Exhibit 99.1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated June 15, 2001,
between Galileo International, Inc., a Delaware corporation (the "Company"),
and Cendant Corporation, a Delaware corporation ("Cendant").
RECITALS
WHEREAS, the Company, Cendant and Galaxy Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Cendant ("Merger Sub"),
are entering into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement"), which provides, among other things, that, upon the
terms and subject to the conditions contained therein, Merger Sub shall be
merged (the "Merger") with and into the Company; and
WHEREAS, the Company has agreed, in order to induce Cendant to enter
into the Merger Agreement, to grant the Option (as hereinafter defined) to
Cendant upon the terms and subject to the conditions set forth herein; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, and as a condition to Cendant's willingness to enter into this
Agreement, Cendant and United Air Lines, Inc., a Delaware corporation ("UAL")
and Covia, LLC a Delaware limited liability company ("Covia" and, together
with UAL, "United") are entering into a transaction support agreement (the
"Transaction Support Agreement") pursuant to which Covia has agreed, among
other things, to grant Cendant a proxy to vote its shares of Company Common
Stock (as hereinafter defined) in favor of the Merger, upon the terms and
subject to the conditions set forth therein;
WHEREAS, capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to them in the Merger
Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, mutual covenants and agreements set forth herein
and in the Merger Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. Grant of Option. The Company hereby grants to Cendant an irrevocable
option (the "Option") to purchase, subject to the terms and
conditions set forth herein, up to 17,041,071 shares (subject to
adjustment as set forth herein, the "Company Shares") of common
stock, par value $0.01 per share, of the Company (the "Company
Common Stock"), together with the preferred stock purchase rights
(the "Rights") associated with such shares issued pursuant to the
Rights Agreement, dated as of February 22, 2001, between the Company
and LaSalle National Bank Association, as Rights Agent (the "Rights
Agreement"), in the manner set forth below at a price per share of
$33.00 (subject to adjustment as set forth herein, the "Exercise
Price"); provided, however, that in no event shall the number of
shares of Company Common Stock for which the Option is exercisable
exceed 19.5% of the Company's issued and outstanding shares of
Company Common Stock. References herein to the Company Shares shall
also be deemed to included the associated Rights.
2. Exercise of Option.
(a) The Option may be exercised by Cendant, in whole or in part, at any
time or from time to time after the Merger Agreement becomes
terminable by Cendant under circumstances which could entitle
Cendant to the Fee under Section 7.6(a) of the Merger Agreement
(regardless of whether the Merger Agreement is actually terminated),
any such event being referred to herein as a "Trigger Event";
provided, however, that the Trigger Event shall not have occurred
and the Option shall not be exercisable unless and until the
Transaction Support Agreement shall have been terminated in
accordance with its terms. In the event Cendant wishes to exercise
the Option, Cendant shall deliver to the Company a written notice
(an "Exercise Notice") specifying the total number of Company Shares
it wishes to purchase and a date and time for the closing of such
purchase (a "Closing"), which date shall not be less than two nor
more than three days after the later of (a) the date such Exercise
Notice is given and (b) the expiration or termination of any
applicable waiting period under the HSR Act and the making of all
required filings and receipt of all required approvals under foreign
competition laws. The Option shall terminate upon the earliest of:
(i) the Effective Time; (ii) the termination of the Merger Agreement
pursuant to Article VII thereof (other than a termination following
the occurrence of a Trigger Event); and (iii) 5:00 p.m., New York
City time, on the date that is the one-year anniversary of the
termination of the Merger Agreement following the occurrence of a
Trigger Event, or if, at the expiration of such one-year period, the
Option cannot be exercised by reason of any applicable judgment,
decree, order, law or regulation, ten Business Days after such
impediment to exercise shall have been removed or shall have become
final and not subject to appeal.
(b) If Cendant proposes to exercise the Option following the record date
of the Stockholders Meeting, the Company, at Cendant's request given
no later than five days prior to the Stockholders Meeting, shall
take all actions necessary to fix a new record date and to hold the
Stockholders Meeting at such time that provides Cendant the
opportunity to vote the Company Shares at the Stockholders Meeting;
provided, however, that the Company's Board of Directors shall not
be required to take such action in the event that the Company's
Board of Directors determines, in good faith (with due regard for
the intention of the parties hereto that, upon exercise of the
Option, Cendant be able to vote the Company Shares at the
Stockholders Meeting) and after consideration of advice it shall
have obtained from outside counsel, that taking such action would
create a substantial probability of violating the Company's Board of
Directors' fiduciary duties to the Company's Stockholders under
applicable law.
