OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
XXXXXXXXXXX.XXX INC.
AT
$23.00 NET PER SHARE
BY
TRAVELOCITY HOLDINGS SUB INC.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SABRE HOLDINGS CORPORATION
------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, APRIL 5, 2002, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
Sabre Holdings Corporation, through its indirect wholly owned subsidiary
Travelocity Holdings Sub Inc., is offering to purchase at a price of $23.00 per
share all outstanding shares of common stock of Xxxxxxxxxxx.xxx Inc., on the
terms and subject to the conditions specified in this Offer to Purchase and
related Letter of Transmittal. Our offer is conditioned on, among other things,
the tender of a sufficient number of Travelocity shares such that, after the
Travelocity shares are purchased pursuant to the Offer, we would own at least
90% of the outstanding Travelocity common stock on an as-converted basis.
Assuming conversion of the Class A common stock of Travelocity and exchange of
all our partnership units in Xxxxxxxxxxx.xxx LP for Travelocity shares, we
currently own approximately 70% of the outstanding common stock of Travelocity
on an as-converted basis. This offer is also subject to certain other conditions
described in Section 11, "The Offer--Certain Conditions of the Offer." This
offer is not conditioned on Sabre or any of its subsidiaries obtaining any
financing or the approval of Travelocity's Board of Directors.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF SUCH TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
IMPORTANT
Any Travelocity stockholder desiring to tender all or any portion of such
stockholder's Travelocity shares should, as applicable, (1) complete and sign
the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal, including any required signature
guarantees, and mail or deliver to the Depositary (as defined herein) the Letter
of Transmittal or such facsimile with such stockholder's certificate(s) for the
tendered Travelocity shares and any other required documents, (2) follow the
procedure for book-entry transfer of Travelocity shares set forth in Section 3,
"The Offer--Procedure for Tendering Shares," or (3) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to tender shares
for such stockholder. A stockholder whose Travelocity shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must ask such broker, dealer, commercial bank, trust company or other nominee to
tender Travelocity shares as the registered stockholder.
A stockholder who desires to tender Travelocity shares and whose
certificates for such shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Travelocity shares by following the procedure for guaranteed delivery set forth
in Section 3, "The Offer--Procedure for Tendering Shares."
Questions and requests for assistance may be directed to X.X. Xxxx &
Co., Inc., the Information Agent for this offer, at its address and telephone
number set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or to the brokers, dealers, commercial banks
or trust companies holding your shares.
------------------------
The date of this Offer to Purchase is March 5, 2002.
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TABLE OF CONTENTS
SECTION PAGE
------- --------
SUMMARY TERM SHEET.......................................... 1
QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER................ 2
INTRODUCTION................................................ 6
SPECIAL FACTORS............................................. 9
Background of the Offer..................................... 9
Reasons for and Purpose of the Offer and the Merger; Sabre's
Plans for Travelocity..................................... 15
Purchaser's and Sabre's Position Regarding the Fairness of
the Offer and the Merger.................................. 16
Report of Xxxxxxx Xxxxx to the Board of Directors of
Sabre..................................................... 17
Travelocity Financial Projections........................... 22
Certain Travelocity Information............................. 23
Terms and Structure of Sabre's Ownership and Operating
Relationships with Travelocity............................ 23
Operating Relationships..................................... 24
Conduct of Travelocity's Business if the Offer is Not
Completed................................................. 30
THE OFFER................................................... 31
1. Terms of the Offer...................................... 31
2. Acceptance for Payment and Payment for Shares........... 32
3. Procedure for Tendering Shares.......................... 33
4. Rights of Withdrawal.................................... 36
5. Certain Federal Income Tax Consequences of the Offer.... 37
6. Price Range of Shares; Dividends........................ 39
7. Certain Information Concerning Travelocity.............. 39
8. Certain Information Concerning Sabre and Purchaser...... 42
9. Merger; Appraisal Rights; Rule 13e-3.................... 43
10. Source and Amount of Funds.............................. 44
11. Certain Conditions of the Offer......................... 45
12. Dividends and Distributions............................. 46
13. Certain Legal Matters................................... 47
14. Certain Effects of the Offer............................ 49
15. Fees and Expenses....................................... 50
16. Miscellaneous........................................... 51
Schedule A Information Concerning the Directors and
Executive Officers of Sabre and Purchaser........ A-1
Schedule B Security Ownership of Certain Beneficial Owners
and Management................................... B-1
Schedule C Section 262 of the Delaware General Corporate
Law.............................................. C-1
i
SUMMARY TERM SHEET
This summary highlights important information from this Offer to Purchase
but is intended to be an overview only. We urge you to read carefully the
remainder of this Offer to Purchase and the related Letter of Transmittal. We
have included section references to direct you to a more complete description of
the topics contained in this summary.
-
Sabre Holdings Corporation, through its indirect wholly owned subsidiary
Travelocity Holdings Sub Inc., is offering to buy all of the outstanding
shares of common stock of Travelocity. The tender price is $23.00 per
share in cash, without interest. See Section 1, "The Offer--Terms of the
Offer," beginning on page 31 for a description of the terms of the Offer.
- If we converted all of the Class A common stock we currently own and
exchanged all of our partnership units in Xxxxxxxxxxx.xxx LP for
Travelocity shares, we would own approximately 70% of the outstanding
Travelocity shares. References in this document to the outstanding
Travelocity common stock on an "as-converted basis" means the percentage
of Travelocity shares that we would own following our conversion of the
Class A common stock and exchange of our Xxxxxxxxxxx.xxx LP partnership
units for Travelocity shares.
- This is a "going private" transaction. If the tender offer is successful
and we own at least 90% of the outstanding Travelocity shares on an
as-converted basis, we will cause Travelocity Holdings Sub Inc. to merge
into Travelocity (the "Merger") and, as a result:
- Sabre will own all of the equity interests in Travelocity;
- You will no longer have any interest in Travelocity's future earnings
or growth;
- Travelocity will no longer be a public company; and
- Travelocity shares will no longer trade on the Nasdaq National Market.
See Section 14, "The Offer--Certain Effects of the Offer," beginning on
page 49.
- We are not required to complete the tender offer unless a sufficient
number of Travelocity shares are tendered such that, after we purchase
shares pursuant to the tender offer, we would own at least 90% of the
outstanding Travelocity shares on an as-converted basis. We also have the
right to waive or reduce the number of Travelocity shares that are
required to be tendered in the tender offer, subject to compliance with
the applicable sections of the Securities Exchange Act of 1934, as
amended. In no event, however, will we purchase Travelocity shares in the
tender offer if less than a majority of the outstanding Travelocity
shares, excluding shares beneficially owned by us, are tendered in the
tender offer.
- We have commenced the tender offer without obtaining the prior approval of
Travelocity's Board of Directors. The offer is not conditioned on the
approval of the Travelocity Board of Directors.
- The offer is not conditioned on Sabre or any of its subsidiaries obtaining
any financing.
- We will pay to those stockholders who do not tender their shares and do
not exercise their appraisal rights the same consideration in the Merger
as we pay in the tender offer.
- Stockholders who sell their shares in the offer will receive cash for
their shares sooner than stockholders who wait for the Merger to occur.
