As filed with the Securities and Exchange Commission on April 30, 1999
Registration No.
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 Incorporation) (I.R.S. Employer
Identification No.)
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
(Address of Principal Executive Offices)
Galileo International, Inc. 1999 Equity and Performance
Incentive Plan
(Full Title of the Plan)
Anthony C. Swanagan, Esq.
Vice President, Legal
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:
Elizabeth C. Kitslaar
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601-1692
(312) 269-4114
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
- ----------------------------------------- ------------------ ---------------- ----------------- ------------------
Proposed Proposed
Title Of Securities To Be Registered Amount To Be Maximum Aggregate Amount Of
Registered Offering Price Offering Registration Fee
Per Share(1) Price(1)
- ----------------------------------------- ------------------ ---------------- ----------------- ===================
Common Stock, par value $.01 per share 13,000,000 $49.588 $644,644,000 $190,169.98
- ----------------------------------------- ------------------ ---------------- ----------------- ===================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to paragraphs (c) and (h) of Rule 457 under
the Securities Act, on the basis of the average of high and low sale
prices of the shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), on the New York Stock Exchange, Inc. on
April 29, 1999.
PART I
Information Required in the Section 10(a) Prospectus
The documents containing the information specified in Part I of Form
S-8 will be sent or given to participating employees as specified by Rule
428(b)(1) of the Securities Act. These documents and the documents incorporated
by reference into this Registration Statement pursuant to Item 3 of Part II of
this Registration Statement, taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Securities Act.
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 the "Registrant") with the Securities and Exchange Commission (the
"Commission") are incorporated by reference in this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year
ended December 31, 1998, filed with the Commission March 22, 1999;
(b) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (File
No. 1-13153) on July 1, 1997.
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 indicating that
all securities offered under this Registration Statement have been sold, or
deregistering all securities then remaining unsold, are also incorporated by
reference and shall be a part hereof from the date of 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 superceded
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 supercedes such
statement. Any such statement so modified or superceded shall not be deemed,
except as so modified or superceded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
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 (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 (1) by a majority vote of the
disinterested directors (even if less than a quorum), (2) by a committee of such
directors designated by majority vote of such directors (even if less than a
quorum), (3) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by the shareholders, 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 Company's Registration Statement on Form S-1 (File No. 333-27495) (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.
Item 8. Exhibits
Exhibit Number Description
4.1 Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to the Form S-1)
4.2 Restated By-Laws (incorporated by reference to Exhibit 3.2 to
the Form S-1)
4.3 Galileo International, Inc. 1999 Equity and Performance
Incentive Plan
4.4 Form of Non-Qualified Stock Option Agreement
5.1 Opinion of Anthony C. Swanagan
23.1 Consent of Anthony C. Swanagan (included in Exhibit 5.1)
23.2 Consent of KPMG LLP
24.1 Power of Attorney
Item 9. Undertakings
(a) 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
amount would not exceed that which is registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than 20 percent 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;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3, Form
S-8 or Form F-3, and 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.
(b) 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 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Village of Rosemont, State of Illinois, on April 29, 1999.
GALILEO INTERNATIONAL, INC.
By: /s/ James E. Barlett
James E. Barlett
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities on the date
indicated.
Signature Title Date
/s/ James E. Barlett* Chairman, President and Chief
James E. Barlett Executive Officer (principal April 29, 1999
executive officer)
/s/ Paul H. Bristow* Directors, Senior Vice President
Paul H. Bristow Chief Financial Officer and
Treasurer (principal financial and April 29, 1999
accounting officer)
/s/ Babetta R. Gray* Directors, Senior Vice President
Babetta R. Gray Customer Service Delivery, General
Counsel and Secretary April 29, 1999
/s/ Graham W. Atkinson* Director April 29, 1999
Graham W. Atkinson
/s/ Frederic F. Brace* Director April 29, 1999
Frederic F. Brace
/s/ David A. Coltman* Director April 29, 1999
David A. Coltman
/s/ Director
Wim Dik
/s/ Mina Gouran* Director April 29, 1999
Mina Gouran
/s/ Thomas A. Mutryn* Director April 29, 1999
Thomas A. Mutryn
/s/ Frank H. Rovekamp* Director
Frank H. Rovekamp April 29, 1999
/s/ Georges P. Schorderet* Director April 29, 1999
Georges P. Schorderet
/s/ Derek M. Stevens* Director April 29, 1999
Derek M. Stevens
/s/ Kenneth Whipple* Director April 29, 1999
Kenneth Whipple
*James E. Barlett, the undersigned attorney-in-fact, by signing his name hereto,
does hereby sign and execute this Registration Statement on behalf of the above
indicated Registrant and officers and directors thereof (constituting a majority
of the directors) pursuant to a Power of Attorney filed with the Securities and
Exchange Commission.
April 29, 1999 By: /s/ James E. Barlett
James E. Barlett
Chairman, President and
Chief Executive Officer
EXHIBIT INDEX
Sequentially
Exhibit Description Numbered Page
Number
4.1 Restated Certificate of Incorporation(incorporated
by reference to Exhibit 3.1 to the Form S-1)
4.2 Restated By-Laws (incorporated by reference to Exhibit
3.2 to the Form S-1)
4.3 Galileo International, Inc. 1999 Equity and Performance
Incentive Plan
4.4 Form of Non-Qualified Stock Option Agreement
5.1 Opinion of Anthony C. Swanagan
23.1 Consent of Anthony C. Swanagan (included in Exhibit 5.1)
23.2 Consent of KPMG LLP
24.1 Power of Attorney
Exhibit 4.3
GALILEO INTERNATIONAL, INC.
1999 EQUITY AND PERFORMANCE INCENTIVE PLAN
1. Purpose. The purpose of the 1999 Equity and Performance Incentive
Plan is to attract and retain consultants, officers and other key employees of
Galileo International, Inc., a Delaware corporation, and its Subsidiaries and to
provide to such persons incentives and rewards for superior performance.
2. Definitions. As used in this Plan,
"Airline Shareholder" means any of United Airlines, US
Airways, British Airways PLC, SAirGroup or KLM Royal Dutch Airlines or any of
their respective affiliates.
"Appreciation Right" means a right granted pursuant to
Section 5 of this Plan and includes both Tandem Appreciation Rights and
Free-Standing Appreciation Rights.
"Base Price" means the price to be used as the basis for
determining the Spread upon the exercise of a Free-Standing Appreciation Right
and a Tandem Appreciation Right.
"Board" means the Board of Directors of the Company and, to
the extent of any delegation by the Board to a committee (or subcommittee
thereof) pursuant to Section 16 of this Plan, such committee (or subcommittee).
"Change in Control" shall have the meaning ascribed thereto in
Section 12 of this Plan.
"Code" means the Internal Revenue Code of 1986, as amended,
and the applicable rulings and regulations thereunder.
"Combined Voting Power" means, at anytime, the combined voting
power of the Company's or other relevant entity's then outstanding Voting
Securities.
"Common Shares" means the shares of Common Stock, par value
$.01 per share, of the Company or any security into which such Common Shares may
be converted or exchanged by reason of any transaction or event of the type
referred to in Section 11 of this Plan.
"Company" means Galileo International, Inc., a Delaware
corporation.
"Covered Employee" means a Participant who is, or is
determined by the Board to be likely to become, a "covered employee" within the
meaning of Section 162(m) of the Code (or any successor provision).
