercise of the stock award (if an offer to purchase Common
Stock) shall cause the simultaneous forfeiture of the tandem award as to the
same number of shares as are then purchased under the stock award;
(2) the lapse of restrictions on vesting of the stock award shall
cause the simultaneous forfeiture and expiration of the tandem award as to the
number of shares of Common Stock which then became vested; and
(3) any exercise of the tandem award shall cause the simultaneous
forfeiture of any unvested or unexercised rights under the related stock award
as to the same number of shares of Common Stock as were subject to the exercise
of the tandem award.
Stock awards not granted or sold in tandem with another award under the Plan
shall have no effect on, and shall not be affected by, the exercise of any other
award under the Plan.
Section VI.3 Issuance of Stock. Upon the grant of a stock award, or upon
the exercise of a stock award which constituted an offer to sell, a stock
certificate representing the number of shares of Common Stock so awarded shall
be registered in the name of the award recipient but shall be held in custody by
the Secretary of the Company for that individual's account until such time as
those shares are forfeited, reacquired by the Company, or any restrictions on
their vesting lapse; as provided in Section 6.4 below.
Upon the release of shares of Common Stock from custody due to the lapse of
restrictions, the Secretary of the Company shall deliver to the award recipient
(or the recipient's beneficiary or estate, as the case may be), as directed by
the Committee, a certificate for the number of shares so released. The Company
shall not be required to deliver any fractional share but will pay in lieu
thereof cash equal to the fair market value (using the closing price of the
Common Stock as of the date restrictions lapsed) of such fractional share.
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Section VI.4 Shareholder Rights. The recipient of a stock award, upon
purchasing Common Stock pursuant to the award or upon grant of an award without
a purchase price, generally shall have the rights and privileges of a
stockholder to the shares of Common Stock being held in custody for the
recipient under Section 6.3 above, including the right to vote such shares,
except that the following restrictions will apply:
(1) the recipient shall not be entitled to delivery of the stock
certificates until the Committee instructs the Secretary of the Company that all
appropriate restrictions and conditions for such delivery have lapsed or been
satisfied;
(2) none of the shares awarded subject to any restrictions may be
sold, transferred, assigned, pledged or otherwise encumbered or disposed of by
or in respect of the award recipient until such restrictions on vesting and
transferability, and any other conditions specified by the Committee, have
lapsed or been satisfied; and
(3) all of the shares awarded subject to any restrictions on vesting
and transferability, and all rights of the award recipient to such shares, shall
be forfeited and terminated without further obligation on the part of the
Company unless the award recipient has remained in service to the Company (or
its parents, subsidiaries or successor) until the lapse of all restrictions and
the satisfaction of all other conditions applicable to such shares as prescribed
by the Committee.
At the discretion of the Committee, dividends with respect to any shares being
held in custody under this Article may be either currently paid to the award
recipient or withheld by the Company for the recipient's account, and interest
may be credited on the amount of cash dividends withheld at a rate and subject
to such terms as determined by the Committee. Upon the forfeiture of any shares
still held in custody, such shares and any withheld dividends related thereto
shall be transferred to the ownership and account of the Company without further
action by the award recipient who incurred the forfeiture. Any shares on which
dividends are currently paid may not, if later forfeited, be available for reuse
in subsequent awards under the Plan.
Section VI.5 Purchase and Taxation. No payment will be required for an
award recipient upon the issuance or delivery of any shares under a stock award,
except:
(1) any purchase price prescribed by the Committee, and
(2) any amount necessary to satisfy applicable federal, state or
local tax requirements
shall be withheld or paid promptly upon notification to the Committee of the
amount due.
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The Committee may permit such amounts to be paid in:
(1) shares of Common Stock previously owned (for at least six (6)
months, if the Committee so requires) by the award recipient,
(2) withholding a portion of the shares of Common Stock that would
otherwise be distributed to the award recipient in connection with the award, or
(3) a combination of cash and shares of Common Stock.