But stockholders who sell their shares in the offer will not be entitled
to a judicial appraisal of the fair value of their shares under Delaware
law. Any stockholders who do not tender their shares and dissent from the
Merger may exercise appraisal rights in accordance with Delaware law. See
Section 9, "The Offer--Merger; Appraisal Rights; Rule 13e-3," beginning on
page 43 for more information on appraisal rights.
1
QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER
- WHO IS OFFERING TO BUY MY SECURITIES?
Travelocity Holdings Sub Inc., a Delaware corporation and an indirect wholly
owned subsidiary of
Sabre Holdings Corporation, is offering to buy your
Travelocity shares as described in this document. See Section 8, "The
Offer--Certain Information Concerning Sabre and Purchaser," for further
information about us.
- WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are offering to buy all of the Travelocity shares not currently owned by
us. For information about the conditions to the offer, see Section 11, "The
Offer--Certain Conditions of the Offer."
- HOW MUCH IS SABRE OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $23.00 in cash for each Travelocity share. See
Section 1, "The Offer--Terms of the Offer," for information about the terms
of the offer.
- WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you are the record owner of your shares and you tender your shares to us
in the offer, you will not have to pay brokerage fees or similar expenses.
If you own your shares through a broker or other nominee, and your broker or
nominee tenders your shares on your behalf, it may charge you a fee for
doing so. You should consult your broker or nominee to determine whether any
charges will apply. See Section 3, "The Offer--Procedure for Tendering
Shares."
- HOW WILL U.S. TAXPAYERS BE TAXED FOR U.S. FEDERAL INCOME TAX PURPOSES?
If you are a U.S. taxpayer, your receipt of cash for Travelocity shares in
the offer will be a taxable transaction for U.S. federal income tax
purposes. You will generally recognize gain or loss in an amount equal to
the difference between (i) the cash you receive in the offer and (ii) your
adjusted tax basis in the Travelocity shares you sell in the offer. That
gain or loss will be a capital gain or loss if the shares are a capital
asset in your hands, and will be long-term capital gain or loss if the
shares have been held for more than one year at the time the offer is
completed. You are urged to consult your own tax advisor as to the
particular tax consequences of the offer to you. See Section 5, "The
Offer--Certain Federal Income Tax Consequences of the Offer."
- DOES SABRE HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. We have the financial resources to pay for all the Travelocity shares
with our cash on hand. THE TENDER OFFER IS NOT CONDITIONED ON OUR OBTAINING
ANY FINANCING. See Section 10, "The Offer--Source and Amount of Funds."
- WHAT IS THE MOST SIGNIFICANT CONDITION TO THE OFFER?
The offer is conditioned on, among other things, satisfaction of the minimum
tender condition. The minimum tender condition requires the tender of a
sufficient number of Travelocity shares so that, after the purchase of the
shares pursuant to the offer, we would own at least 90% of the outstanding
Travelocity shares on an as-converted basis (the "Minimum Condition"). See
the "Introduction" and Section 11, "The Offer--Certain Conditions of the
Offer," for a complete description of all of the conditions to which the
offer is subject.
2
- WHY IS SABRE MAKING THIS OFFER?
We have determined that the long-term strategies of Sabre and Travelocity
are converging. Taking Travelocity private would support our continuing
strategy to deliver value to suppliers and travelers across multiple
distribution channels. We believe it makes sense to combine the strengths of
both companies to pursue new revenue opportunities while optimizing
investment decisions across companies. See "Special Factors--Reasons for and
Purpose of the Offer and the Merger; Sabre's Plans for Travelocity."
- IS THIS OFFER SUPPORTED BY THE TRAVELOCITY BOARD OF DIRECTORS?
We commenced this offer without obtaining the prior approval of the
Travelocity Board of Directors. The completion of the offer is not
conditioned on the approval of the Travelocity Board of Directors. Although
the Board of Directors of Travelocity has not yet made any recommendation,
the special committee comprised of two independent, outside Travelocity
directors has publicly announced its belief that the tender offer price is
inadequate. Federal securities laws require the Travelocity Board of
Directors to advise Travelocity stockholders of its position on this offer
within ten business days of the date of this document. See "Introduction."
- WHY IS SABRE NOT SEEKING APPROVAL OF ITS OFFER FROM TRAVELOCITY'S INDEPENDENT
DIRECTORS?
We want to begin to realize the benefits of combining Travelocity and Sabre
as soon as possible and believe that making a tender offer directly to
Travelocity stockholders will be significantly faster than making a proposal
for consideration by Travelocity's independent directors and negotiating a
merger agreement with those directors. We believe that the Travelocity
stockholders are capable of evaluating the fairness of the offer. We also
note that approximately two-thirds of the shares not owned by us would need
to be tendered to satisfy the Minimum Condition. We believe that acceptance
of the offer by this many Travelocity stockholders would provide meaningful
procedural protection that obviates the need for Travelocity board approval.
Accordingly, we are not seeking to negotiate our offer with Travelocity.
Nonetheless, we are prepared to discuss our tender offer with the
independent directors of Travelocity so long as our acquisition of shares is
not delayed. We reserve the right to amend the offer if we enter into a
merger or other agreement with Travelocity. See "Special Factors--Background
of the Offer--Development of the Offer."
- HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES IN THE INITIAL
OFFERING PERIOD?
You may tender your shares under the offer until 12:00 midnight, New York
City time, on Friday, April 5, 2002, which is the scheduled expiration date
of the offering period, unless we decide to extend the offering period or
provide a subsequent offering period. See Section 3, "The Offer--Procedure
for Tendering Shares," for information about tendering your shares.
- CAN THE OFFER BE EXTENDED AND HOW WILL I BE NOTIFIED IF THE OFFER IS
EXTENDED?
Yes, we may elect to extend the offer. We can do so by issuing a press
release no later than 9:00 a.m., New York City time, on the next business
day following the scheduled expiration date of the offer. The press release
would state the approximate number of shares tendered as of that time and
would announce the extended expiration date. See Section 1 of this document,
"The Offer--Terms of the Offer," for information about extension of the
offer.
3
- WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
Following our purchase of all shares tendered during the offering period, we
may elect to provide a subsequent offering period of at least three business
days, during which time stockholders whose shares have not been accepted for
payment may tender their shares and receive the offer consideration. Tenders
during any subsequent offering period may not be withdrawn for any reason.
We are not permitted under the federal securities laws to provide a
subsequent offering period of more than twenty business days. See Sections 1
and 4, "The Offer--Terms of the Offer," and "The Offer--Rights of
Withdrawal," respectively, for more information concerning any subsequent
offering period.
- HOW DO I TENDER MY SHARES?
If you hold the certificates for your shares, you should complete the
enclosed Letter of Transmittal and enclose all the documents required by it,
including your certificates, and send them to the Depositary at the address
listed on the back cover of this document. If your broker holds your shares
for you in "street name" you must instruct your broker to tender your shares
on your behalf. In any case, the Depositary must receive all required
documents before the expiration date of the offer, which is Friday,
April 5, 2002, unless extended. If you cannot comply with any of these
procedures, you still may be able to tender your shares by using the
guaranteed delivery procedures described in this document. See Section 3,
"The Offer--Procedure for Tendering Shares," for more information on the
procedures for tendering your shares.
- UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
The tender of your shares may be withdrawn at any time before the expiration
date of the offer. There will be no withdrawal rights during any subsequent
offering period. See Section 4, "The Offer--Rights of Withdrawal," for more
information.
- HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares are held in "street name") must notify
the Depositary at the address and telephone number listed on the back cover
of this document, and the notice must include the name of the stockholder
that tendered the shares, the number of shares to be withdrawn and the name
in which the tendered shares are registered. For complete information about
the procedures for withdrawing your previously tendered shares, see
Section 4, "The Offer--Rights of Withdrawal."
- IF SABRE CONSUMMATES THE TENDER OFFER, WHAT ARE ITS PLANS WITH RESPECT TO ALL
THE SHARES THAT ARE NOT TENDERED IN THE OFFER?
If the tender offer is successful and we own at least 90% of the outstanding
Travelocity shares on an as-converted basis, we will cause Travelocity
Holdings Sub Inc. to merge into Travelocity (the "Merger") and pay to the
Travelocity stockholders who have not tendered their shares the same
consideration we paid for shares in the tender offer. Travelocity
stockholders who do not tender their shares in the offer will have a right
to dissent and demand an appraisal of the fair value of their shares under
Delaware law. If the Minimum Condition is not satisfied, we do not presently
intend to acquire any shares.
- WHEN DOES SABRE EXPECT TO COMPLETE THE OFFER AND THE MERGER?
We hope to complete the offer on Friday, April 5, 2002, the initial
scheduled expiration date. However, we may extend the offer if the
conditions to the offer have not been satisfied at the
4
scheduled expiration date or if we are required to extend the offer by the
rules of the SEC. We expect to complete the Merger shortly after completion
of the offer.
- WILL I HAVE THE RIGHT TO HAVE MY TRAVELOCITY SHARES APPRAISED?
If you tender your Travelocity shares in the offer, you will not be entitled
to exercise statutory appraisal rights under Delaware law. If you do not
tender your shares in the offer and the Merger occurs, you will have a
statutory right to demand payment of the judicially appraised fair value of
your Travelocity shares plus a fair rate of interest, if any, from the date
of the Merger. The appraised value may be more than, less than or the same
as the cash consideration we pay in the offer and the Merger. See
Section 9, "The Offer--Merger; Appraisal Rights; Rule 13e-3."
- IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If you do not tender in the offer and the Merger occurs, you will receive
the same consideration as paid in the tender offer, subject to your right to
dissent and demand an appraisal of the fair value of your shares under
Delaware law. If you exercise your appraisal rights, you will not receive
the Merger consideration unless you waive or effectively lose your appraisal
rights.
If the Merger does not occur, our purchase of shares will reduce the number
of shares that might otherwise trade publicly and may reduce the number of
holders of shares. These events could adversely affect the liquidity and
trading price of the remaining shares held by the public. The shares may no
longer be quoted on the Nasdaq National Market. Also, Travelocity may no
longer be required to make filings with the SEC or comply with the SEC's
rules relating to publicly held companies. See Section 14, "The
Offer--Certain Effects of the Offer," for complete information about the
effect of the offer on your shares.
- WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On Friday, February 15, 2002, the last full trading day prior to the public
announcement of our intention to commence the offer, the reported closing
price on the Nasdaq National Market was $19.20 per share. You should obtain
a recent market quotation for shares of the common stock of Travelocity in
deciding whether to tender your shares. See Section 6, "The Offer--Price
Range of Shares; Dividends," for recent high and low sales prices for the
Shares.
- WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
If you have questions or you need assistance you should contact the
Information Agent at the following address and telephone number:
X.X. Xxxx & Co., Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Toll Free: (000) 000-0000
Banks and Brokers may call collect: (000) 000-0000
5
TO THE HOLDERS OF COMMON STOCK OF
XXXXXXXXXXX.XXX INC.:
INTRODUCTION
Travelocity Holdings Sub Inc. ("Purchaser"), an indirect wholly owned
subsidiary of
Sabre Holdings Corporation ("Sabre"), is offering to purchase all
of the outstanding shares of common stock, par value $.001 per share (the
"Shares"), of Xxxxxxxxxxx.xxx Inc. ("Travelocity") at a purchase price of $23.00
per Share, net to the seller in cash, without interest, on the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which together constitute the "Offer"). The per share offer
price represents a 19.8% premium to the closing price of Travelocity common
stock on February 15, 2002, the last full trading day before the public
announcement of Sabre's intention to commence the Offer.
If you are a record owner of Shares, you will not be required to pay
brokerage fees or commissions or, except as described in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares
in the Offer. Stockholders who hold their Shares through bankers or brokers
should check with such institutions as to whether they charge any service fee.
However, if you do not complete and sign the Substitute Form W-9 that is
included in the Letter of Transmittal, you may be subject to a required backup
U.S. federal income tax withholding of 30% of the gross proceeds payable to you.
We will pay all charges and expenses of The Bank of New York, as Depositary (the
"Depositary"), and X.X. Xxxx & Co., Inc., as Information Agent (the "Information
Agent"), incurred in connection with the Offer.
OUR OFFER IS CONDITIONED ON, AMONG OTHER THINGS, THE TENDER OF A SUFFICIENT
NUMBER OF SHARES SUCH THAT, AFTER THE SHARES ARE PURCHASED PURSUANT TO THE
OFFER, WE WOULD OWN AT LEAST 90% OF THE OUTSTANDING SHARES ON AN AS-CONVERTED
BASIS (THE "MINIMUM CONDITION"). WE RESERVE THE RIGHT TO WAIVE OR REDUCE THE
MINIMUM CONDITION AND TO ELECT TO PURCHASE A SMALLER NUMBER OF SHARES, SUBJECT
TO COMPLIANCE WITH THE APPLICABLE SECTIONS OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE "EXCHANGE ACT"). WE HAVE NO CURRENT EXPECTATION THAT WE
WOULD SEEK TO EXERCISE THIS RIGHT. IN NO EVENT, HOWEVER, WILL WE PURCHASE SHARES
IN THE OFFER IF LESS THAN A MAJORITY OF THE OUTSTANDING SHARES, EXCLUDING THE
SHARES BENEFICIALLY OWNED BY US, ARE VALIDLY TENDERED AND NOT WITHDRAWN. OUR
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 1, "THE
OFFER--TERMS OF THE OFFER," AND SECTION 11, "THE OFFER--CERTAIN CONDITIONS OF
THE OFFER."
The purpose of the Offer is to acquire as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in Travelocity.
If the Offer is successful and we own at least 90% of the outstanding Shares on
an as-converted basis, we will cause Purchaser to merge with Travelocity through
a short-form merger (the "Merger"). In the Merger, each outstanding Share that
is not owned by us (other than Shares held by Travelocity stockholders who
dissent from the Merger and perfect their appraisal rights under the Delaware
General Corporation Law (the "DGCL")) will be converted into the right to
receive the same consideration paid in the Offer, without interest. See
Section 9, "The Offer--Merger; Appraisal Rights; Rule 13e-3." Under the DGCL, if
we own at least 90% of the outstanding Shares, we can consummate the Merger
without a vote of or prior notice to the Travelocity stockholders or Board of
Directors. See Section 9, "The Offer--Merger; Appraisal Rights; Rule 13e-3." As
a result of the Offer and the Merger, Travelocity would become a wholly owned
subsidiary of Sabre and the Shares would no longer trade publicly on any stock
exchange.