"Date of Grant" means the date specified by the Board on which
a grant of Option Rights, Appreciation Rights, Performance Shares or Performance
Units or a grant or sale of Restricted Shares, Deferred Shares or Stock Payments
shall become effective (which shall not be earlier than the date on which the
Board takes action with respect thereto).
"Deferral Period" means the period of time during which
Deferred Shares are subject to deferral limitations under Section 7 of this
Plan.
"Deferred Shares" means an award pursuant to Section 7 of this
Plan of the right to receive Common Shares at the end of a specified Deferral
Period.
"Director" means a member of the Board of Directors of the
Company.
"Disability" means the permanent inability of a Participant,
as a result of accident or illness, to perform substantially all of the duties
pertaining to such Participant's occupation or employment for which the
Participant is suited by reason of previous training, education and experience,
as determined by the Board. A determination made under any long-term disability
benefit plan covering the Participant that the Participant is disabled for
purposes of entitlement to benefits under that plan may be relied upon by the
Board as sufficient evidence of Disability for purposes of the Plan.
"Effective Date" shall have the meaning ascribed thereto in
Section 18 of the Plan.
"Eligible Transferee" means one or more (i) one or more
members of the Participant's immediate family (as the term "immediate family" is
defined in Rule 16a-1(e) promulgated under Section 16(a) of the Exchange Act (or
any successor rule to the same effect), as in effect from time to time), (ii)
one or more trusts established solely for the benefit of one or more members of
the Participant's immediate family, (iii) one or more corporations or limited
liability companies in which the only equity holders are members of the
Participant's immediate family or (iv) one or more partnerships in which the
only partners are members of the Participant's immediate family.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, as such statute, rules and
regulations may be amended from time to time.
"Free-Standing Appreciation Right" means an Appreciation
Right granted pursuant to Section 5 of this Plan that is not granted in tandem
with an Option Right.
"Incentive Stock Options" means Option Rights that are
intended to qualify as "incentive stock options" under Section 422 of the Code
or any successor provision.
"Management Objectives" means the measurable performance
objective or objectives established pursuant to this Plan for Participants who
have received grants of Performance Shares or Performance Units (or, when so
determined by the Board, Option Rights, Appreciation Rights, Restricted Shares
and dividend credits) under this Plan. Management Objectives may be described in
terms of Company-wide objectives or objectives that are related to the
performance of the individual Participant or the Subsidiary, division,
department, region or function within the Company or Subsidiary in which the
Participant is employed. The Management Objectives may be made relative to the
performance of other corporations. The Management Objectives applicable to any
award to a Covered Employee shall be based on specified levels of, or growth in,
one or more of the following criteria:
(i) market value;
(ii) book value;
(iii) market share;
(iv) operating profit;
(v) net income;
(vi) cash flow;
(vii) earnings, including earnings before interest, taxes,
depreciation and other non-cash items;
(viii) debt/capital ratio;
(ix) return on capital;
(x) return on equity;
(xi) costs or expenses;
(xii) net assets;
(xiii) return on assets;
(xiv) margins;
(xv) earnings per share;
(xvi) revenues;
(xvii) product volume growth;
(xviii) total return to shareholders; and
(xix) customer satisfaction.
If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which the Company conducts its business, or other events or
circumstances render the Management Objectives unsuitable, the Committee may in
its discretion modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the Committee deems
appropriate and equitable; provided, however, the Committee shall not make any
modification of the Management Objectives or minimum acceptable level of
achievement in the case of a Covered Employee where such action would result in
the loss of the otherwise available exemption of the award under Section 162(m)
of the Code.
"Market Value per Share" means, as of any particular date, (i)
the mean between the highest and lowest sale price per Common Share as reported
on the principal exchange on which Common Shares are then trading, if any, or,
if applicable, the NASDAQ National Market System, on the Date of Grant, or if
there are no sales on such day, on the next preceding trading day during which a
sale occurred, or (ii) if clause (i) does not apply, the fair market value of
the Common Shares as determined by the Board.
"Non-Employee Director" means a person who is a
"non-employee director" of the Company within the meaning of Rule 16b-3.
"Optionee" means the optionee named in an agreement
evidencing an outstanding Option Right.
"Option Price" means the purchase price payable upon exercise
of an Option Right.
"Option Right" means the right to purchase Common Shares upon
exercise of an option granted pursuant to Section 4 of this Plan.
"Outside Director" means a person who is an "outside
director" of the Company within the meaning of Section 162(m)of the Code.
"Participant" means a person who is selected by the Board to
receive benefits under this Plan and who is at the time a consultant, an officer
or other employee of the Company or any one or more of its Subsidiaries or who
has agreed to commence serving in any of such capacities.
"Performance Period" means, in respect of a Performance Share
or Performance Unit, a period of time established pursuant to Section 9 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.
"Performance Share" means a bookkeeping entry that records
the equivalent of one Common Share awarded pursuant to Section 9 of this Plan.
"Performance Unit" means a bookkeeping entry that records a
unit equivalent to $1.00 (which may be expressed as a percentage of a
Participant's base salary or other compensation) awarded pursuant to Section 9
of this Plan.
"Plan" means this Galileo International, Inc. 1999 Equity and
Performance Incentive Plan.
"Reload Option Rights" means additional Option Rights granted
automatically to an Optionee upon the exercise of Option Rights pursuant to
Section 4(f) of this Plan.
"Restricted Shares" means Common Shares granted or sold
pursuant to Section 6 of this Plan as to which neither the substantial risk of
forfeiture nor the restrictions on transfer referred to in Section 6 of this
Plan have expired.
"Retirement" means a Participant's termination of employment
with the Company at the time such Participant is eligible for retirement or
early retirement as defined by (i) the then current Company-sponsored plan or
scheme, or (ii) the country laws and practices, applicable at the time of such
termination.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act (or any successor rule to the same effect), as in effect from time to time.
"Securities Act" means the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as amended from time to time.
"Spread" means the excess of the Market Value per Share on the
date when an Appreciation Right is exercised, or on the date when Option Rights
are surrendered in payment of the Option Price of other Option Rights, over the
Option Price or Base Price provided for in the related Option Right or
Free-Standing Appreciation Right, respectively.
"Stock Payment" means (i) payment in the form of Common
Shares, or (ii) an election or other right to receive or purchase Common Shares,
in lieu of, or in addition to, all or any portion of the compensation
(including, without limitation, salary, bonuses, incentive compensation,
commissions and deferred compensation) that would otherwise become payable to a
Participant in the form of cash. A Stock Payment may consist of the transfer by
the Company to a Participant of Common Shares as additional compensation for
services to the Company, without other payment therefor.
"Subsidiary" means a corporation, company or other entity (i)
more than 50 percent of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may be the case in
a partnership, joint venture or unincorporated association) but more than 50
percent of whose ownership interest representing the right generally to make
decisions for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company except that, for the purposes of
determining whether any person may be a Participant for the purposes of any
grant of Incentive Stock Options, "Subsidiary" means any corporation in which
the Company at the time of grant, owns or controls, directly or indirectly, more
than 50 percent of the total combined voting power represented by all classes of
stock issued by such corporation.
"Tandem Appreciation Right" means an Appreciation Right
granted pursuant to Section 5 of this Plan that is granted in tandem with an
Option Right.
"Tax-Qualified Option" means an Option Right that is intended
to qualify under particular provisions of the Code, including but not limited to
an Incentive Stock Option.