Unless otherwise approved by the Committee, an election by an award recipient
who is subject to Section 16(b) of the Exchange Act to use shares of Common
Stock withheld from his award distribution under clause (b) above shall be made
only during the window period described in Section 5.7(a) above and the
Committee shall have sole discretion to consent to or disapprove of any such
election (which consent or disapproval may be given at any time after the
election to which it relates).
Section VI.6 Forfeiture or Resale. Any share of stock awarded under this
Article shall be forfeited, and any share of Common Stock sold under this
Article shall, at the Company's option, be resold to the Company for an amount
equal to the purchase price paid therefore, and in either case such forfeited or
resold shares shall revert to the Company, if:
(1) the award recipient violates any noncompetition or
confidentiality provision of his stock award agreement, or breaches any other
provision of said agreement;
(2) the award recipient's employment or service with the Company (or
its parents, subsidiaries and successors) terminates before restrictions on his
rights to vesting and transferability of the shares have lapsed, which date
cannot be earlier than the first anniversary of his award; or
(3) the award recipient's employment with the Company (or its
parents, subsidiaries and successors) terminated for Cause.
Section VI.7 Adjustments. Stock awards shall be adjusted, in accordance
with Section 9.1, to reflect any changes in the number of shares, class or
features of Common Stock occurring while the award remains in effect. Thus,
additional or replacement shares of Common Stock shall be made subject to an
outstanding stock award as needed upon a material change in the Common Stock to
give that award the same proportionate Common Stock rights as it had when first
awarded.
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The Committee may accelerate the vesting or lapse of restrictions on stock
awards at any time in its sole discretion.
ARTICLE VII--PERFORMANCE SHARE AWARDS
-------------------------------------
Section VII.1 Awards Authorized. The Committee shall be authorized to
grant performance share awards from time to time, in accordance with this
Article, to any one or more of the same individuals or groups who are eligible
for stock options as described in Article III, subject to Section 3.2. Each
performance share award shall be governed by a written agreement specifying such
features as the number of shares of Common Stock being awarded, whether the
award is freestanding or is granted in tandem with or in substitution of any
other award under this Plan, the performance targets, goals, periods and
measures for determining whether, when and to what extent the shares subject to
the award will be delivered to the award recipient, and such other terms and
conditions as the Committee shall determine, including any restrictions on
vesting of the award and transferability of the shares so awarded. The terms and
conditions of performance share awards may vary with each individual recipient
and with each award.
Section VII.2 Performance Shares. Performance shares represent the right
to receive shares of Common Stock, by grant from the Company, at a future time,
provided the performance goals specified in the award agreement are satisfied.
The award agreement may provide for grants of less than all the shares made
subject to the award where the targeted performance goals are not met but lesser
stated goals are met. No stock certificate shall be held in custody during the
performance period as with stock awards during the restriction period. The award
recipient shall have no rights of a shareholder with respect to any shares
subject to a performance share award unless and until such shares are actually
delivered in accordance with the terms of the award agreement and this Plan.
Section VII.3 Performance Goals. The Committee shall determine the
period over which performance shall be measured, the measures of performance,
the performance goals, the weighting of multiple performance goals where
applicable, and the levels of performance at which all or some of the shares
subject to the award will become deliverable. The Committee shall have sole
discretion to modify performance goals in response to changing circumstances
during the term of an award, to determine the extent to which goals have been
met and to determine the number of shares, if any, to be distributed under an
award in recognition of the achieved levels of performance. Performance goals
may be based on Company-wide financial performance, based on performance by
smaller units of the Company's business, based on individual performance, or
based on any combination of such areas of performance. Performance periods shall
not be based on the individual award recipient's duration of employment,
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but if an award recipient terminates employment before the end of a performance
period, that recipient may, if the award agreement so provides, receive a pro
rata share of any benefit that is earned for the entire performance period based
on the relative duration of his employment under an award in that performance
period. Any shares not earned and distributable under the terms of a performance
share award shall be forfeited and remain with the Company for reuse under this
Plan.