We have not asked the Travelocity Board of Directors to approve the Offer or
the Merger. The Travelocity Board must file with the Securities and Exchange
Commission (the "SEC") and provide to the Travelocity stockholders a
"Solicitation/Recommendation Statement on Schedule 14D-9" within ten business
days from the date of this document. The Travelocity Board of Directors
appointed a special committee of independent directors authorized to consider
and recommend the actions the full
6
Travelocity Board of Directors should take in connection with the Offer,
including a recommendation with respect to the position that the full
Travelocity Board should take in connection with the Schedule 14D-9. The special
committee has publicly announced its belief that the Offer price is inadequate.
We encourage you to review carefully the Schedule 14D-9 when it becomes
available.
As of the date hereof, Sabre and its wholly owned subsidiaries own all of
the 33,000,000 shares of Class A common stock of Travelocity, 30,000,000
partnership units (the "Units") in Xxxxxxxxxxx.xxx LP (the "Partnership") and
2,033,970 Shares. Assuming conversion of the Class A common stock and the
exchange of Sabre's Units into Shares, Sabre would own an additional 33,000,000
Shares which, when combined with the 2,033,970 Shares already owned by Sabre,
would represent approximately 70% of the outstanding Shares (excluding options
that are currently exercisable into Shares). The 33,000,000 shares of Class A
common stock of Travelocity and the Shares generally vote together as a single
class. Because each share of Class A common stock and Travelocity common stock
is entitled to one vote, Sabre holds approximately 70% of the voting power of
Travelocity.
According to information provided by Travelocity to Sabre, there are
approximately 17,051,811 Shares outstanding as of January 31, 2002 and
approximately 1,280,304 Shares subject to issuance at $23.00 or less under
Travelocity's stock option and incentive plans as of April 2002. Based on the
foregoing, and assuming conversion of the Class A common stock and exchange of
Sabre's Units, we believe that there would be approximately 51,332,115 Shares
outstanding (treating as outstanding Shares issuable upon the exercise of
options at $23.00 or less). Because Sabre would own 35,033,970 Shares on an
as-converted basis, we believe that at least 11,164,934 Shares must be tendered
to satisfy the Minimum Condition.
This Offer to Purchase and the documents incorporated by reference in this
Offer to Purchase include certain forward-looking statements. These statements
appear throughout this Offer to Purchase and include statements regarding our
intent, belief or current expectations of, including statements concerning our
plans with respect to, the acquisition of all of the Shares. Such
forward-looking statements are not guarantees of future performance or events
and involve risks and uncertainties. Actual results may differ materially from
those described in such forward-looking statements as a result of various
factors. Factors that might affect such forward-looking statements include,
among other things:
- general economic, capital market and business conditions;
- terrorist attacks on the United States or international targets;
- changes in government regulation;
- the risks and uncertainties described in Travelocity's and Sabre's filings
with the SEC under the Exchange Act;
- changes in tax law requirements, including tax rate changes, new tax laws
and revised tax law interpretations;
- competitive factors in the industries in which Travelocity and Sabre
operate; and
- the ability to execute fully our business strategy after taking
Travelocity private.
The information contained in this Offer to Purchase concerning Travelocity
was obtained from publicly available sources or made available by Travelocity to
Sabre. We do not take any responsibility for the accuracy of such information.
7
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF THE CONDITIONS
DESCRIBED IN SECTION 11, "THE OFFER--CERTAIN CONDITIONS OF THE OFFER." THE OFFER
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, APRIL 5, 2002,
UNLESS WE EXTEND IT.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.
8
SPECIAL FACTORS
BACKGROUND OF THE OFFER
SABRE'S INVESTMENT IN TRAVELOCITY
Sabre has offered consumer-direct online travel services since 1985. In
January 1995, Sabre established a separate business unit for this business. The
website for the Travelocity business unit was launched in March 1996. In 1999,
Sabre created a new company named Xxxxxxxxxxx.xxx Inc. that combined Sabre's
Xxxxxxxxxxx.xxx business unit with the online travel business of Preview
Travel, Inc. ("Preview Travel").
In March 2000, Sabre completed the merger of Travelocity and Preview Travel
(the "Preview Merger") combining the Travelocity business unit and Preview
Travel in a holding company/partnership structure and Travelocity common stock
began trading on the Nasdaq National Market under the symbol "TVLY".
Travelocity is a holding company whose sole assets consist of an approximate
40% partnership interest in Xxxxxxxxxxx.xxx LP. Xxxxxxxxxxx.xxx LP owns the
combined online travel businesses formerly conducted by the Travelocity business
unit and Preview Travel. Sabre and its subsidiaries own the remaining
partnership interest in Xxxxxxxxxxx.xxx LP. For further information regarding
the organizational and operating structure of Travelocity, see "Special
Factors--Terms and Structure of Sabre's Ownership and Operating Relationships
with Travelocity--Holding Company/Partnership Structure."
DEVELOPMENT OF THE OFFER
Since the time of the Preview Merger, there have been significant changes in
the travel industry and changes in the business strategies of both Sabre and
Travelocity. These changes, as further described under "Special Factors--Reasons
for and Purpose of the Offer and the Merger; Sabre's Plans for Travelocity,"
caused Sabre to re-evaluate the benefits of continuing to own a majority
interest in Travelocity while it is a publicly traded company.
Starting in the spring of 2001, Sabre management began to examine strategic
alternatives with respect to Sabre's ownership interest in Travelocity, such as
the purchase by Sabre of the Shares it did not already own, a business
combination involving Travelocity and various other online travel businesses, a
sale of Travelocity to a strategic party or the continuation of Sabre's
ownership interest in Travelocity at current levels. In the wake of the
September 11, 2001 terrorist attacks on New York and Washington, D.C. and the
ensuing impact on the travel industry in general, Sabre management postponed
further consideration of its equity interest in Travelocity until a time when
the impact of those events on the businesses of Sabre and Travelocity could be
better determined.
In January 2002, Sabre renewed its examination of Travelocity. Following
internal discussions and discussions with its financial advisor, Xxxxxxx,
Xxxxx & Co. ("Xxxxxxx Xxxxx"), and its outside legal counsel, Xxxxxx & Xxxxxxx,
Sabre concluded that the benefits of taking Travelocity private were greater
than the benefits that would result from any of the other alternatives that
Sabre had been considering. Sabre's senior management further concluded that the
acquisition of the Shares from the Travelocity public stockholders would be in
the best interests of Sabre and its stockholders. See "Special Factors--Reasons
for and Purpose of the Offer and the Merger; Sabre's Plans for Travelocity" for
details regarding Sabre's reasons for the Offer and the Merger.
On February 15, 2002, the Sabre Board of Directors met to consider the
Offer. The Sabre Board received presentations from senior management, Xxxxxxx
Xxxxx and Xxxxxx & Xxxxxxx and discussed the Offer and related matters
extensively, but took no formal action with respect to the Offer.