"Termination Date" means the tenth anniversary of the date on
which this Plan is first approved by the stockholders of the Company.
"Voting Securities" means securities entitled to vote
generally in the election of Directors.
3. Shares Available Under the Plan. (a) Subject to adjustment as
provided in Section 3(b) and Section 11 of this Plan, the number of Common
Shares that may be issued or transferred (i) upon the exercise of Option Rights
or Appreciation Rights, (ii) as Restricted Shares and subsequently released from
substantial risks of forfeiture, (iii) as Deferred Shares or Stock Payments,
(iv) in payment of Performance Shares or Performance Units that have been
earned, or (v) in payment of dividend equivalents paid with respect to awards
made under this Plan, shall not in the aggregate exceed 13,000,000, plus any
Common Shares described in Section 3(b). Such Common Shares may be shares of
original issuance or treasury shares or a combination thereof.
(b) The number of Common Shares available in Section 3(a)
above shall be adjusted to account for Common Shares relating to awards that
expire, are forfeited or are surrendered or relinquished upon the payment of any
Option Price by the transfer to the Company of Common Shares or upon
satisfaction of any withholding amount. Upon payment in cash of the benefit
provided by any award granted under this Plan, any Common Shares that were
covered by that award shall again be available for issuance or transfer
hereunder.
(c) Notwithstanding anything in this Section 3 or elsewhere in
this Plan to the contrary and subject to adjustment as provided in Section 11 of
this Plan, (i) the aggregate number of Common Shares actually issued or
transferred by the Company upon the exercise of Incentive Stock Options shall
not exceed 10,000,000 Common Shares; (ii) no Participant shall be granted Option
Rights and Appreciation Rights for more than an aggregate of 2,000,000 Common
Shares during any five-year period under the Plan; and (iii) the number of
Common Shares issued as Restricted Shares shall not in the aggregate exceed
2,500,000.
(d) Notwithstanding any other provision of this Plan to the
contrary, in no event shall any Participant in any calendar year receive an
award of Performance Shares or Performance Units having an aggregate maximum
value as of their respective Dates of Grant in excess of $5,000,000.
4. Option Rights. The Board may from time to time authorize grants to
Participants of options to purchase Common Shares. Each such grant may utilize
any or all of the authorizations, and shall be subject to all of the
requirements, contained in the following provisions:
(a) Each grant shall specify the number of Common Shares to
which it pertains, subject to the limitations set forth in Section 3 of
this Plan.
(b) Each grant shall specify an Option Price per share, which
may be less than the Market Value per Share on the Date of Grant.
(c) Each grant shall specify the form of consideration to be
paid in satisfaction of the Option Price and the manner of payment of
such consideration, which may include (i) cash in the form of currency
or check or other cash equivalent acceptable to the Company, (ii) by
the tender (of actual shares or through attestation) to the Company of
Common Shares owned by the Participant for at least six months and
registered in the name of the Participant having an aggregate fair
market value on the date of exercise equal to the total Option Price,
such fair market value to be determined based on the Market Value per
Share on the date of exercise, (iii) by delivery of irrevocable
instructions to a financial institution or broker to deliver promptly
to the Company sale or loan proceeds with respect to the Common Shares
sufficient to pay the total Option Price, and (iv) any combination of
the foregoing methods of payment.
(d) The Board may determine, at or after the Date of Grant,
that payment of the Option Price of any Option Right (other than an
Incentive Stock Option) may also be made in whole or in part in the
form of Restricted Shares or other Common Shares that are forfeitable
or subject to restrictions on transfer, Deferred Shares, Stock
Payments, Performance Shares (based, in each case, on the Market Value
per Share on the date of exercise), other Option Rights (based on the
Spread on the date of exercise) or Performance Units. Unless otherwise
determined by the Board at or after the Date of Grant, whenever any
Option Price is paid in whole or in part by means of any of the forms
of consideration specified in this Section 4(d), the Common Shares
received upon the exercise of the Option Rights shall be subject to
such risks of forfeiture or restrictions on transfer as may correspond
to any that apply to the consideration surrendered, but only to the
extent determined with respect to the consideration surrendered, of (i)
the number of shares or Performance Shares, (ii) the Spread of any
unexercisable portion of Option Rights, or (iii) the stated value of
Performance Units.
(e) Any grant may provide for deferred payment of the Option
Price from the proceeds of sale through a broker on a date satisfactory
to the Company of some or all of the Common Shares to which such
exercise relates.
(f) On or after the Date of Grant of any Option Rights, the
Board may provide for the automatic grant of Reload Option Rights to an
Optionee upon the exercise of Option Rights (including Reload Option
Rights) using Common Shares or other consideration specified in Section
4(d). Reload Option Rights shall cover up to the number of Common
Shares, Deferred Shares, Stock Payments, Option Rights or Performance
Shares (or the number of Common Shares having a value equal to the
value of any Performance Units) surrendered to the Company upon any
such exercise in payment of the Option Price or to meet any withholding
obligations. Reload Options may have an Option Price that is less than
the applicable Market Value per Share at the time the Reload Option is
granted and shall be on such other terms as may be specified by the
Board, which may be the same as or different from those of the original
Option Rights.
(g) Successive grants may be made to the same Participant
regardless of whether any Option Rights previously granted to such
Participant remain unexercised.
(h) Each grant shall specify the period or periods of
continuous service by the Optionee with the Company or any Subsidiary
or shall specify such different or additional conditions as the Board
may determine (including the achievement of Management Objectives),
that must be satisfied before the Option Rights or installments thereof
will become exercisable and may provide for the earlier exercise of
such Option Rights in the event of a Change in Control or other events.
(i) Option Rights granted under this Plan may be (i) options,
including, without limitation, Incentive Stock Options, that are
intended to qualify under particular provisions of the Code, (ii)
options that are not intended so to qualify, or (iii) combinations of
the foregoing.
(j) On or after the Date of Grant of any Option Rights (other
than Incentive Stock Options), the Board may provide for the payment of
dividend equivalents to the Optionee on a current, deferred or
contingent basis or may provide that any such equivalents shall be
credited against the Option Price.
(k) The exercise of an Option Right shall result in the
cancellation on a share-for-share basis of any Tandem Appreciation
Right authorized under Section 5 of this Plan.
(l) No Option Right shall be exercisable more than 10 years
from the Date of Grant.
(m) Each grant of Option Rights shall be evidenced by an
agreement executed on behalf of the Company by an officer thereof and
delivered to the Optionee and containing such terms and provisions as
the Board may approve consistent with this Plan.
5. Appreciation Rights. (a) The Board may authorize the granting of (i)
Tandem Appreciation Rights to any Optionee in respect of Option Rights granted
under this Plan, and (ii) Free-Standing Appreciation Rights to any Participant.
A Tandem Appreciation Right shall be a right of the Optionee, exercisable by
surrender of the related Option Right, to receive from the Company an amount
determined by the Board, which shall be expressed as a percentage of the Spread
(not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights
may be granted at any time prior to the exercise or termination of the related
Option Rights; provided, however, that a Tandem Appreciation Right awarded in
respect of an Incentive Stock Option must be granted concurrently with the
Incentive Stock Option. A Free-Standing Appreciation Right shall be a right of
the Participant to receive from the Company an amount determined by the Board,
which shall be expressed as a percentage of the Spread (not exceeding 100
percent) at the time of exercise.