3. Conditions to Closing. The obligation of the Company to issue the
Company Shares to Cendant hereunder is subject to the conditions
that (a) all waiting periods, if any, under the HSR Act applicable
to the issuance of the Company Shares hereunder shall have expired
or shall have been terminated and all required filings shall have
been made and all required approvals shall have been obtained under
foreign competition laws and (b) no statute, rule or regulation
shall be in effect, and no order, decree or injunction entered by
any court of competent jurisdiction or governmental entity in the
United States shall be in effect, that prohibits or restrains the
exercise of the Option pursuant to the terms of this Agreement.
4. Closing. At any Closing, (a) upon receipt of the payment provided
for by this Section 4, the Company shall deliver to Cendant a single
certificate in definitive form representing the number of Company
Shares designated by Cendant in its Exercise Notice, such
certificate to be registered in the name of Cendant (or its
designee) and to bear the legend set forth in Section 12 of this
Agreement, and (b) Cendant shall deliver to the Company the
aggregate price for the Company Shares so designated in an amount
equal to the product obtained by multiplying the Exercise Price by
the number of Company Shares to be purchased by wire transfer of
immediately available funds payable to the Company pursuant to the
Company's instructions. At any Closing at which Cendant is
exercising the Option in part, Cendant shall present and surrender
this Agreement to the Company in exchange for the delivery to
Cendant by the Company of a duly executed new agreement with the
same terms as this Agreement evidencing the right to purchase the
balance of the Company Shares.
5. Representations and Warranties of the Company. The Company
represents and warrants to Cendant that:
(a) the Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder;
(b) the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby;
(c) this Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding
obligation of Cendant, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally, the availability of injunctive relief and other equitable
remedies, and limitations imposed by law on indemnification for liability
under securities laws;
(d) the Company has taken all necessary corporate action to
authorize and reserve for issuance and to permit it to issue, upon exercise
of the Option, and at all times from the date hereof through the expiration
of the Option shall have reserved, 17,041,071 unissued Company Shares and
such other shares of the Company Common Stock or other securities which may
be issued pursuant to Section 10 of this Agreement, all of which, upon their
issuance, payment and delivery in accordance with the terms of this
Agreement, shall be duly authorized, validly issued, fully paid and
nonassessable, and free and clear of all claims, liens, charges, encumbrances
and security interests of any nature whatsoever (other than those (i) created
by or through Cendant, or any of its affiliates, (ii) which arise under this
Agreement, or (iii) which arise under the Securities Act of 1933, as amended
(the "Securities Act"), or any applicable state securities laws); upon such
issuance, payment and delivery, Cendant shall have full and unrestricted
power to vote such Company Shares; and the 17,041,071 Company Shares
represent 19.5% of the issued and outstanding shares of Company Common Stock
on the date hereof;
(e) the execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company shall
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security interest
or other encumbrance on assets pursuant to (any such conflict, violation,
default, right of termination, cancellation or acceleration, loss or
creation, a "Violation"), (i) any provision of the Certificate of
Incorporation or By-laws of the Company, (ii) any provisions of any loan or
credit agreement, note, mortgage, indenture, lease or other material
contract, agreement, obligation, instrument, permit, concession, franchise,
license of or applicable to the Company (other than (A) restrictions
contained in the Company's debt, loan and credit agreements applicable to
Section 7 of this Agreement and (B) restrictions contained in the
Registration Rights Agreement, dated as of July 30, 1997, among the Company,
Covia, USAM Corp., RESNET Holdings, Inc., Distribution Systems, Inc., Roscor
A.G., Travel Industry Systems B.V., Retford Limited, Racom Teledata S.p.a.,
Travidata, Inc., Olynet, Inc. and Coporga, Inc. (the "Existing Registration
Rights Agreement") applicable to Section 9 of this Agreement), or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or its properties or assets (other than, with
respect to Section 9 of this Agreement, compliance with the Securities Act
and applicable state securities laws), except for such Violations, in the
case of each of clauses (ii) and (iii), (1) set forth on Schedule 3.6 of the
Company Disclosure Letter delivered pursuant to the Merger Agreement or (2)
that, individually or in the aggregate, has not had and would not reasonably
be expected to have a material adverse effect on the Company's ability to
consummate the transactions contemplated by this Agreement;
(f) the execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company shall not, (i)
result in a "Triggering Event" under the Rights Agreement; or (ii) render
Section 203 of the General Corporation Law of the State of Delaware (the
"DGCL") applicable to this Agreement or the transactions contemplated hereby;
and
(g) except as described in this Agreement or in Section 3.6 of the
Merger Agreement and other than the HSR Act and applicable Regulatory Laws
and, with respect to Section 9 hereof, compliance with the provisions of the
Securities Act and any applicable state securities laws, the execution and
delivery of this Agreement by the Company does not, and the performance of
this Agreement by the Company shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Entity.