9
On February 16, 2002, Xxxxxxx X. Xxxxxxxx, Xxxxx's Chairman and Chief
Executive Officer, made separate telephone calls to Xxxxxxx X. Xxxxx,
Travelocity's President and Chief Executive Officer, and X. Xxxxxxx Xxxxxx, a
member of the Travelocity Board of Directors and Chairman of its governance
committee (which oversees and advises on the policies, practices and procedures
relating to the business and financial relationship between Sabre and
Travelocity). In each of those phone conversations, Xx. Xxxxxxxx said that a
Sabre Board of Directors meeting was scheduled for Monday, February 18, 2002 to
consider a going private proposal whereby Sabre would make a cash tender offer
to acquire all of the Shares not already owned by Sabre. Xx. Xxxxxxxx also
informed them that, if the Sabre Board approved the proposal, he would send a
formal letter outlining the proposal to the Travelocity Board on Monday,
February 18 and that Sabre would publicly announce the going private proposal
before the opening of the stock markets on Tuesday, February 19. Xx. Xxxxxxxx
also said Sabre believed that it would be desirable for the independent
directors of Travelocity to be constituted as a special committee to respond to
any proposal made by Sabre, and that it would be appropriate for the special
committee to hire independent legal and financial advisors. Xx. Xxxxxxxx
concluded each conversation by stating that Sabre wanted Travelocity and the
Travelocity Board to be able to continue business in the ordinary course,
including various on-going commercial and strategic discussions with Sabre,
notwithstanding any Sabre proposal.
On February 17, 2002, Xx. Xxxxx and Xxxxxx X. Xxxxxxxxx, Executive Vice
President, Administration, General Counsel and Corporate Secretary of
Travelocity, called Xx. Xxxxxxxx to discuss the timing of the going private
proposal that Sabre was considering. In this conversation, Xx. Xxxxx and
Xx. Xxxxxxxxx asked if Sabre had considered engaging in discussions with the
Travelocity independent directors before making any public announcement of a
proposal. Xx. Xxxxxxxx expressed his view that Sabre would probably follow the
schedule that had been described.
On February 18, 2002, Xxxxx X. Xxxxxxxx, Executive Vice President and
General Counsel of Sabre, and Xxxxxxx X. Xxxxxx, a partner at Xxxxxx & Xxxxxxx,
called Xx. Xxxxxxxxx and X. Xxxxx XxXxxx, a partner of Xxxxx, Xxxxxxx & Xxxx
LLP, to discuss general procedural matters relating to a planned meeting of the
Travelocity Board of Directors to consider the Sabre proposal. They also
discussed the potential reactions suppliers and business partners of Travelocity
might have to Sabre's going private proposal.
Later on February 18, 2002, the Board of Directors of Sabre unanimously
approved the Offer and the Merger and authorized Sabre management to send a
letter that evening to the Board of Directors of Travelocity and to announce
publicly on February 19, 2002, Sabre's intention to commence the Offer. On the
evening of February 18, 2002, Xx. Xxxxxxxx delivered the following letter to the
Travelocity Board of Directors:
February 18, 2002
The Board of Directors
Xxxxxxxxxxx.xxx Inc.
00000 Xxxxxxx Xxxx.
Fort Worth, Texas 76155
Ladies and Gentlemen:
It has become clear that the long-term strategies of Sabre and Travelocity
are converging. We believe that this transaction would serve the best interests
of our collective shareholders, employees and business partners, and achieve our
vision of serving travelers across multiple channels. Accordingly, we are
pleased to advise you that Sabre intends to commence a cash tender offer for all
of the outstanding shares of common stock of Travelocity not owned by Sabre or
its affiliates at a purchase price of $23.00 per share in cash. This tender
offer price would represent a 19.8% premium over Friday's closing price of
$19.20.
10
The tender offer will be conditioned on the tender of a number of shares
sufficient to bring Sabre's ownership interest in Travelocity common stock to
90% (assuming conversion of Sabre's Class A common stock), but will not be
subject to any financing contingency. We anticipate acquiring any shares not
purchased in the tender offer through a short-form merger, at the same cash
price per share as the tender offer.
We believe that the transaction will deliver greater value to suppliers and
travelers across multiple channels. Sabre believes it makes sense to combine the
strengths of both companies to pursue new revenue opportunities, while
optimizing investment decisions across companies.
Through this offer, it is our intention that Travelocity will become a
wholly-owned Sabre company. There are no plans to change the Travelocity
executive team, strategic direction or brand.
In order to promptly and fully realize these strategic benefits, we wish to
complete the acquisition of the public Travelocity shares as quickly as
possible. We believe it would be desirable for the three independent directors
of Travelocity to be constituted as a special committee to respond to our
proposal on behalf of Travelocity's public shareholders, and our representatives
on the Travelocity Board will vote in favor of that delegation of authority. We
also encourage the special committee to retain legal and financial advisors to
assist it in its review. Sabre would also welcome the opportunity to present its
proposal to the special committee. Our current intention is to launch the tender
offer on or soon after March 5.
We are hopeful that by proceeding with a tender offer Sabre will be able to
complete its acquisition of the public Travelocity shares quickly and thereby
enable Travelocity's shareholders to receive payment for their shares earlier
than would be the case if we sought to negotiate a merger agreement. Therefore,
we do not intend to seek a conventional long-form merger, but rather will
utilize a short-form merger procedure assuming we attain requisite share
ownership.
A copy of the press release announcing our intentions to commence a tender
offer is attached for your information. We expect to issue the press release
tomorrow.
Xxx Xxxxxx will head the Sabre business team on this transaction and Xxx
Xxxxxxxx will lead our legal team. They may be reached at (000) 000-0000 and
(000) 000-0000, respectively. If you have any questions concerning our offer,
please contact them.
Very truly yours,
Xxxxxxx X. Xxxxxxxx
Chairman, Chief Executive Officer and
President
Later in the evening on February 18, 2002, the Travelocity Board of
Directors met and voted to establish a special committee comprised of
independent directors X. Xxxxxxx Xxxxxx and Xxxxx Xxxxxxx (the "Special
Committee"). The Special Committee was authorized to consider and recommend the
actions that the full Travelocity Board of Directors should take in connection
with the proposal made by Sabre. The Special Committee was also authorized to
retain independent legal and financial advisors. The Special Committee
subsequently retained Xxxxxxx Xxxxx Xxxxxx Inc. ("Xxxxxxx Xxxxx Xxxxxx") as its
financial advisor and Xxxxx, Xxxxxxx & Xxxx LLP as its legal counsel.
On the morning of February 19, 2002, Sabre issued a press release announcing
its intention to commence the tender offer on or soon after March 5, 2002.
On February 19, 2002, the Special Committee sent a letter to Sabre
expressing its interest in working with Sabre to structure a transaction
providing the minority stockholders of Travelocity with the best opportunity to
maximize the value of their Shares. In the letter, the Special Committee asked
11
if Sabre would be interested in exploring alternatives to Sabre's going private
proposal, such as the sale of some or all of Sabre's interest in Travelocity to
a third party. Responding to the Special Committee in a letter dated
February 20, 2002, Sabre stated that, regardless of the outcome of the Offer,
Sabre had no intention of selling any of its equity interest in Travelocity and
that Sabre remained committed to its proposal to acquire 100% of the equity
interest in Travelocity in order to achieve its strategic vision of better
serving travelers across multiple channels.