Section VII.4 Settlement in Cash or Stock. Within sixty (60) days after
the end of the performance period, or if later within thirty (30) days after
consolidated financial statements for such period are completed and accepted by
the Company, the Committee shall determine and declare any shares of Common
Stock earned and deliverable under any performance share awards for that
performance period. Distribution of such declared benefit shall be made as
promptly as practicable thereafter; provided, however, that each award recipient
entitled to a distribution may receive such benefit all or in part in cash equal
to the fair market value of the Common Stock, determined by its closing price on
the NYSE as of the last day of the performance period. The Committee has sole
discretion to determine the extent to which such benefit shall be distributed in
cash or in shares of Common Stock.
Section VII.5 Taxation. Any amount necessary to satisfy applicable
federal, state or local tax requirements shall be withheld and paid promptly
upon the award recipient's notification to the Committee of the amount due. Such
tax withholding and payment shall be made in the same manner as provided under
Section 4.3(d) or 6.5 above.
ARTICLE VIII--OTHER AWARDS
Section VIII.1 Other Awards. The Committee has the authority and
discretion to declare and make from time to time other forms of awards based on
Common Stock rights and values, on such terms and conditions as the Committee
deems appropriate and consistent with the purposes of this Plan and the
interests of the Company. Such awards may provide for deferral of compensation
through equity-based units, for cash payments based in whole or in part on the
value or future value of Common Stock, for the grant or acquisition (currently
or in the future) of Common Stock, for any combination of such awards, or for
any other equity-related awards. Other awards may also include cash benefits
based on one or more criteria determined by the Committee which may be unrelated
to the value of the Common Stock. Each award shall be evidenced and governed by
a separate award agreement.
<PAGE>
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ARTICLE IX--ADJUSTMENTS
Section IX.1 Affecting Stock. Appropriate adjustment in the maximum number
of shares of Common Stock issuable pursuant to the Plan, the number of shares
subject to awards under the Plan, the exercise price with respect to options and
tandem SARs and the base price with respect to freestanding SARs, shall be made
to give effect to any increase or decrease in the number of shares of issued
Common Stock resulting from a subdivision or consolidation of shares whether
through reorganization, recapitalization, stock split, reverse stock split,
spin-off, split-off, spin-out, or other distribution of assets to stockholders,
stock distributions or combination of shares, assumption and conversion of
outstanding awards due to an acquisition by the Company of the stock or assets
of any other corporation, payment of stock dividends, other increase or decrease
in the number of shares with respect to which awards may be granted under the
Plan, or in the number of shares subject to outstanding awards, but such
adjustment shall be made only in the event that such adjustment, together with
all respective prior adjustments which were not made as a result of this
provision, involves a net change of more than ten (10) percent:
(1) from the number of shares of Common Stock with respect to which
awards may be granted under the Plan, or
(2) with respect to each outstanding option, from the respective
number of shares of Common Stock subject thereto on the date of grant thereof.
The Committee shall have the discretion, but not the obligation, to make
adjustments involving a net change of ten (10) percent or less.
If the number of shares of Common Stock subject to an option has been
adjusted pursuant to this paragraph, and tandem SARs or freestanding SARs have
been granted to the holder of such option, or restricted stock has been granted
or sold to the holder of such option in tandem with the grant of such option,
then the number of such SARs or of such shares of restricted stock shall be
adjusted as necessary to maintain the ratio between the number of shares subject
to such option and the number of such SARs or shares of restricted stock. The
decision of the Committee as to the amount and timing of any such adjustments
shall be conclusive.
Section IX.2 Affecting the Company. In the case of dissolution of the
Company,
(1) every option and SAR granted to an Executive Group member
outstanding hereunder shall terminate, notwithstanding any restrictions and
conditions that may be contained in his option agreement, and
<PAGE>
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(2) the restrictions and conditions on restricted stock held by such
employee shall lapse and the holders of such restricted stock shall have all the
rights of a stockholder with respect to participation in the dissolution.