6. Representations and Warranties of Cendant. Cendant represents and
warrants to the Company that:
(a) Cendant is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the corporate
power and authority to enter into this Agreement and to perform its
obligations hereunder;
(b) the execution and delivery of this Agreement by Cendant and the
consummation by Cendant of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Cendant and
no other corporate proceedings on the part of Cendant are necessary to
authorize this Agreement or any of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by Cendant
and, assuming this Agreement constitutes a valid and binding obligation of
the Company, constitutes a valid and binding obligation of Cendant
enforceable against Cendant in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and the availability of injunctive relief and other
equitable remedies and limitations imposed by law on indemnification for
liability under applicable securities laws;
(d) the execution and delivery of this Agreement by Cendant does
not, and the performance of this Agreement by Cendant shall not, result in
any Violation pursuant to (i) any provision of the Certificate of
Incorporation or By-laws of Cendant, (ii) any provisions of any loan or
credit agreement, note, mortgage, indenture, lease, or other material
contract, agreement, obligation, instrument, permit, concession, franchise,
license of or applicable to Cendant or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Cendant or its
properties or assets (other than, with respect to Section 9 of this
Agreement, compliance with the Securities Act and applicable state securities
laws), except for such Violations, in the case of each of clauses (ii) and
(iii), that, individually or in the aggregate, has not has and would not
reasonably be expected to have a material adverse effect on Cendant's ability
to consummate the transactions contemplated by this Agreement;
(e) except as described in this Agreement or in Section 4.5 of the
Merger Agreement, and other than the HSR Act and applicable Regulatory Laws
and, with respect to Section 9 hereof, compliance with the provisions of the
Securities Act and any applicable state securities laws, the execution and
delivery of this Agreement by Cendant does not, and the performance of this
Agreement by Cendant shall not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity; and
(f) any Company Shares acquired upon exercise of the Option shall
not be, and the Option is not being, acquired by Cendant with a view to
public distribution or resale in any manner which would be in violation of
federal or state securities laws.
7. Put Right.
(a) Exercise of Put. At any time during which the Option is
exercisable pursuant to Section 2 or would be exercisable
but for the circumstances referred to in Section 3 (the
"Repurchase Period"), upon demand by Cendant, Cendant shall
have the right to sell to the Company (or any successor
entity thereof), and the Company (or such successor entity)
shall be obligated to repurchase from Cendant (the "Put"):
(i) all or any portion of the Option, at a price equal to
the product obtained by multiplying (A) the difference
between (1) the Market/Offer Price (as defined below) for
shares of Company Common Stock as of the date (the "Notice
Date") the notice of exercise of the Put is given to the
Company and (2) the Exercise Price, by (B) the number of
Company Shares purchasable pursuant to the Option (or
portion thereof with respect to which Cendant is exercising
the Put); or
(ii) all or any portion of the Company Shares purchased by
Cendant upon exercise of the Option pursuant hereto, at a
price equal to the product obtained by multiplying (A) the
higher of (1) the Exercise Price paid by Cendant for the
Company Shares acquired pursuant to the Option and (2) the
Market/Offer Price by (B) the number of Company Shares with
respect to which Cendant is exercising the Put.
As used herein, "Market/Offer Price" shall mean the higher of (x) the highest
price per share offered as of the Notice Date pursuant to any tender or
exchange offer or proposed pursuant to any other Third-Party Acquisition
proposal which was commenced or proposed prior to the Notice Date and not
terminated or withdrawn as of the Notice Date and (y) the average of the
closing sales prices of the Company Common Stock reported on the NYSE
Composite Tape for the 5 consecutive Trading Days ending on (and including)
the Trading Day immediately preceding the Notice Date. In determining the
Market/Offer Price, the value of consideration other than cash or stock as
provided above shall be determined by a nationally recognized investment
banking firm selected by Cendant and reasonably acceptable to the Company.