On February 19, 2002, Xx. Xxxxxxxx met with Xx. Xxxxx and other members of
Travelocity management to discuss the reactions of Travelocity's suppliers to
the going private proposal and Sabre's general intentions with respect to
Travelocity employees and Travelocity's stock option and incentive plans.
Xx. Xxxxxxxx informed the Travelocity managers that Travelocity's position as a
Sabre company was not expected to change following the successful completion of
the tender offer. He also said that Travelocity's business goals would remain
the same, as would its brand, culture and values. With respect to employee
matters, Xx. Xxxxxxxx said that Sabre intended to maintain Travelocity employee
levels and Travelocity compensation plans and to assume existing employee stock
options. Xx. Xxxxxxxx stated that any future changes relating to Travelocity
employees would be the result of decisions made by Travelocity's management in
the ordinary course of business.
On February 19, 2002, a representative of Xxxxxxx Xxxxx, on behalf of Sabre,
contacted a representative of Xxxxxxx Xxxxx Xxxxxx, to discuss certain
preliminary matters. During this conversation, the representative of Xxxxxxx
Xxxxx Xxxxxx expressed his desire to discuss with Sabre and its advisors certain
issues raised by Sabre's going private proposal. The representative of Xxxxxxx
Xxxxx indicated that Sabre was prepared to explain its proposal to the Special
Committee and desired to conduct certain due diligence on Travelocity. The
representative of Xxxxxxx Xxxxx and the representative of Xxxxxxx Xxxxx Xxxxxx
agreed that the parties should meet during the week of February 25, 2002.
Between February 19 and February 25, 2002, Xxxxxxx Xxxxxxx, Senior Vice
President of Human Resources for Sabre Inc., and Xxxxx Xxxxxxxxxx, Senior Vice
President of Human Resources for Travelocity, had discussions regarding the
terms of Travelocity's employee stock option and benefit plans and other
Travelocity benefit and compensation matters. In these conversations,
Xx. Xxxxxxxxxx agreed to provide Sabre with copies of certain compensation and
option plans and agreements that would help Sabre better understand the benefit
arrangements at Travelocity. Xx. Xxxxxxxxxx also indicated that Travelocity
management requested more detail about Sabre's intentions with respect to the
Travelocity employees if the proposed tender offer were successful. In response,
Xx. Xxxxxxx explained that Sabre sought to minimize disruption to the
Travelocity employees and would work with Xx. Xxxxxxxxxx to provide greater
clarification of Sabre's intentions. Xx. Xxxxxxx also confirmed that Sabre would
assume all existing Travelocity employee stock options and retain the same
vesting schedules, terms and conditions that currently govern those options. He
also confirmed that Travelocity's compensation plans would remain in place
during 2002 and would be reviewed in 2003 in a manner similar to the way such
plans are currently reviewed at Travelocity.
On February 20, 2002, Xx. Xxxxx and Xxxxxxx X. Xxxxxxx, Executive Vice
President, Chief Financial Officer and Treasurer of Sabre, discussed by
telephone Sabre's offer to provide a loan to Travelocity in the amount of
approximately $40 million for the purpose of funding the purchase price of a
proposed acquisition by Travelocity. Xx. Xxxxxxx said Xxxxx would deliver to
Travelocity draft documentation evidencing the loan.
On February 21, 2002, a representative of Xxxxxxx Xxxxx, on behalf of Sabre,
and a representative of Xxxxxxx Xxxxx Xxxxxx, on behalf of Travelocity, had a
telephone discussion regarding the scheduling of a meeting between the Special
Committee and representatives of Sabre. In this conversation, the representative
of Xxxxxxx Xxxxx Xxxxxx informed the representative of Xxxxxxx Xxxxx that
Travelocity was not prepared to allow Sabre to conduct due diligence on
Travelocity.
12
Between February 22 and February 27, 2002, Xxxxx X. Xxxxxxxx, Corporate
Secretary for Sabre, and Xx. Xxxxxxxxx had various telephone discussions about
Sabre obtaining access to the Travelocity stockholders list and certain other
related matters. In these conversations, Xx. Xxxxxxxxx recommended that Sabre
deliver a formal request for a stockholders list. On February 25, 2001,
Xx. Xxxxxxxx delivered such a formal request letter to Travelocity in accordance
with Delaware law.
On February 24, 2002, Xx. Xxxxxxxx and Xx. Xxxxxxxxx discussed by phone
whether and how the announcement of the Offer might affect on-going coordination
between Sabre and Travelocity in ordinary course of business commercial matters
and in certain strategic initiatives, including the evaluation of possible
acquisition opportunities. Xx. Xxxxxxxxx and Xx. Xxxxxxxx determined to seek the
recommendation of the Special Committee, based on the advice of its counsel, and
to proceed on the basis of that recommendation and advice. See "Special
Factors--Operating Relationships--Certain Matters Relating to Acquisitions by
Sabre and Travelocity."
On February 25, 2002, a representative of Xxxxxxx Xxxxx, on behalf of Sabre,
and a representative of Xxxxxxx Xxxxx Xxxxxx, on behalf of Travelocity, had a
telephone conversation about Sabre's perspective on the Offer price for the
Shares of Travelocity. The representative of Xxxxxxx Xxxxx described to the
representative of Xxxxxxx Xxxxx Xxxxxx portions of the preliminary report
Xxxxxxx Xxxxx delivered to the Sabre Board of Directors in connection with
Sabre's consideration of the Offer. The representative of Xxxxxxx Xxxxx Xxxxxx
and the representative of Xxxxxxx Xxxxx also discussed the financial performance
of Travelocity.
On February 25, 2002, Xx. Xxxxxx and Xx. XxXxxx had a telephone conversation
regarding the conduct of ordinary course business matters between Sabre and
Travelocity and the coordination of on-going strategic initiatives involving
both parties. As a separate matter, Xx. Xxxxxx reiterated Sabre's desire to
perform certain due diligence on Travelocity. In response, Xx. XxXxxx agreed to
review a due diligence request list from Sabre. Subsequently, Xxxxxxx Xxxxx, on
behalf of Sabre, sent a due diligence request list to a representative of
Xxxxxxx Xxxxx Xxxxxx.
On February 26, 2002, Xx. Xxxxxxx had a telephone conversation with
Xx. Xxxxxxxxx concerning Sabre's intentions relating to employee stock programs,
benefits and employment levels. Xx. Xxxxxxx reiterated that Sabre would assume
all employee stock options and that Sabre expected employment levels and
employee benefits to remain unchanged. Xx. Xxxxxxx stated that any future
changes relating to Travelocity employees would be the result of decisions made
by Travelocity's management in the ordinary course of business.