Each such option and SAR holder shall have 30 days prior written notice of such
event, during which time he shall have a right, subject to the $100,000 limit in
Section 4.2(d), to exercise his partly or wholly unexercised option and SAR
(without regard to installment exercise limitations, if any).
ARTICLE X--CHANGES IN CONTROL
Section X.1 Consequences. In the event of termination of a participant's
employment by the Company without Cause or, in certain cases, by the participant
for Good Reason, as such terms may be defined in the applicable award
agreements, within two years of a change in control, all such participant's
outstanding stock options and stock appreciation rights will become fully
exercisable, all restrictions and conditions of all stock awards then held by
such participant will lapse, and all performance share awards held by such
participant will be deemed to have been fully earned. In the case of a change in
control caused by a merger or consolidation involving the Company, but in which
the Company either is not the surviving corporation or becomes a wholly owned
subsidiary of another entity, outstanding and unexercised stock options held by
a participant will be converted into options to acquire common stock of the
survivor on substantially the same terms and conditions as the original option,
with appropriate adjustments as to the number and kind of shares and exercise
prices.
Section X.2 Changes in Control. For purposes of this Plan, a "change in
control" shall be deemed to have occurred when:
(a) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of the Airline
Shareholders (an "Acquiring Person"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 33_% of the then outstanding voting stock of the Company (49% of the then
outstanding voting stock of the Company if such person or group includes any of
the Airline Shareholders);
(b) the stockholders of the Company and a majority of the non-
employee directors of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of
<PAGE>
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the surviving entity) at least 66_% of the combined voting power of the voting
securities of the Company, such surviving entity or the parent of such surviving
entity outstanding immediately after such merger or consolidation;
(c) the stockholders of the Company approve a plan of reorganization
(other than a reorganization or liquidation under the United States Bankruptcy
Code or complete liquidation of the Company) or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
(d) during any period of two consecutive years (beginning on or after
the effective date of the Plan), individuals who at the beginning of such period
constitute the Board and any new director (other than a director who is a
representative or nominee of an Acquiring Person) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, no longer constitute a majority of the
Board; provided, however, that a change in control shall not be deemed to have
occurred in the event of:
(i) a sale or conveyance in which the Company continues as a
holding company of an entity or entities that conduct the
business or businesses formerly conducted by the Company if
such sale or conveyance does not materially affect the
beneficial ownership of the Company's capital stock; or
(ii) any transaction undertaken for the purpose of
reincorporating the Company under the laws of another
jurisdiction, if such sale or conveyance does not materially
affect the beneficial ownership of the Company's capital
stock.
<PAGE>
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For the purpose of this definition of change in control, "Airline Shareholder"
means any of British Airways, KLM Royal Dutch Airlines, SAirGroup, United
Airlines, or US Airways.
ARTICLE XI--TERMINATION OF EMPLOYMENT
Section XI.1 Termination. In the event that the employment of an employee
to whom an award has been granted under this Plan shall be terminated, such
outstanding award may be exercised (to the extent the employee was entitled to
do so at the termination of his employment), subject to all applicable
provisions of this Plan, by the earlier of:
(1) ninety (90) days after such termination date, or
(2) the date such award would otherwise expire according to the award
agreement.
The earlier of those dates shall become the new expiration date of the award and
the award shall become vested and exercisable as of such employment termination
date. However, if the award involves restricted stock, any shares as to which
the restrictions have not lapsed as of the date the employee's employment
terminates shall be forfeited immediately and reclaimed by the Company.
If termination of employment is due to the employee's total disability,
then the ninety (90) day period for exercise under clause (a) above shall
instead be one year. If the Participant dies either after termination of
employment but before exercising any outstanding award, or while employed, the
award shall vest upon the Participant's death and then remain exercisable:
(1) in the case of an incentive stock option, within the remainder of
the ninety (90) day or one year (if the Participant had a total
disability) period the Participant had to exercise the option
following termination of employment; or
(2) in the case of a nonqualified stock option, until the expiration
of one year from the Participant's death.