(b) Payment and Redelivery of Option or Shares. In the event Cendant
exercises the Put pursuant to this Section 7, the Company shall, within three
Business Days of the Notice Date, pay the required amount to Cendant in cash
by wire transfer of immediately available funds to an account specified by
Cendant two Business Days prior to the date that payment is due and Cendant
shall surrender to the Company the Option and/or the certificates evidencing
the Company Shares with respect to which Cendant is exercising the Put, and
Cendant shall warrant that it owns such Company Shares and that such Company
Shares are then free and clear of all liens, claims, charges and encumbrances
of any kind or nature whatsoever. Upon any exercise by Cendant of the Put
with respect to less than all of the Option, Cendant shall present and
surrender this Agreement to the Company in exchange for the delivery to
Cendant by the Company of a duly executed new agreement with the same terms
as this Agreement evidencing the right to purchase the balance of the Company
Shares.
8. Restrictions on Certain Actions. Until the termination of the
Option pursuant to Section 2, the Company shall not (a) amend the
Rights Agreement or adopt any shareholder rights plan or any
amendment thereto in any manner which would cause Cendant to become
an "Acquiring Person" under such Rights Agreement or shareholder
rights plan solely by reason of the beneficial ownership by Cendant
or any of its affiliates of the Company Shares subject to the Option
or by ownership by Cendant or any of its affiliates of any Company
Shares acquired pursuant to the Option; or (b) take any action, or
rescind any prior action, in any manner which would cause the Merger
or any other transaction contemplated by the Merger Agreement to
become subject to Section 203 of the DGCL solely by reason of the
beneficial ownership by Cendant or any of its affiliates of the
Company Shares subject to the Option or by ownership by Cendant or
any of its affiliates of any Company Shares acquired pursuant to the
Option.
9. Registration Rights.
(a) Demand. The Company shall, if requested in writing (a
"Registration Notice") by Cendant at any time and from time to time within
two years of the exercise of the Option (the "Registration Period"), as
expeditiously as possible, prepare and file registration statements under the
Securities Act if such registration is necessary in order to permit the sale
or other disposition of any or all shares of Company Common Stock or other
securities that have been acquired by or are issuable to Cendant upon
exercise of the Option ("Registrable Securities"); provided, however, that
Cendant shall be entitled to no more than an aggregate of two effective
registration statements hereunder. Any such Registration Notice must relate
to a number of Registrable Securities equal to at least twenty percent (20%)
of the Company Shares, unless the remaining number of Registrable Securities
is less than such amount, in which case Cendant shall be entitled to exercise
its rights hereunder but only for all of the remaining Registrable Securities
(a "Permitted Offering"). Cendant's rights hereunder shall terminate at such
time as Cendant shall be entitled to sell all of the remaining Registrable
Securities pursuant to Rule 144(k) under the Act. The Company (and/or any
person designated by the Company) shall upon receipt of the Registration
Notice relating to a proposed sale by Cendant of Registrable Securities in an
underwritten registration (subject to revocation of such Registration Notice)
have the option exercisable by written notice delivered to Cendant within 20
Business Days after the receipt of the Registration Notice, irrevocably to
agree to purchase all or any part of the Registrable Securities proposed to
be so sold for cash at a price (the "Option Price") equal to the product of
(i) the number of Registrable Securities to be so purchased by the Company
and (ii) the average of the daily closing sales price for such shares
reported on the NYSE Composite Tape for the 10 consecutive Trading Days
ending on (and including) the Trading Date immediately preceding the date
such notice was delivered by the Company to Cendant. Any such purchase of
Registrable Securities by the Company (or its designee) hereunder shall take
place at a closing to be held at the principal executive offices of the
Company or at the offices of its counsel at any reasonable date and time
designated by the Company and/or such designee in such notice within 20
Business Days after delivery of such notice. Any payment for the shares to be
purchased shall be made by delivery at the time of such closing of the Option
Price in immediately available funds. If the Company does not elect to
exercise its option pursuant to this Section 9 with respect to all
Registrable Securities, the Company shall use its reasonable best efforts to
qualify such shares of Company Common Stock or other securities not purchased
under any applicable state securities laws; provided, however, that the
Company shall not be required to qualify to do business, consent to general
service of process or submit to taxation in any jurisdiction by reason of
this provision. If the managing underwriters of such offering advise the
Company in writing that in their opinion the number of shares of the Company
Common Stock requested to be included in such registration or qualification
exceeds the number that could reasonably be expected to be sold by Cendant or
other Holders (as defined in the Existing Registration Rights Agreement), as
the case may be, in such offering, the Company shall, subject to the rights
of any Holders party to the Existing Registration Rights Agreement, include
the shares of Company Common Stock requested to be included therein by
Cendant and such other Holders pro rata (based on the number of shares of
Company Common Stock requested to be included therein). The Company shall use
reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are
required therefor, and to keep such registration statement or prospectus
effective for such period not in excess of 120 calendar days from the day
such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of the
Company hereunder to file a registration statement or prospectus and to
maintain its effectiveness may be suspended for up to 90 calendar days in the
aggregate during any 12-month period if the Company shall have determined, in
its reasonable judgment and upon the advice of outside counsel, that the
filing of such registration statement or prospectus or the maintenance of its
effectiveness would require premature disclosure of nonpublic information
that would materially and adversely affect the Company or otherwise interfere
with or adversely affect any pending or proposed offering of securities of
the Company or any other material transaction involving the Company, or the
Company would be required under the Securities Act to include audited
financial statements for any period in such registration statement or
prospectus and such financial statements are not yet available for inclusion
in such registration statement or prospectus. Subject to applicable law, the
expenses associated with the preparation and filing of any registration
statement or prospectus prepared and filed under this Section 9, and any sale
covered thereby, including the reasonable fees and expenses of one law firm
to act as Cendant's counsel ("Registration Expenses"), shall be paid by the
Company, except for underwriting discounts or commissions and brokers' fees.