(b) Each grant of Appreciation Rights may utilize any or all
of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(i) Any grant may specify that the amount payable
upon exercise of an Appreciation Right may be paid by the Company in
cash, in Common Shares or in any combination thereof and may either
grant to the Participant or retain in the Board the right to elect
among those alternatives.
(ii) Any grant may specify that the amount payable
upon exercise of an Appreciation Right may not exceed a maximum
specified by the Board at the Date of Grant.
(iii) Any grant may specify waiting periods before
exercise and permissible exercise dates or periods.
(iv) Any grant may specify that the Appreciation
Right may be exercised only in the event of, or earlier in the event
of, a Change in Control or other events.
(v) Any grant may provide for the payment to the
Participant of dividend equivalents thereon in cash or Common Shares on
a current, deferred or contingent basis.
(vi) Any grant may specify Management Objectives that
must be achieved as a condition of the exercise of the subject
Appreciation Rights.
(vii) Each grant of Appreciation Rights shall be
evidenced by an agreement executed on behalf of the Company by an
officer thereof and delivered to the Participant, which agreement shall
describe such Appreciation Rights, identify any related Option Rights,
state that such Appreciation Rights are subject to all of the terms and
conditions of this Plan, and contain such other terms and provisions as
the Board may approve consistent with this Plan.
(c) Any grant of Tandem Appreciation Rights shall provide that
the Tandem Appreciation Rights may be exercised only at a time when the related
Option Rights are also exercisable and the Spread is positive and by surrender
of the related Option Rights for cancellation.
(d) Regarding Free-Standing Appreciation Rights only:
(i) Each grant shall specify in respect of each
Free-Standing Appreciation Right a Base Price, which shall be equal to
or greater or less than the Market Value per Share on the Date of
Grant;
(ii) Successive grants may be made to the same
Participant regardless of whether any Free-Standing Appreciation Rights
previously granted to the Participant remain unexercised; and
(iii) No Free-Standing Appreciation Right
granted under this Plan may be exercised more than 10 years from the
Date of Grant.
6. Restricted Shares. The Board may authorize the granting or sale of
Restricted Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate
transfer of the ownership of Common Shares to the Participant in
consideration of the performance of services, entitling such
Participant to voting, dividend and other ownership rights, subject in
each case to the substantial risk of forfeiture and restrictions on
transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that
is less than Market Value per Share at the Date of Grant; provided,
however, that any grant of Restricted Shares made for consideration
paid at the time of grant (including the foregoing of compensation owed
by the Company to a Participant) shall not be counted for purposes of
the limit set forth in Section 3(c)(iii).
(c) Each such grant or sale shall provide that the Restricted
Shares covered by such grant or sale shall be subject to a "substantial
risk of forfeiture" within the meaning of Section 83 of the Code for a
period to be determined by the Board at the Date of Grant and may
provide for the earlier lapse of such substantial risk of forfeiture in
the event of a Change in Control or other events.
(d) Each such grant or sale of Restricted Shares shall provide
that during the period for which such substantial risk of forfeiture is
to continue, the transferability of the Restricted Shares shall be
prohibited or restricted in the manner and to the extent prescribed by
the Board at the Date of Grant (which restrictions may include, but
shall not be limited to, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Shares may specify Management
Objectives that, if achieved, will result in termination or early
termination of the risk of forfeiture and restrictions on transfer
applicable to the subject Restricted Shares. Each grant may specify in
respect of any such Management Objectives a minimum acceptable level of
achievement and may set forth a formula for determining the number of
Restricted Shares on which restrictions will terminate if performance
is at or above such minimum level but falls short of full achievement
of the specified Management Objectives.
(f) Any such grant or sale of Restricted Shares may require
that any or all dividends or other distributions paid on the Restricted
Shares during the period of a risk of forfeiture and restrictions on
transfer be automatically deferred and reinvested in additional
Restricted Shares, which may be subject to the same restrictions as the
underlying award.
(g) Each grant or sale of Restricted Shares shall be evidenced
by an agreement executed on behalf of the Company by any officer and
delivered to the Participant and shall contain such terms and
provisions as the Board may approve consistent with this Plan. Unless
otherwise directed by the Board, all certificates representing
Restricted Shares shall be held in custody by the Company, together
with a stock power or powers endorsed in blank by the Participant in
whose name such certificates are registered, until all restrictions
thereon shall have lapsed.
7. Deferred Shares. The Board may authorize the granting or sale of
Deferred Shares to Participants. Each such grant or sale may utilize any or all
of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each such grant or sale shall constitute the agreement by
the Company to deliver Common Shares to the Participant in the future
in consideration of the performance of services and subject to the
fulfillment of such conditions, if any, during the Deferral Period as
the Board may specify.
(b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by the Participant that
is less than the Market Value per Share at the Date of Grant; provided,
however, that any grant of Deferred Shares made for consideration paid
at the time of grant (including the foregoing of compensation owed by
the Company to a Participant) shall not be counted for purposes of the
limit set forth in Section 3(c)(iv).
(c) Each such grant or sale shall be subject to a Deferral
Period as determined by the Board at the Date of Grant, and may provide
for the earlier lapse or other modification of such Deferral Period in
the event of a Change in Control or other event.
(d) During the Deferral Period, a Participant shall not have
any rights of ownership in the Deferred Shares, shall not have any
right to vote the Deferred Shares and, except as provided in Section
10(c) of this Plan, shall not have any right to transfer any rights
under his or her award, but at or after the Date of Grant, the Board
may authorize the payment of dividend equivalents on the Deferred
Shares on a current, deferred or contingent basis, in either cash or
additional Common Shares.
(e) Each grant or sale of Deferred Shares shall be evidenced
by an agreement executed on behalf of the Company by any officer and
delivered to the Participant and shall contain such terms and
provisions as the Board may approve consistent with this Plan.
8. Stock Payments. The Board may authorize the receipt of Stock
Payments by any Participant in the manner determined from time to time by the
Board. Each Stock Payment and the grant or sale of Common Shares pursuant to
Stock Payments, may utilize any or all of the authorizations, and shall be
subject to all of the requirements, contained in the following provisions:
(a) Each Stock Payment shall constitute an agreement by the
Company to (i) deliver Common Shares to the Participant as payment, or
(ii) permit a Participant to exercise an election or other right to
receive or purchase Common Shares, in lieu of, or in addition to, all
or any portion of the compensation (including, without limitation,
salary, bonuses, incentive compensation, commissions and deferred
compensation), that would otherwise become payable to a Participant in
the form of cash. A Stock Payment may consist of the transfer by the
Company to a Participant of Common Shares as additional compensation
for services to the Company, without other payment therefor. The number
of shares to be issued pursuant to Stock Payments shall be determined
by the Board, and may be based upon the Market Value per Share, book
value, net profits or other measure of the value of Common Shares or
other criteria determined appropriate by the Board, determined on the
date such Stock Payment is granted or on any date thereafter.
(b) Prior to the receipt of Common Shares in satisfaction of a
Stock Payment, a Participant shall not have any rights of ownership in
such Common Shares, shall not have any right to vote the Common Shares
subject to the Stock Payment and, except as provided in Section 10(c)
of this Plan, shall not have any right to transfer any rights under his
or her award, but at or after the date of grant, the Board may
authorize the payment of dividend equivalents with respect to the Stock
Payment on a current, deferred or contingent basis, in either cash or
additional Common Shares.
(c) Each Stock Payment shall be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to the
Participant, and shall contain such terms and provisions as the Board
may approve consistent with this Plan.