The extended post-termination of employment exercise rights described in this
paragraph shall apply only to stock option awards and any tandem awards of stock
appreciation rights. The employee's designated beneficiary (or, if none, the
deceased employee's estate or the recipient of an applicable bequest under that
estate) may exercise an award during the remaining exercise period following the
employee's death.
<PAGE>
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For this purpose, "total disability" shall mean the permanent inability of
an employee, as a result of accident or illness, to perform substantially all of
the duties pertaining to such employee's occupation or employment for which the
employee is suited by reason of previous training, education and experience, as
determined by the Committee. A determination made under any long-term disability
benefit plan covering the employee that the employee is disabled for purposes of
entitlement to benefits under that plan may be relied upon by the Committee as
sufficient evidence of "total disability" for purposes of this Plan.
Section XI.2 Non-Employees. The service for the Company (or any of its
parents, affiliates, Subsidiaries or successors) of a non-employee who has
received an award under the Plan, such as a consultant or non-employee director,
shall be treated under this Plan as though it were employment by an employee of
the Company under this Article. Thus, Sections 12.1 and 12.2 also shall apply to
such non-employees in the event their service is terminated.
ARTICLE XII--TERMS AND CONDITIONS OF AWARDS
Section XII.1 Contracts and Legends. Each key employee shall agree to such
restrictions and conditions and other terms in connection with the exercise of
any award, including restrictions and conditions on the disposition of the
Common Stock acquired upon the exercise, grant or sale thereof, as the Committee
may deem appropriate. The certificates delivered to a participant or to the
Secretary of the Company evidencing the shares of Common Stock acquired upon
exercise of an award may, and in the case of a grant or a sale under a stock
award shall, bear a legend referring to the restrictions and conditions and
other terms contained in the respective option agreement or award agreement and
the Plan, and the Company may place a stop transfer order with its transfer
agent against the transfer of such shares. If requested to do so by the
Committee at the time of exercise of an option or sale of restricted stock, each
participant shall execute a written instrument stating that he is purchasing the
Common Stock for investment and not with any present intention to sell the same.
Section XII.2 Stock Registration and Rights. The obligation of the Company
to sell and deliver Common Stock under the Plan shall be subject to all
applicable laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the Securities
Act of 1933, if deemed necessary or appropriate by the Committee, for any of the
Common Stock, options, SARs, and other securities reserved for issuance or that
may be offered under the Plan. A participant shall have no rights as a
stockholder with respect to any shares covered by an option granted to, or
exercised by, him until the date of delivery of a stock certificate to him for
such shares, or with respect to restricted stock granted or sold to him under a
stock award, until
<PAGE>
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the date of delivery of a stock certificate representing such vested restricted
stock to the Secretary of the Company on his behalf. No adjustment other than
pursuant to Article IX hereof shall be made for dividends or other rights for
which the record date is prior to the date such stock certificate is delivered.
ARTICLE XIII--NONTRANSFERABILITY
Section XIII.1 Nonalienation of Benefits. Except in connection with
unrestricted Common Stock issued pursuant to an award, awards granted under the
Plan and any rights and privileges pertaining thereto, may not be transferred,
assigned, pledged or hypotheticated in any manner, by operation of law or
otherwise, other than by will or by the laws of descent and distribution and
shall not be subject to execution, attachment or similar process. The granting
of an option or other award shall impose no obligation upon the award recipient
to exercise such option or award.
ARTICLE XIV--AMENDMENT AND TERMINATION OF PLAN
Section XIV.1 Board Authority. The Board may at any time terminate,
suspend or modify (by written amendment) the Plan, without the authorization of
stockholders to the extent allowed by law, including (without limitation) any
rules issued by the Securities and Exchange Commission under Section 16 of the
Exchange Act. The Committee may amend in writing or terminate any award
agreement made under the Plan, to the extent not yet exercised.
Section XIV.2 Effect. No termination, suspension or modification of the
Plan shall adversely affect any right acquired by any participant under an award
granted before the date of such termination, suspension or modification, unless
such participant shall consent; but it shall be conclusively presumed that any
adjustment for changes in capitalization as provided for herein does not
adversely affect any such right. Any member of the Board who is an officer or
employee of the Company shall be without vote on any proposed amendment to the
Plan, or on any other matter, which might affect that member's individual
interest under the Plan.