In connection with any registration statement or prospectus prepared pursuant
to this Section 11, Cendant shall furnish, or cause any holder of the Option
or Company Shares (a "Holder") to furnish, the Company with such information
concerning itself and the proposed sale or distribution as shall reasonably
be required in order to ensure compliance with the requirements of the
Securities Act and to provide representations and warranties customary for
selling stockholders who are unaffiliated with the Company. In addition,
Cendant shall, and Cendant shall cause each Holder to contractually agree to,
indemnify and hold the Company, its underwriters and each of their respective
affiliates harmless against any and all losses, claims, damages, liabilities
and expenses (including, without limitation, investigation expenses and fees
and disbursements of counsel and accountants), joint or several, to which the
Company, its underwriters and each of their respective affiliates may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based solely upon an untrue statement or alleged untrue
statement of a material fact contained in written information furnished by
Cendant or any Holder to the Company expressly for use in such registration
statement. Except for losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arising out of or based solely upon an untrue
statement or alleged untrue statement of a material fact contained in written
information furnished by Cendant and any Holder to the Company expressly for
use in any registration statement, the Company shall indemnify and hold
Cendant and each Holder and each of its respective affiliates harmless
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, investigation expenses and fees and
disbursement of counsel and accountants), joint or several, to which Cendant
and each Holder and each of its respective affiliates may become subject
under the Securities Act or otherwise.
(b) Piggyback. If, during the Registration Period, the Company
effects a registration under the Securities Act of the Company Common Stock
for its own account or for the account of any other stockholders of the
Company pursuant to a firm commitment underwriting (other than on Form S-4 or
Form S-8, or any successor form), it shall use reasonable best efforts to
allow Cendant the right to participate in such registration or qualification
as long as Cendant participates in such underwriting on terms reasonably
satisfactory to the managing underwriters of such offering, and such
participation shall not affect the obligation of the Company to effect demand
registration statements for Cendant under Section 9(a); provided, that, if
the managing underwriters of such offering advise the Company in writing that
in their opinion the number of shares of the Company Common Stock requested
to be included in such registration or qualification exceeds the number that
could reasonably be expected to be sold by the Company or other stockholders,
as the case may be, in such offering, the Company shall, after fully
including therein all shares of Company Common Stock to be sold by the
Company or other stockholders, as the case may be, include the shares of
Company Common Stock requested to be included therein by Cendant pro rata
(based on the number of shares of Company Common Stock requested to be
included therein) with the shares of Company Common Stock requested to be
included therein by persons other than the Company and persons on whose
behalf the registration statement was proposed to be filed, including any
person to whom the Company owes a contractual obligation.
(c) In connection with any registration or qualification pursuant to
this Section 9, the Company and Cendant shall provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification, and contribution in connection with such
registration or qualification. The Company shall provide to any underwriters
such documentation (including certificates, opinions of counsel and "comfort"
letters from auditors) as are customary in connection with underwritten
public offerings as such underwriters may reasonably require.
(d) If the Company's securities of the same type as the Company
Common Stock beneficially owned by Cendant are then authorized for quotation
or trading or listing on The New York Stock Exchange (the "NYSE") or any
other securities exchange or automated quotations system, the Company, upon
the request of Cendant, shall promptly file an application, if required, to
authorize for quotation, trading or listing such shares of the Company Common
Stock on such exchange or system and shall use its reasonable efforts to
obtain approval, if required, of such quotation, trading or listing as soon
as practicable.