9. Performance Shares and Performance Units. The Board may authorize
the granting of Performance Shares and Performance Units that will become
payable to a Participant upon achievement of specified Management Objectives.
Each such grant may utilize any or all of the authorizations, and shall be
subject to all of the requirements, contained in the following provisions:
(a) Each grant shall specify the number of Performance Shares
or Performance Units to which it pertains, which may be subject to
adjustment to reflect changes in compensation or other factors;
provided, however, that no such adjustment shall be made in the case of
a Covered Employee where such action would result in the loss of the
otherwise available exemption of the award under Section 162(m) of the
Code.
(b) The Performance Period with respect to each Performance
Share or Performance Unit shall be such period of time commencing with
the Date of Grant, as shall be determined by the Board at the time of
grant, which may be subject to earlier lapse or other modification in
the event of a Change in Control or other events as set forth in the
agreement specified in Section 9(h).
(c) Each grant shall specify Management Objectives that, if
achieved, will result in payment or early payment of the award, and
each grant may specify in respect of the specified Management
Objectives a minimum acceptable level of achievement and shall set
forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the
minimum level but falls short of full achievement of the specified
Management Objectives. The grant shall specify that, before the
Performance Shares or Performance Units shall be earned and paid, the
Company (or, in the case of Performance Shares or Performance Units
granted to Covered Employees, a committee (or subcommittee) of Outside
Directors in accordance with Section 16(a)(ii)) must certify that the
specified Management Objectives have been satisfied.
(d) Each grant shall specify the time and manner of payment of
Performance Shares or Performance Units that have been earned. Any
grant may specify that the amount payable with respect thereto may be
paid by the Company in cash or Common Shares or any combination thereof
and may either grant to the Participant or retain in the Board the
right to elect among those alternatives.
(e) At or after the Date of Grant, any grant of Performance
Shares or Performance Units may provide for the automatic grant of
Option Rights, Appreciation Rights, Deferred Shares, Stock Payments or
Restricted Shares upon the earning of the Performance Shares or
Performance Units, and on such other terms and conditions as may be
specified by the Board; provided, however, that no amendment or
modification of any Performance Shares or Performance Units granted to
any Covered Employee shall be made where such action would result in
the loss of the otherwise available exemption of the award under
Section 162(m) of the Code.
(f) Any grant of Performance Shares may specify that the
amount payable with respect thereto may not exceed a maximum specified
by the Board at the Date of Grant. Any grant of Performance Units may
specify that the amount payable or the number of Common Shares issuable
or transferable with respect thereto may not exceed maximums specified
by the Board at the Date of Grant.
(g) At or after the Date of Grant of Performance Shares, the
Board may provide for the payment of dividend equivalents to the holder
thereof on a current, deferred or contingent basis, in either cash or
additional Common Shares.
(h) Each grant of Performance Shares or Performance Units
shall be evidenced by an agreement executed on behalf of the Company by
any officer and delivered to the Participant, which agreement shall
state that such Performance Shares or Performance Units are subject to
all the terms and conditions of this Plan and shall contain such other
terms and provisions as the Board may approve consistent with this
Plan.
10 Transferability. (a) Except as otherwise determined by the Board,
but subject to Section 10(c), no Option Right, Appreciation Right or other
derivative security granted under the Plan shall be transferable by a
Participant other than by will or the laws of descent and distribution. Except
as otherwise determined by the Board, Option Rights and Appreciation Rights
shall be exercisable during the Optionee's lifetime only by him or her or by his
or her guardian or legal representative.
(b) The Board may specify at the Date of Grant that part or
all of the Common Shares that are to be issued or transferred by the Company
upon the exercise of Option Rights or Appreciation Rights, upon the termination
of the Deferral Period applicable to Deferred Shares or upon payment under any
grant of Performance Shares, Performance Units or Stock Payments or are no
longer subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 6 of this Plan, shall be subject to further
restrictions on transfer.
(c) Notwithstanding the provisions of Section 10(a), but
subject to prior authorization by the Board, Option Rights (other than Incentive
Stock Options), Appreciation Rights, Restricted Shares, Deferred Shares, Stock
Payments, Performance Shares and Performance Units shall be transferable by a
Participant to an Eligible Transferee, without payment of consideration
therefor; provided, however, that (i) no such transfer shall be effective unless
reasonable prior notice thereof is delivered to the Company and such transfer is
thereafter effected in accordance with any terms and conditions that shall have
been made applicable thereto by the Company or the Board and (ii) any such
transferee shall be subject to the same terms and conditions hereunder as the
Participant.
11 Adjustments. The Board shall make or provide for such adjustments in
the numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Deferred Shares, Stock Payments and Performance Shares granted
hereunder, in the Option Price and Base Price provided in outstanding Option
Rights and Appreciation Rights, and in the kind of shares or other securities
covered thereby, as the Board, in its sole discretion, exercised in good faith,
may determine is equitably required to prevent dilution or expansion of the
rights of Participants or Optionees that otherwise would result from (a) any
stock dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, or (b) any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities, or (c) any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Board, in its discretion, may provide in substitution
for any or all outstanding awards under this Plan such alternative consideration
as it, in good faith, may determine to be equitable in the circumstances and may
require in connection therewith the surrender of all awards so replaced. The
Board shall also make or provide for such adjustments in the numbers of shares
specified in Section 3 of this Plan as the Board in its sole discretion,
exercised in good faith, may determine is appropriate to reflect any transaction
or event described in this Section 11; provided, however, that any such
adjustment to the number specified in Section 3(c)(i) shall be made only if and
to the extent that such adjustment would not cause any Option Right intended to
qualify as an Incentive Stock Option to fail so to qualify.
12 Change in Control. For the purposes of this Plan, except as may be
otherwise prescribed by the Board in an agreement evidencing a grant or award
made under the Plan, a "Change in Control" shall mean if at any time any of the
following events shall have occurred:
(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 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 Common Shares; 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 Common Shares.
13 Fractional Shares. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the
elimination of fractions or for the settlement of fractions in cash.
14 Withholding Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for such withholding are insufficient, it
shall be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory
to the Company for payment of the balance of such taxes required to be withheld,
which arrangements (in the discretion of the Board) may include relinquishment
of a portion of such benefit. The Company and a Participant or such other person
may also make similar arrangements with respect to the payment of any taxes with
respect to which withholding is not required.
15 Foreign Employees. In order to facilitate the making of any grant or
combination of grants under this Plan, the Board may provide for such special
terms for awards to Participants who are foreign nationals or who are employed
by the Company or any Subsidiary outside of the United States of America as the
Board may consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. Moreover, the Board may approve such supplements to
or amendments, restatements or alternative versions of this Plan as it may
consider necessary or appropriate for such purposes, without thereby affecting
the terms of this Plan as in effect for any other purpose, and the Secretary or
other appropriate officer of the Company may certify any such document as having
been approved and adopted in the same manner as this Plan. No such special
terms, supplements, amendments or restatements, however, shall include any
provisions that are inconsistent with the terms of this Plan as then in effect
unless this Plan could have been amended to eliminate such inconsistency without
further approval by the stockholders of the Company.
16 Administration of the Plan. (a) (i) Subject to subsection (ii) of
this Section 16(a), this Plan shall be administered by the Board, which may from
time to time delegate all or any part of its authority under this Plan to a
committee of the Board (or subcommittee thereof) consisting of not less than two
Non-Employee Directors appointed by the Board.