ARTICLE XV--MISCELLANEOUS
Section XV.1 No Contract of Employment. Neither the adoption of the Plan
nor the grant of any award shall be deemed to obligate the Company or any
Subsidiary to continue the employment of any employee for any particular period,
nor shall the granting of an award constitute a request or consent to postpone
the retirement date of any employee.
<PAGE>
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Section XV.2 Effective Date of Plan. The Plan shall become effective upon
adoption by the Board; provided, however, that it shall be submitted for
approval by the holders of a majority of the outstanding shares of common stock
of the Company present, or represented, and entitled to vote at a stockholders'
meeting held not later than 12 months thereafter, and awards granted prior to
such stockholder approval shall become null and void if such stockholder
approval is not obtained.
Section XV.3 Leaves of Absence. The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan regarding any leave of absence taken by an employee who is the recipient of
any award. Without limiting the generality of the foregoing, the Committee shall
be entitled to determine:
(1) whether or not any such leave of absence shall constitute a
termination of employment within the meaning of the Plan, and
(2) the impact, if any, of any such leave of absence on awards under
the Plan theretofore made to any employee who takes such leave of absence.
Section XV.4 Governing Law. The Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of the State of
Delaware and, where applicable, the federal laws and regulations referenced
herein.
Section XV.5 Successors. In the event of a sale of substantially all of
the assets of the Company, or a merger, consolidation or share exchange
involving the Company, all obligations of the Company under the Plan with
respect to awards granted hereunder shall be binding on the successor to the
transaction. Employment of an employee with such a successor shall be considered
employment of the employee with the Company for purposes of the Plan.
Section XV.6 Notices. Notices given pursuant to the Plan shall be in
writing and shall be deemed received when personally delivered or five days
after mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid. Notice to the Company shall be
directed to:
Senior Vice President, Human Resources and Corporate Relations
Galileo International, Inc.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
with a copy to: General Counsel, at the same address.
<PAGE>
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Section XV.7 Unfunded Plan. The Plan is intended to constitute an unfunded
plan for incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant 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 Common Stock or payments in lieu thereof with respect to awards
hereunder.
Section XV.8 Other Employee Benefit Plans. Payments received by a
Participant under any Award made pursuant to the provisions of the Plan shall
not be included in, nor have any effect on, the determination of benefits under
any other employee benefit plan or similar arrangement provided by the Company.
Section XV.9 Securities Law Restrictions. The Committee may require each
eligible individual purchasing or acquiring shares of Common Stock pursuant to a
stock option or other award under the Plan to represent to and agree with the
Company in writing that such eligible individual is acquiring the shares for
investment and not with a view to the distribution thereof. All certificates for
shares of Common Stock 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 exchange upon which the Common 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. No shares of Common Stock shall be issued hereunder unless
the Company shall have determined that such issuance is in compliance with, or
pursuant to an exemption from, all applicable federal and state securities laws.
Section XV.10 Compliance with Rule 16b-3.
(1) The Plan is intended to comply with Rule 16b-3 under the Exchange
Act or its successors under the Exchange Act, and the Committee shall interpret
and administer the provisions of the Plan or any award agreement in a manner
consistent therewith. To the extent any provision of the Plan or award agreement
or any action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
Moreover, in the event the Plan or an award agreement does not include a
provision required by Rule 16b-3 to be stated therein, such provision (other
than one relating to eligibility requirements or the price and amount of awards)
shall be deemed automatically to be incorporated by reference into the Plan or
such award agreement insofar as Participants subject to Section 16 of the
Exchange Act are concerned.
(2) Notwithstanding anything contained in the Plan or any award
<PAGE>
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agreement to the contrary, if the consummation of any transaction under the Plan
would result in the possible imposition of liability on a Participant pursuant
to Section 16(b) of the Exchange Act, the Committee shall have the right, in its
sole discretion, but shall not be obligated, to defer such transaction to the
extent necessary to avoid such liability.