On February 26, 2002, Xxxxx X. Xxxxxx, Senior Vice President of Corporate
Development and Treasurer of Sabre Inc., and Xx. Xxxxx discussed by telephone
Sabre's offer, previously communicated, to provide a loan of approximately $40
million to Travelocity for the purpose of funding the purchase price of a
proposed acquisition by Travelocity. Subsequently, on March 4, 2002, Sabre
delivered to Travelocity draft documentation to evidence the loan.
On February 27, 2002, the Special Committee, together with representatives
of Xxxxxxx Xxxxx Xxxxxx, met with Xx. Xxxxxx and representatives of Xxxxxxx
Xxxxx. During this meeting, the Sabre participants and the Special Committee
participants described their views of Travelocity's value. Xxxxxxx Xxxxx, on
behalf of Sabre, presented to Xxxxxxx Xxxxx Xxxxxx and the Special Committee
portions of the preliminary financial analyses that Xxxxxxx Xxxxx had presented
to the Sabre Board of Directors and other preliminary materials that summarize
Sabre's observations regarding the Offer.
In particular, Xxxxxxx Xxxxx cited several factors Sabre used in determining
the Offer price for the Shares, including (i) the recent relative financial
underperformance of Travelocity relative to a key competitor, Expedia, Inc.
("Expedia"), (ii) Travelocity's lagging merchant model position relative to
competitors, (iii) the size of average discounts on a calendar year 2002 price
to taxed earnings per share basis at which the Shares traded relative to those
of Expedia over several recent relevant time
13
periods, and the implications of these discounts for the implied value of the
Shares and (iv) premiums paid by majority or controlling shareholders in buy-in
transactions from 1995 to 2002. Xxxxxxx Xxxxx Xxxxxx, at the request of the
Special Committee, presented valuation observations to Sabre and Xxxxxxx Xxxxx.
In particular, Xxxxxxx Xxxxx Xxxxxx expressed the belief, based on three
valuation methodologies, that the value of the Shares ranges from $30 to $55.
The first methodology applied selected Expedia trading multiples to projected
2002 and 2003 Travelocity metrics, with each of the results discounted by ten
percent. The second methodology applied premiums paid by majority or controlling
shareholders in buy-in transactions from 1999 to 2002. The third methodology
relied on pro forma analyses, including various levels of hypothetical
synergies, in calculating the maximum price Sabre could hypothetically pay per
Share in a going private transaction without diluting its earnings. Xxxxxxx
Xxxxx Xxxxxx did not present the assumptions used to calculate the Travelocity
projections relied on in its valuation analyses. During the meeting, the parties
also discussed Sabre's intention to launch the proposed tender offer on or soon
after March 5, 2002.
On February 28, 2002, a representative of Xxxxxxx Xxxxx, on behalf of Sabre,
and a representative of Xxxxxxx Xxxxx Xxxxxx, on behalf of Travelocity, had a
telephone conversation to discuss certain follow-up matters relating to the
February 27 meeting. The representative of Xxxxxxx Xxxxx expressed Sabre's
willingness to continue discussing with the Special Committee the circumstances
under which the Special Committee would be prepared to recommend the proposed
tender offer. However, the representative of Xxxxxxx Xxxxx suggested that, based
on the discussions at the February 27 meeting, Sabre did not believe that such
discussions would be productive at that time. The representative of Xxxxxxx
Xxxxx confirmed that Sabre expected to commence the proposed tender offer as
planned.
On March 1, 2002, Xx. Xxxxxx called Xx. XxXxxx to discuss certain matters
relating to the February 27 meeting. Xx. Xxxxxx and Xx. XxXxxx discussed
generally the same matters that the representative of Xxxxxxx Xxxxx and the
representative of Xxxxxxx Xxxxx Xxxxxx discussed in their February 28, 2002
telephone conversation.
On March 1, 2002, a representative of Xxxxxxx Xxxxx Xxxxxx, on behalf of
Travelocity, telephoned a representative of Xxxxxxx Xxxxx and informed him that
the Special Committee had met and had also reached the conclusion that further
discussions regarding the circumstances under which the Special Committee would
support the proposed tender offer would not be fruitful in the near term.
On March 4, 2002, Xx. Xxxxxx and Xx. XxXxxx discussed general procedural
matters relating to the planned meeting of the Travelocity Board of Directors to
consider Sabre's proposed tender offer.
On March 4, 2002, a representative of Xxxxxxx Xxxxx received a letter from
the Special Committee declining Sabre's request to conduct due diligence in
light of the unilateral nature of the proposed tender offer and the fact that
there were no pending negotiations between the parties to reach a mutually
acceptable price.
In the evening on March 4, 2002, the Travelocity Board of Directors met to
receive the Special Committee's initial report regarding Sabre's proposed tender
offer. At this meeting, representatives of Xxxxxxx Xxxxx Xxxxxx presented a
report concluding that a $23.00 per share tender offer price is inadequate.
Xxxxxxx Xxxxx Xxxxxx presented valuation observations that included analyses and
information similar to the analyses and information presented at the
February 27 meeting between the Special Committee and Sabre. The Special
Committee then presented its report regarding Sabre's proposed tender offer to
the Travelocity Board which concluded that, if Sabre commenced a tender offer at
a price of $23.00 per share, such price would be inadequate. Representatives of
Sabre did not participate in the discussion of the reports of Xxxxxxx Xxxxx
Xxxxxx or the Special Committee. The
14
Travelocity Board of Directors, with the five Sabre representatives and Xx.
Xxxxx abstaining, approved the Special Committee's report.
On March 5, 2002, the Offer was commenced.
REASONS FOR AND PURPOSE OF THE OFFER AND THE MERGER; SABRE'S PLANS FOR
TRAVELOCITY
We have determined that the long-term strategies of Sabre and Travelocity
are converging. Sabre's strategy is to deliver value to suppliers and travelers
across multiple distribution channels, as Travelocity does for the online
leisure channel. Because the travel industry is rapidly evolving, we believe it
makes sense to combine the strengths of both companies to pursue new revenue
opportunities while optimizing investment decisions across companies.
We believe that by making Travelocity a wholly owned subsidiary, we will
have greater operating flexibility to make Travelocity an integral component of
our strategy to focus on serving the traveler and delivering value to suppliers.
The important position of Travelocity within our strategic plans has been
complicated by the constraints and additional costs related to the operation of
Sabre and Travelocity as separate companies with independent stockholder bases,
including the costs associated with the procedural and compliance requirements
of a public company. Monitoring and resolving potential conflicts of interest
between Sabre and Travelocity, whether in connection with inter-company
agreements, corporate opportunities, customer and supplier relationships or
otherwise, within the Travelocity operational structure has affected our ability
to implement our business strategies in a manner that is most favorable to Sabre
and its customers and suppliers. See "Special Factors--Terms and Structure of
Sabre's Ownership and Operating Relationships with Travelocity." Making
Travelocity a wholly owned subsidiary of Sabre will reduce these complications
and costs and allow us to execute our strategy more efficiently and to meet
customer and supplier needs more effectively.
The purpose of the Offer and the Merger is for Sabre to acquire for cash as
many outstanding Shares as possible as a first step in acquiring the entire
equity interests in Travelocity not owned by Sabre and its subsidiaries.