(ii) Awards of Option Rights and Appreciation Rights
are, and certain awards of Restricted Shares, Performance Shares and
Performance Units may be, intended to qualify as performance-based
compensation under Section 162(m) of the Code. The grant of such
awards, and the administration thereof and any determinations to be
made in connection therewith, shall be carried out only by a committee
of the Board (or subcommittee thereof) consisting of not less than two
Outside Directors appointed by the Board. Such committee shall grant
such awards in a manner consistent with the rules governing
performance-based compensation under Section 162(m) of the Code.
(b) To the extent of any such delegation, references in this
Plan to the Board shall be deemed to be references to any such committee (or
subcommittee). The interpretation and construction by the Board of any provision
of this Plan or of any agreement, notification or document evidencing the grant
of Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares,
Performance Shares or Performance Units and any determination by the Board
pursuant to any provision of this Plan or of any such agreement, notification or
document shall be final and conclusive. No member of the Board shall be liable
for any such action or determination made in good faith.
17 Amendments, Etc. (a) The Board may at any time and from time to time
amend this Plan in whole or in part; provided, however, any amendment that must
be approved by the stockholders of the Corporation in order to comply with
applicable law or the rules of the principal exchange on which the Common Shares
are then trading (or, if applicable, the NASDAQ National Market System) shall
not be effective unless and until such approval shall have been obtained. The
submission of this Plan or any amendment hereto for stockholder approval shall
not be construed to limit the Company's authority to offer similar or dissimilar
benefits under other plans without stockholder approval.
(b) With the concurrence of the affected Optionee, the Board
may cancel any agreement evidencing Option Rights granted under this Plan. In
the event of any such cancellation, the Board may authorize the granting of new
Option Rights hereunder, which may or may not cover the same number of Common
Shares as had been covered by the canceled Option Rights, at such Option Price,
in such manner and subject to such other terms, conditions and discretion as
would have been permitted under this Plan had the canceled Option Rights not
been granted.
(c) The Board also may permit Participants to elect to defer
the issuance of Common Shares or the settlement of awards in cash under the Plan
pursuant to such rules, procedures or programs as it may establish for the
purposes of this Plan. The Board may also provide that deferred issuances and
settlements include the payment or crediting of dividend equivalents or interest
on the deferral amounts.
(d) The Board may condition the grant of any award or
combination of awards authorized under this Plan on the surrender or deferral by
the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Company or a Subsidiary to the
Participant.
(e) In the event of termination of employment by reason of
death, disability or normal or early retirement, or in the case of hardship or
other special circumstances, of a Participant who holds an Option Right or
Appreciation Right not immediately and fully exercisable, any Restricted Shares
as to which the substantial risk of forfeiture or the restrictions on transfer
have not lapsed, any Deferred Shares as to which the Deferral Period has not
been completed, any rights with respect to Stock Payments that have not been
satisfied, any Performance Shares or Performance Units that have not been fully
earned, or Common Shares subject to any transfer restriction imposed pursuant to
Section 10(b) of this Plan, the Board may in its sole discretion accelerate the
time at which such Option Right or Appreciation Right may be exercised, the time
at which such substantial risk of forfeiture or restrictions on transfer will
lapse, the time when such Deferral Period will end, the time at which rights
with respect to Stock Payments will be satisfied, the time at which such
Performance Shares or Performance Units will be deemed to have been fully
earned, or the time when such transfer restriction will terminate, or may waive
any other limitation or requirement under any such award.
(f) This Plan shall not confer upon any Participant any right
with respect to continuance of employment or other service with the Company or
any Subsidiary and shall not interfere in any way with any right the Company or
any Subsidiary would otherwise have to terminate any Participant's employment or
other service at any time.
(g) To the extent that any provision of this Plan would
prevent any Option Right that was intended to qualify as an Incentive Stock
Option from qualifying as such, such provision shall be null and void with
respect to such Option Right; provided, however, that such provision shall
remain in effect for other Option Rights, and there shall be no further effect
on any provision of this Plan.
18 Effective Date, Approval of Plan by Stockholders and Termination.
(a) The effective date of this Plan (the "Effective Date") shall be the date of
its adoption by the Board. This Plan will be submitted for the approval of the
Company's stockholders within 12 months following such date. Options,
Appreciation Rights, Performance Shares, Performance Units, Restricted Shares,
Deferred Shares and Stock Payments may be awarded prior to such stockholder
approval, provided that (i) such Options and Appreciation Rights shall not be
exercisable, and such Performance Shares, Performance Units, Restricted Shares,
Deferred Shares and Stock Payments shall not vest or be paid, prior to receipt
of such stockholder approval, and (ii) if such approval has not been obtained by
the end of such 12-month period, all Options, Appreciation Rights, Performance
Shares, Performance Units, Restricted Shares, Deferred Shares and Stock Payments
previously awarded under this Plan shall thereupon be canceled and become null
and void.
(b) No grant shall be made under this Plan after the
Termination Date, but all grants made on or before the Termination Date shall
continue in effect thereafter subject to the terms thereof and the terms of this
Plan.
Exhibit 4.4
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of ____________ (the "Date
of Grant") by and between Galileo International, Inc., a Delaware corporation
(the "Company"), and __________________ (the "Optionee").
1. Definitions. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Company's 1999 Equity
and Performance Incentive Plan (the "Plan").
2. Grant of Stock Option. Subject to and upon the terms,
conditions and restrictions set forth in this Agreement and in the Plan, the
Company hereby grants to the Optionee as of the Date of Grant a stock option
(the "Option") to purchase _____________ Common Shares Stock (the "Optioned
Shares"). The Option may be exercised from time to time in accordance with the
terms of this Agreement. The price at which the Optioned Shares may be purchased
pursuant to this Option shall be _____________ per share, subject to adjustment
as hereinafter provided (the "Option Price"). The Option is intended to be a
non-qualified stock option and shall not be treated as an "incentive stock
option" within the meaning of that term under Section 422 of the Code, or any
successor provision thereto.
3. Term of Option. The term of the Option shall commence on
the Date of Grant and, unless earlier terminated in accordance with Section 7
hereof, shall expire ten (10) years from the Date of Grant.
4. Vesting of Option. Subject to the expiration or earlier
termination of the Option, the Optioned Shares granted hereby shall become
exercisable as follows:
(i) after one (1) year from the Date of Grant, the Optionee
may purchase up to ____________ percent (__%) of the
Optioned Shares;
(ii) after two (2) years from the Date of Grant, the Optionee
may purchase up to ____________ percent (__%) of the
Optioned Shares;
(iii) after three (3) years from the Date of Grant, the Optionee
may purchase up to ____________ percent (__%) of the
Optioned Shares; and
(iv) after four (4) years from the Date of Grant, the Optionee
may purchase up to ___________ percent (__%) of the
Optioned Shares.
To the extent the Option is exercisable, it may be exercised in whole or in
part. In no event shall the Optionee be entitled to acquire a fraction of one
Optioned Share pursuant to this Option. The Optionee shall be entitled to the
privileges of ownership with respect to Optioned Shares purchased and delivered
to him or her only upon the exercise of all or part of this Option.
5. Transferability of Option. The Option granted hereby shall
be neither transferable nor assignable by the Optionee other than by will or by
the laws of descent and distribution and may be exercised, during the lifetime
of the Optionee, only by the Optionee, or in the event of his or her legal
incapacity, by his or her guardian or legal representative acting on behalf of
the Optionee. Any purported transfer or encumbrance in violation of the
provisions of this Section 5 shall be void, and the other party to any such
purported transaction shall not obtain any rights to or interest in the Option.