Section XV.11 Award Agreement. The Committee shall determine the form and
terms of any award agreement issued to a Participant as evidence of the
Participant's rights under any award granted under the Plan. Such award
agreement may be in the form of a unilateral offer or certificate and it need
not require the Participant's signature, or the signature of a Company
representative, to be valid unless the Committee so requires. In the event of
any conflict or inconsistency between the Plan and any award agreement, the Plan
shall govern, and the award agreement shall be interpreted to minimize or
eliminate any such conflict or inconsistency.
Section XV.12 Expenses. The costs and expenses of administering the Plan
shall be borne by the Company.
IN WITNESS WHEREOF, this 1997 Stock Incentive Plan, having been first duly
adopted, is hereby executed below by a duly authorized officer, to take effect
as provided herein.
GALILEO INTERNATIONAL, INC.
By:
----------------------------------
Its:
---------------------------------
<PAGE>
[LETTERHEAD OF GALILEO]
EXHIBIT 5.1
-----------
May 28, 1998
Galileo International, Inc.
9700 West Higgins Road
Rosemont, Illinois 60018
Ladies and Gentlemen:
I am Senior Vice President, Legal and General Counsel of Galileo
International, Inc., a Delaware corporation (the "Company"), and have acted as
counsel to the Company in connection with the preparation and filing of the
Registration Statement on Form S-8 (the "Registration Statement"), pertaining to
the registration by the Company of 8,640,000 shares of its Common Stock, par
value $0.01 per share, pursuant to the Company's 1997 Stock Incentive Plan and
1997 Non-Employee Director Stock Plan (collectively, the "Plans").
In that connection, I have examined the originals, or copies certified or
otherwise authenticated to our satisfaction, of such documents, corporate
records and other instruments as we have deemed necessary for the purposes of
this opinion, including the Company's Restated Certificate of Incorporation and
Restated Bylaws in effect on the date hereof and the resolutions of the Board of
Directors of the Company relating to the proposed offering of Common Stock
pursuant to the Registration Statement.
For purposes of this opinion, I have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies, and the authenticity of the originals of
all documents submitted to us as copies. I have also assumed the genuineness of
the signatures of persons signing all documents in connection with which this
opinion is rendered.
My opinion set forth below is limited to the law of the State of Colorado,
the General Corporation Law of the State of Delaware and the federal law of the
United States, and I do not express any opinion herein concerning any other law.
<PAGE>
Galileo International, Inc.
May 28, 1998
Page 2
Based on the foregoing, I am of the opinion that the shares of Common Stock
under the Plans, the issuance of which is being registered by the Company, if
and when sold and delivered as described in the Registration Statement and in
accordance with the Plans, will have been duly authorized and validly issued,
and will constitute fully paid and nonassessable shares of Common Stock.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me in the Registration Statement.
Very truly yours,
Babetta R. Gray
Senior Vice President, Legal
and General Counsel
<PAGE>
EXHIBIT 23.1
------------
Independent Auditors' Consent
The Board of Directors
Galileo International, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-8 related to the Galileo International, Inc. 1997 Stock Incentive Plan
and Galileo International, Inc. 1997 Non-Employee Director Stock Plan of our
report dated February 2, 1998 relating to the consolidated balance sheets of
Galileo International, Inc. and subsidiaries as of December 31, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report appears in the December 31, 1997 annual report on Form 10-K of
Galileo International, Inc., our report dated February 21, 1997 relating to the
consolidated balance sheets of Galileo International Partnership and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, partners' capital, and cash flows for each of the years in
the three-year period ended December 31, 1996, and our report dated May 20, 1997
relating to the balance sheet of Galileo International, Inc. as of May 13, 1997,
which reports appear in the prospectus filed with the Securities and Exchange
Commission on July 28, 1997.
KPMG Peat Marwick LLP
Chicago, Illinois
May 27, 1998