(e) Cendant shall not effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company,
or any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to, and the 90-day period beginning
on, the effective date of any underwritten registration statement relating to
shares of the Company's Common Stock (except to the extent such securities
are included in such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree.
(f) Notwithstanding anything herein to the contrary, to the extent
there is a conflict between the provisions of this Section 9 and the
provisions of the Existing Registration Rights Agreement, the provisions of
the Existing Registration Rights Agreement shall control.
10. Adjustment Upon Changes in Capitalization.
(a) In the event of any change in the Company Common Stock by reason
of stock dividends, split-ups, mergers, recapitalizations, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Option, and the Exercise Price, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Cendant shall receive, upon exercise of the Option,
the number and class of shares or other securities or property that Cendant
would have received in respect of the Company Common Stock if the Option had
been exercised immediately prior to such event or the record date therefor,
as applicable. In the event that any additional shares of Company Common
Stock otherwise become outstanding after the date of this Agreement (other
than pursuant hereto), the number of shares of Company Common Stock subject
to the Option shall be increased to equal 19.5% of the number of shares of
Company Common Stock then issued and outstanding.
(b) In the event that the Company shall enter into an agreement: (i)
to consolidate with or merge into any person, other than Cendant, Merger Sub
or another direct or indirect wholly-owned subsidiary of Cendant, and shall
not be the continuing or surviving corporation of such consolidation or
merger; (ii) to permit any person, other than Cendant, Merger Sub or another
direct or indirect wholly-owned subsidiary of Cendant, to merge into the
Company and the Company shall be the continuing or surviving corporation,
but, in connection with such merger, the then-outstanding shares of Company
Common Stock shall be changed into or exchanged for stock or other securities
of the Company or any other person or cash or any other property or the
outstanding shares of Company Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the surviving corporation; or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Cendant, Merger Sub or another direct or indirect wholly-owned subsidiary of
Cendant, then, and in each such case, the Company shall immediately so notify
Cendant, and the agreement governing such transaction shall make proper
provisions so that, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, Cendant shall, upon exercise of
the Option, receive for each Company Share with respect to which the Option
has not been exercised an amount of consideration in the form of and equal to
the per share amount of consideration that would be received by the holder of
one share of Company Common Stock less the Exercise Price (and, in the event
of an election or similar arrangement with respect to the type of
consideration to be received by the holders of Company Common Stock, subject
to the foregoing, proper provision shall be made so that the holder of the
Option would have the same election or similar rights as would the holder of
the number of shares of Company Common Stock for which the Option is then
exercisable).
11. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in no
event shall the Total Payment (as hereinafter defined) received by Cendant
and its affiliates exceed $100 million and, if it otherwise would exceed such
amount, Cendant, at its sole election, shall either (i) reduce the number of
shares of Company Common Stock subject to the Option, (ii) deliver to the
Company for cancellation Company Shares previously purchased by Cendant
(valued, for the purposes of this Section 11(a) at the average of the closing
sales prices of the Company Common Stock reported on the NYSE Composite Tape
for the 20 consecutive Trading Days ending on (and including) the Trading Day
immediately preceding the day on which the Total Payment exceeds $100
million), (iii) pay cash to the Company, or (iv) any combination thereof, so
that the actually realized Total Payment shall not exceed $100 million after
taking into account the foregoing actions.
(b) As used herein, the term "Total Payment" shall mean the sum
(before taxes) of the following: (i) any amount received by Cendant pursuant
to Section 7 hereof, (ii) (x) the net (I) cash amounts received or (II) the
fair market value of securities received by Cendant pursuant to the sale,
disposition, conversion or exchange (including any sale, disposition,
conversion or exchange in connection with any Third Party Acquisition) of
Company Shares (or any securities into which the Company Shares shall be
converted or exchanged) to any unaffiliated party within twelve months
following exercise of the Option, less (y) the aggregate Exercise Price for
such shares, (iii) any amounts received by Cendant upon transfer of the
Option (or any portion thereof) to any unaffiliated party, and (iv) the
amount, if any, of the Fee actually received by Cendant pursuant to Section
7.6(a) of the Merger Agreement.
(c) Notwithstanding any other provision of this Agreement and
subject to Section 11(a) and Section 11(b) hereof, nothing in this Agreement
shall affect the ability of Cendant to receive, or the Company's obligation
to pay, the Fee and the Parent Expenses pursuant to Section 7.6 of the Merger
Agreement.