6. Notice of Exercise; Payment. To the extent then
exercisable, the Option may be exercised by written notice to the Company
stating the number of Optioned Shares for which the Option is being exercised
and the intended manner of payment. The date of such notice shall be the
exercise date. Payment equal to the aggregate Option Price of the Optioned
Shares being exercised shall be tendered in full with the notice of exercise to
the Company either (i) in cash or by check acceptable to the Company, (ii) by
the tender to the Company of shares of Common Stock owned by the Optionee for at
least 6 months and registered in the name of the Optionee having an aggregate
fair market value on the date of exercise equal to the total Option Price, such
fair market value to be determined based on the Market Value per Share on the
date of exercise, (iii) by delivery of irrevocable instructions to a financial
institution or broker to deliver promptly to the Company sale or loan proceeds
with respect to the shares sufficient to pay the total Option Price, or (iv) by
any combination of the payment methods specified in clauses (i) through (iii)
hereof. Within ten (10) days thereafter, the Company shall direct the due
issuance of the Optioned Shares so purchased.
7. Conditions and Limitations on Right to Exercise
Option. Notwithstanding the provisions of Sections 3 and 4 hereof,
(a) Except as otherwise provided in Section 7(b) hereof, this Option
may not be exercised unless the Optionee is, at the time of exercise, an
employee of the Company or a Subsidiary (as defined in the Plan) and has been
employed by the Company or a Subsidiary continuously since the Date of Grant. If
the Optionee returns to active employment with the Company or a Subsidiary after
having been on an approved leave of absence from the Company or a Subsidiary,
the Optionee shall be treated as if continuously employed during the period of
such leave of absence. This Option may not, however, be exercised by the
Optionee while on a leave of absence from active employment with the Company or
a Subsidiary, unless such exercise is expressly approved in writing by the
Board; and
(b) (i) If the Optionee ceases to be employed by the Company or a
Subsidiary (other than by reason of death, Disability (as defined below) or
Retirement (as defined below)), the Option granted hereby, to the extent the
Optionee was entitled to exercise it at the date of termination of employment,
may be exercised at any time within three months after such termination but not
after the date of termination of the Option. Any part of the Option not so
exercised shall expire. Notwithstanding the foregoing, if Optionee's employment
is terminated for Cause (as defined below), then this Option shall thereupon
terminate and thereafter be unexercisable.
(ii) If the Optionee Retires after reaching age 65, all or any
part of this Option which has not yet been exercised, whether otherwise
eligible for immediate exercise by the terms of this Agreement or not,
may be exercised at any time within six months after the Optionee's
retirement but not after the date of expiration of the Option.
(iii) If the Optionee Retires after attaining age 55 but not
age 65, the Board, in its sole discretion, may permit all or any part
of this Option which has not yet been exercised, whether otherwise
eligible for immediate exercise by the terms of this Agreement or not,
to be exercised within six months after the Optionee's Retirement but
not after the date of expiration of the Option.
(iv) If the Optionee's employment is terminated by reason of
death or Disability, all or any part of this Option which has not yet
been exercised, whether otherwise eligible for immediate exercise by
the terms of this Agreement or not, may be exercised at any time within
one year after such termination but not after the date of expiration of
the option.
As used in this Agreement, "Cause" means:
(1) The Optionee's failure to substantially perform his
or her duties with the Company (other than any such
failure resulting from the Optionee's Disability (as
defined below) or at any time that Good Reason (as
defined below) exists).
(2) The Optionee's willful conduct which is demonstrably
and materially injurious to the Company, monetarily
or otherwise. For purposes of paragraphs (1) and (2),
no act, or failure to act, on the part of the
Optionee shall be deemed "willful" unless done, or
omitted to be done, by the Optionee not in good faith
and without reasonable belief that the Optionee's
action or omission was in the best interest of the
Company and its affiliates.
As used in this Agreement, "Disability" means the permanent inability
of the Optionee, as a result of accident or illness, to perform substantially
all of the duties pertaining to such Optionee's occupation or employment for
which the Optionee is suited by reason of previous training, education and
experience, as determined by the Board. A determination made under any long-term
disability benefit plan covering the Optionee that the Optionee is disabled for
purposes of entitlement to benefits under that plan may be relied upon by the
Board as sufficient evidence of Disability for purposes of the plan.
As used in this Agreement, "Retirement" means the Optionee's
termination of employment with the Company at the time the Optionee is eligible
for retirement or early retirement as defined by (i) the then current
Company-sponsored plan or scheme, or (ii) the country laws and practices,
applicable at the time of such termination.
As used in this Agreement, "Good Reason" means, without the Optionee's
express written consent, the occurrence of any of the following circumstances,
unless such circumstances are fully corrected within 30 days of Optionee's
written notice to Galileo's Senior Vice President, Human Resources:
(1) A significant diminution or adverse alteration in the
Optionee's status or responsibilities from those in effect at
the date hereof; provided that a change in the Optionee's
title prior to any Change in Control, by itself, shall not
constitute a diminution or adverse alteration for purposes of
the foregoing;
(2) A reduction in the Optionee's annual base salary as in
effect at the date hereof or as the same may be increased
from time to time;
(3) The relocation of the principal execution offices of the
Company or the affiliate where the Optionee is employed at the
date hereof to a location more than 35 miles from such
location, or the Optionee's being required to be based
anywhere other than such offices, except for required business
travel obligations; or
(4) The failure (without the Optionee's consent) to pay any portion of
the Optionee's current compensation.
The Optionee's continued employment shall not constitute consent to, or a wavier
of rights with respect to, any circumstances constituting Good Reason hereunder.
This Agreement shall not be exercisable for any number of Optioned
Shares in excess of the number of Optioned Shares for which this Agreement is
then exercisable, pursuant to Sections 4 and 8 hereof, on the date of
termination of employment.
8. Acceleration of Option. Notwithstanding the provisions of
Section 4, the Option granted hereby shall become immediately exercisable in
full in the event of (i) a Change of Control [to be included only in
Non-Qualified Stock Option Agreements between the Company and its Chairman,
President and Chief Executive Officer, or any one of its Senior Vice Presidents
or other executive officers], (ii) the Optionee's Disability if the Optionee
becomes Disabled while an employee of the Company, (iii) the death of the
Optionee if such death occurs while the Optionee is employed by the
Company, (iv) the Optionee's Retirement from the Company after attaining age
65, or (v) in the Board's sole discretion, the Optionee's Retirement
after attaining age 55 but not age 65. Also notwithstanding the provisions
of Section 4, the Board may determine, in its sole discretion, that the Option
granted hereby shall become immediately exercisable in full in the event of (x)
termination employment by the Company other than for Cause or (y) termination
of employment by the Optionee for Good Reason.
9. No Employment Contract. Nothing contained in this Agreement
shall confer upon the Optionee any right with respect to continuance of
employment by the Company or a Subsidiary, nor limit or affect in any manner the
right of the Company or a Subsidiary to terminate the employment or adjust the
compensation of the Optionee.