12. Restrictive Legends. Each certificate representing shares of
Company Common Stock issued to Cendant pursuant to the Option shall
include a legend in substantially the following form:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN
THE REGISTERED HOLDER HEREOF AND THE COMPANY AND TO RESALE
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND SHALL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
COMPANY OF A WRITTEN REQUEST THEREFOR."
The Company shall, upon written request of the holder thereof, issue such
holder a new certificate evidencing such Company Shares without such legend
in the event (i) the sale of such Company Shares has been registered pursuant
to the Securities Act, or (ii) such holder shall have delivered to the
Company an opinion of counsel to the effect that subsequent transfers of such
Company Shares may be effected without registration under the Securities Act.
13. NYSE Listing and Antitrust Filings. The Company, upon request of
Cendant, shall as promptly as practicable file an application to
list Company Shares to be acquired upon exercise of the Option for
listing on the NYSE and shall use its reasonable efforts to obtain
approval for such listing as promptly as practicable. Promptly after
the date hereof, each of the parties hereto shall file all required
pre-merger notification and report forms and other documents and
exhibits required to be filed under the HSR Act and any foreign
competition laws to permit the acquisition of the Company Shares
subject to the Option at the earliest practicable date.
14. Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as expressly
provided for in this Agreement and except for any assignment by
Cendant, in whole or in part, to a wholly owned, direct or indirect,
subsidiary of Cendant (provided that any such subsidiary agrees in
writing to be bound by and liable for all of the terms, conditions
and provisions contained herein that would otherwise be applicable
to Cendant and provided further that Cendant shall remain liable for
all of its duties and obligations hereunder in the event such
subsidiary shall fail to perform hereunder), neither this Agreement
nor the rights or the obligations of either party hereto are
assignable in whole or in part (whether by operation of law or
otherwise), without the written consent of the other party and any
attempt to do so in contravention of this Section 14 shall be void.
Nothing contained in this Agreement, express or implied, is intended
to confer upon any person other than the parties hereto and their
respective permitted assigns any rights or remedies of any nature
whatsoever by reason of this Agreement.
15. Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed
in accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for which
money damages would not be an adequate remedy. Accordingly, each
party agrees that, in addition to other remedies, the other party
shall be entitled to an injunction or injunctions restraining any
violation or threatened violation of the provisions of this
Agreement and to enforce specifically the terms and provisions
hereof in the Delaware Courts (as hereinafter defined). In the event
that any action should be brought in equity to enforce the
provisions of this Agreement, neither party shall allege, and each
party hereby waives the defense that there is adequate remedy at
law.
16. Entire Agreement. This Agreement and the Merger Agreement (including
the Exhibits and Schedules thereto) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all other prior discussions, representations and
warranties, agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter
hereof.
17. Further Assurances. Subject to the terms and conditions hereof, if
Cendant exercises the Option, or any portion thereof, in accordance
with the terms of this Agreement, each party shall execute and
deliver all such further documents and instruments and take all such
further action including obtaining necessary regulatory approvals
and making necessary filings (including, without limitation, filings
under the HSR Act and any Regulatory Laws, the Securities Act and
filings with the NYSE) as may be necessary in order to consummate
the transactions expressly contemplated hereby (including the
issuance, registration and listing of the Company Shares).
18. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The words "hereof,"
"herein" and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole
and not to any particular provision of this Agreement. All terms
defined in this Agreement shall have the defined meaning contained
herein when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well as to the gender and neuter genders of such term.
Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such
agreement or instrument as from time to time amended, modified or
supplemented and attachments thereto and instruments incorporated
therein. References to a person are also to its successors and
permitted assigns. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed to also to refer to
any amendments thereto and all rules and regulations promulgated
thereunder, unless the context requires otherwise.
19. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full
force and effect. In the event any court or other competent
authority holds any provision of this Agreement to be null, void or
unenforceable, under any present or future law, public policy or
order, and if the rights or obligations of any party hereto under
this Agreement or the Merger Agreement, and the economic or legal
substance of the transactions contemplated hereby and thereby, shall
not be materially and adversely affected thereby, (i) such provision
shall be fully severable and (ii) this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith the
execution and delivery of an amendment to this Agreement in order to
the maximum extent possible to effectuate, to the extent permitted
by law, the intent of the parties hereto with respect to such
provision. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to take
any action inconsistent herewith, or not take any action required
herein, the other party shall not be entitled to specific
performance of such provision or part hereof or to any other remedy,
including but not limited to money damages, for breach hereof or of
any other provision of this Agreement or part hereof as the result
of such holding or order.