10. Taxes and Withholding. If the Company or any Subsidiary
shall be required to withhold any federal, state, local or foreign tax in
connection with the exercise of the Option, and the amounts available to the
Company or such Subsidiary for such withholding are insufficient, the Optionee
shall pay the tax or make provisions that are satisfactory to the Company or
such Subsidiary for the payment thereof. The Optionee may elect to satisfy all
or any part of any such withholding obligation by surrendering to the Company a
portion of the Optioned Shares that are issued or transferred to the Optionee
upon the exercise of the Option, and the Optioned Shares so surrendered by the
Optionee shall be credited against any such withholding obligation at the Market
Value per Share of such shares on the date of such surrender. The Company will
pay any and all issue and other taxes in the nature thereof which may be payable
by the Company in respect of any issue or delivery upon a purchase pursuant to
this Option.
11. Compliance with Law. The Company shall make reasonable
efforts to comply with all applicable federal and state securities laws;
provided, however, that notwithstanding any other provision of this Agreement,
the Option shall not be exercisable if the exercise thereof would result in a
violation of any such law.
12. Adjustments. The Board shall make or provide for such
adjustments in the number of Optioned Shares covered by this Option, in the
Option Price applicable to such Option, and in the kind of shares covered
thereby, as the Board may determine is equitably required to prevent dilution or
enlargement of the Optionee's rights that otherwise would result from (a) any
stock dividend, stock split, combination of shares, recapitalization, or other
change in the capital structure of the Company, (b) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete
liquidation, or other distribution of assets or issuance of rights or warrants
to purchase securities, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing. In the event of any such transaction
or event, the Board may provide in substitution for this Option such alternative
consideration as it may determine to be equitable in the circumstances and may
require in connection therewith the surrender of this Option.
13. Available Shares. The Company shall at all times until the
expiration of the Option reserve and keep available, either in its treasury or
out of its authorized but unissued shares of Common Stock, the full number of
Optioned Shares deliverable upon the exercise of this Option.
14. Relation to Other Benefits. Any economic or other benefit
to the Optionee under this Agreement shall not be taken into account in
determining any benefits to which the Optionee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a Subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan
covering employees of the Company or a Subsidiary.
15. Amendments. Any amendment to the Plan shall be deemed to
be an amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Optionee under this Agreement without the Optionee's consent.
16. Rights as a Stockholder. The Optionee shall have none of
the rights of a stockholder with respect to the shares of Common Stock subject
to this Option until such shares are issued to the Optionee upon exercise of the
Option.
17. Severability. In the event that one or more of the
provisions of this Agreement shall be invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated shall be deemed to be
separable from the other provisions hereof, and the remaining provisions hereof
shall continue to be valid and fully enforceable.
18. Relation to Plan. This Agreement is subject to the terms
and conditions of the Plan. In the event of any inconsistent provisions between
this Agreement and the Plan, the Plan shall govern. The Board acting pursuant to
the Plan, as constituted from time to time, shall, except as expressly provided
otherwise herein, have the right to determine any questions that arise in
connection with this Option or its exercise.
19. Successors and Assigns. Without limiting Section 5 hereof,
the provisions of this Agreement shall inure to the benefit of, and be binding
upon, the successors, administrators, heirs, legal representatives and assigns
of the Optionee, and the successors and assigns of the Company.
20. Notices. Any notice to the Company provided for herein
shall be in writing to the Company, marked Attention: ____________________ at
Galileo International, Inc., 9700 West Higgins Road, Suite 400, Rosemont,
Illinois 60018, and any notice to the Optionee shall be addressed to said
Optionee at his or her address currently on file with the Company. Except as
otherwise provided herein, any written notice shall be deemed to be duly given
if and when hand delivered, or five (5) business days after having been mailed
by United States registered or certified mail, return receipt requested, postage
prepaid, or three (3) business days after having been sent by a nationally
recognized overnight courier service such as Federal Express, UPS or Purolator,
addressed as aforesaid. Any party may change the address to which notices are to
be given hereunder by written notice to the other party as herein specified,
except that notices of changes of address shall be effective only upon receipt.
21. Governing Law. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer as of the day and year
first above written.
GALILEO INTERNATIONAL, INC.
By:_____________________
Its:____________________
The undersigned Optionee hereby acknowledges receipt of an
executed original of this Agreement and accepts the Option granted hereunder,
subject to the terms and conditions of the Plan and the terms and conditions
hereinabove set forth.
Optionee
__________________________
Date: _______________
Exhibit 5.1
[LETTERHEAD OF GALILEO INTERNATIONAL, INC.]
April 29, 1999
Galileo International, Inc.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
Re: Galileo International, Inc. 1999 Equity and Performance Incentive Plan
Ladies and Gentlemen:
I, Vice President, Legal of Galileo International, Inc., a Delaware
corporation (the "Company"), have acted as counsel for the Company in connection
with the Galileo International Inc. 1999 Equity and Performance Incentive Plan
(the "Plan"). I have examined such documents, records and matters of law as I
have deemed necessary for purposes of this opinion, and based thereupon I am of
the opinion that the 13,000,000 shares of Common Stock, $.01 par value per
share, of the Company that are the subject of the Company's Registration
Statement on Form S-8 and that may be issued and sold pursuant to the Plan (the
"Shares") will, when issued and sold in accordance with the Plan, be validly
issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement on Form S-8 filed by the Company to effect registration
of the Shares under the Securities Act of 1933.
Very truly yours,
Anthony C. Swanagan
Vice President, Legal
Exhibit 23.2
CONSENT OF KPMG LLP
The Board of Directors
Galileo International, Inc.
We consent to the incorporation by reference in the Registration Statement
on Form S-8 of Galileo International, Inc. of our report dated February 1, 1999
relating to the consolidated balance sheets of Galileo International, Inc. and
subsidiaries as of December 31, 1998 and 1997, 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, 1998, which report appears in the
December 31, 1998 annual report on Form 10-K of Galileo International, Inc.
KPMG LLP
Chicago, Illinois
April 29, 1999
Exhibit 24.1
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints James E. Barlett his or her true and lawful
attorney-in-fact and agent, 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 a Registration Statement or Registration Statements on Form
S-8 pursuant to the Securities Act of 1933, as amended, concerning certain
shares of the Common Stock, par value $.01 per share, of Galileo International,
Inc., a Delaware corporation (the "Company") and related interests to be offered
in connection with the Galileo International, Inc. 1999 Equity and Performance
Incentive Plan and any and all amendments (including post-effective amendments)
to such Registration Statement(s) and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission or any state regulatory authority, 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.
This Power of Attorney may be executed in multiple
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one and the same document.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of the 29th day of April, 1999.
Signature Title
/s/ James E. Barlett Chairman, President and Chief Executive Officer
James E. Barlett (principal executive officer)
/s/ Paul H. Bristow Director, Senior Vice President, Chief Financial
Paul H. Bristow Officer and Treasurer (principal financial and
accounting officer)
/s/ Babetta R. Gray Director, Senior Vice President, Customer Service
Babetta R. Gray Delivery, General Counsel and Secretary
/s/ Graham W. Atkinson Director
Graham W. Atkinson
/s/ Frederic F. Brace Director
Frederic F. Brace
/s/ David A. Coltman Director
David A. Coltman
/s/ Director
Wim Dik
/s/ Mina Gouran Director
Mina Gouran
/s/ Thomas A. Mutryn Director
Thomas A. Mutryn
/s/ Frank H. Rovekamp Director
Frank H. Rovekamp
/s/ Georges P. Schorderet Director
Georges P. Schorderet
/s/ Derek M. Stevens Director
Derek M. Stevens
/s/ Kenneth Whipple Director
Kenneth Whipple