20. Notices. Any notice, request, claim, demand or communication
required or permitted hereunder shall be in writing and either
delivered personally, telegraphed or telecopied or sent by certified
or registered mail, postage prepaid, and shall be deemed to be
given, dated and received (a) on the date of delivery if delivered
personally, including by courier, (b) upon receipt if delivered by
registered or certified mail, return receipt requested, postage
prepaid or (c) upon receipt if sent by facsimile transmission,
provided that any notice received by telecopy or otherwise at the
addressee's location on any Business Day after 5:00 p.m.
(addressee's local time) shall be deemed to have been received at
9:00 a.m. (addressee's local time) on the next Business Day. Any
party to this Agreement may notify any other party of any changes to
the address or any of the other details specified in this paragraph,
provided that such notification shall only be effective on the date
specified in such notice or five Business Days after the notice is
given, whichever is later. Rejection or other refusal to accept or
the inability to deliver because of changed address of which no
notice was given shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver. All
notices hereunder shall be delivered to the parties to the addresses
or facsimile numbers set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive
such notice:
If to the Company, to:
Galileo International, Inc.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
Facsimile No.: (847) 518-4918
Attention: General Counsel
with a copy to (which shall not constitute notice):
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601
Facsimile No.: (312) 782-8585
Attention: Elizabeth C. Kitslaar, Esq.
If to Cendant, to:
Cendant Corporation
9 West 57th Street
New York, New York 10019
Facsimile No.: (212) 413-1922
Attention: General Counsel
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Facsimile No.: (302) 651-3001
Attention: Patricia Moran, Esq.
21. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to
contracts executed and to be performed fully within such State,
without giving effect to the principles of conflicts or choice of
law thereof or any other jurisdiction.
22. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
23. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties. A facsimile copy of a signature page shall be deemed to be
an original signature page.
24. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred by a party in
connection with the transactions contemplated by this Agreement,
including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel, shall be paid by the
party incurring such expenses.
25. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties
hereto, or, in the case of a waiver, by an instrument in writing
signed on behalf of the party waiving compliance.
26. Consent to Jurisdiction. Each of the parties hereto irrevocably
agrees that any action, suit, claim or other legal proceeding with
respect to this Agreement or in respect of the transactions
contemplated hereby brought by any other party hereto or its
successors or assigns shall be brought and determined in any state
or federal court located in the State of Delaware or any appeals
courts thereof (the "Delaware Courts"), and each of the parties
hereto irrevocably submits with regard to any such proceeding for
itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the Delaware
Courts. Each of the parties hereto irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the Delaware Courts for any reason, (b) that it or
its property is exempt or immune from jurisdiction of any Delaware
Court or from any legal process commenced in any Delaware Court
(whether through service of notice, attachment before judgment,
attachment in aid of execution of judgment, execution of judgment or
otherwise) and (c) to the fullest extent permitted by applicable
law, that (i) the proceeding in any Delaware Court is brought in an
inconvenient forum, (ii) the venue of such proceeding is improper or
(iii) this Agreement, or the subject matter hereof, may not be
enforced in or by a Delaware Court. Notwithstanding the foregoing,
each of the parties hereto agrees that the other party shall have
the right to bring any action or proceeding for enforcement of a
judgment entered by the Delaware Courts in any other court or
jurisdiction.
27. Remedies Cumulative. Except as otherwise herein provided, the
rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by applicable law.
28. Limitations on Warranties.
(a) Except for the representations and warranties contained in this
Agreement and the Merger Agreement, the Company makes no other express or
implied representation or warranty to Cendant. Cendant acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of the Company or any other person other than the representations
and warranties of the Company set forth in this Agreement or the Merger
Agreement.
(b) Except for the representations and warranties contained in this
Agreement and the Merger Agreement, Cendant makes no other express or implied
representation or warranty to the Company. The Company acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Cendant or any other person other than the representations and
warranties of Cendant set forth in this Agreement and the Merger Agreement.
29. Date for Any Action. In the event that any date on which any action
is required to be taken hereunder by any of the parties hereto is
not a Business Day, such action shall be required to be taken on the
next succeeding day which is a Business Day.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Option
Agreement to be executed by their respective duly authorized officers as of
the date first above written.
GALILEO INTERNATIONAL, INC.
By:/s/ James E. Barlett
--------------------------
Name: James E. Barlett
Title: Chairman, President and
Chief Executive Officer
CENDANT CORPORATION
By:/s/ Eric J. Bock
--------------------------
Name: Eric J. Bock
Title: Senior Vice President, Law
and Corporate Secretary