If the Offer is successful and we obtain at least 90% of the outstanding
Shares on an as-converted basis, we will effect the Merger. As a result of the
Offer and the Merger, Travelocity would become a wholly owned subsidiary of
Sabre and the Shares would no longer trade publicly on any stock exchange.
If, after the Offer is completed but prior to consummation of the Merger,
the aggregate ownership by Sabre and its subsidiaries of the outstanding Shares
should fall below 90% on an as-converted basis due to the exercise of
outstanding options to acquire Shares or for any other reason, Purchaser may
decide to acquire additional Shares in the open market or in privately
negotiated transactions to the extent required for such ownership to equal or
exceed 90%. Any such purchases would be made at market prices or privately
negotiated prices at the time of purchase, which may be higher or lower than or
the same as the Offer price.
Following completion of the Offer and the Merger, we will cause the Shares
to be delisted from the Nasdaq National Market and Travelocity will be a
privately held corporation. Accordingly, current stockholders who are not
affiliated with us will not have the opportunity to participate in the earnings
and growth of Travelocity and will not have any right to vote on corporate
matters. Similarly, after completion of the Merger, former stockholders will not
face the risk of losses resulting from Travelocity's operations or from any
decline in the value of Travelocity.
Except as otherwise described in this Offer to Purchase, Sabre has no
current plans or proposals or negotiations which relate to or would result in:
(i) an extraordinary corporate transaction, such as a merger (other than the
Merger), reorganization or liquidation involving Travelocity; (ii) any purchase,
sale or transfer of a material amount of assets of Travelocity; (iii) any
material change in Travelocity's present dividend rate or policy; (iv) any
change in the management of Travelocity (other than Sabre's
15
intention to appoint a board of directors comprised solely of members of
Travelocity's and Sabre's management after the Merger) or any change in any
material term of the employment contract of any executive officer; or (v) any
other material change in Travelocity's corporate structure or business. We
expressly reserve the right to change our business plans with respect to
Travelocity based on future developments.
PURCHASER'S AND SABRE'S POSITION REGARDING THE FAIRNESS OF THE OFFER AND THE
MERGER
We believe the Offer and the Merger are both financially and procedurally
fair to Travelocity's stockholders who are not affiliated with Purchaser and
Sabre. We base our belief on our observations of the following factors, each of
which, in our judgment, supports our views as to the fairness of the Offer and
the Merger.
- The $23.00 per Share cash consideration payable in the Offer represents a
19.8% premium to the closing price on February 15, 2002, the last trading
day prior to public announcement of the Offer.
- We believe that the Travelocity stockholders are capable of evaluating the
fairness of the Offer.
- The Offer is conditioned on the tender of at least a sufficient number of
Shares such that, after the Shares are purchased pursuant to the Offer, we
would own at least 90% of the outstanding Travelocity common stock on an
as-converted basis. Accordingly, approximately two-thirds of the Shares
not owned by us would need to be tendered to satisfy the Minimum
Condition. Acceptance of the Offer by this many Travelocity stockholders
would provide meaningful procedural protection for Travelocity
stockholders.
- Travelocity stockholders who elect not to tender their Shares in the Offer
will receive the same consideration in the Merger that we pay in the
Offer, subject to their right to dissent from the Merger and demand an
appraisal of the fair value of their Shares under the DGCL.
- The report of Xxxxxxx Xxxxx to the Sabre Board of Directors on
February 15, 2002 regarding the potential purchase by Sabre of the
publicly held Shares, including (i) the financial comparison of
Travelocity and Expedia (a key competitor of Travelocity), (ii) the
trading prices and volumes of Travelocity common stock over various
periods between March 8, 2000 and February 14, 2002, (iii) the relative
price-to-taxed earning per share ("EPS") multiples at which Travelocity
common stock has traded in the recent past compared to those of Expedia,
(iv) various public market valuation metrics for Travelocity, Hotel
Reservation Network, Inc., xxxxxxxxx.xxx Incorporated and Expedia, and
(v) summary statistics for previously completed minority buy-in
transactions between January 1, 1995 and February 14, 2002. See "Special
Factors--Report of Xxxxxxx Xxxxx to the Board of Directors of Sabre."
- We believe that each of the foregoing observations is relevant to all of
the Travelocity stockholders who are not affiliated with us.
We determined that the following factors were not relevant indicators of the
value of the Shares:
- book value ($13.46 per Share as of September 30, 2001), which we do not
believe has any meaningful relation to the economic value of the Shares,
particularly because a majority of Travelocity's assets are intangible
assets;
- liquidation value, which we do not believe to be relevant because
substantial value results from continuing Travelocity as a going concern
and any liquidation would destroy that value; and
- other recent firm offers for Travelocity, of which we are aware of none.
The foregoing discussion of the information and factors considered by us is
not intended to be exhaustive but includes all material factors we considered.
In view of the variety of factors considered
16
in connection with our evaluation of the Offer and the Merger, we did not find
it practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching our determination and
recommendation.
Our view as to the fairness of the Offer and the Merger should not be
construed as a recommendation as to whether or not you should tender your
Shares.
REPORT OF XXXXXXX XXXXX TO THE BOARD OF DIRECTORS OF SABRE
Xxxxxxx Xxxxx, in its role as financial advisor to Sabre, has advised Sabre
regarding its strategic alternatives with respect to its investment in
Travelocity. In that regard, at the request of Sabre's management, on
February 15, 2002, Xxxxxxx Xxxxx presented a preliminary report to Sabre's Board
of Directors that set forth:
- recent financial information of Travelocity in comparison with recent
financial information of Expedia;
- price and trading activity of the Shares for various periods;
- premiums over various trading prices for the Shares based on a range of
offer prices;
- the equity value, enterprise value and certain multiples for Travelocity
and certain other selected companies in the online travel sector;
- a comparison of tax-effected price to calendar year 2002 earnings
estimates on a daily basis for Travelocity and Expedia over various time
periods based on estimates reported by Institutional Brokers Estimate
System ("IBES");
- a summary of premiums paid by majority or controlling shareholders in
recent buy-in transactions; and
- an analysis of the pro forma effect of the Offer and the Merger on Sabre
based on estimates reported by XXXX.
Xxxxxxx Xxxxx did not prepare the preliminary report to recommend or provide
support for a fair or appropriate offer price for the Shares not held by Sabre.
Had Xxxxxxx Xxxxx intended to do so, the information and comparisons presented
in the preliminary report may have been different. The preliminary report was
intended to serve as a guide for discussions with Sabre's Board of Directors in
connection with Sabre's potential acquisition of the Shares. Xxxxxxx Xxxxx
presented the preliminary report to Sabre's Board of Directors and answered
related questions. Xxxxxxx Xxxxx was not asked to and has not delivered a
fairness opinion to Sabre in connection with the Offer.
THE FULL TEXT OF THE PRELIMINARY REPORT OF XXXXXXX XXXXX, DATED
FEBRUARY 15, 2002, IS ATTACHED AS EXHIBIT (C) TO THE SCHEDULE TO, FILED ON MARCH
5, 2002 IN CONNECTION WITH THE OFFER, AND IS INCORPORATED HEREIN BY REFERENCE.
THE DESCRIPTION OF THE PRELIMINARY REPORT IN THE OFFER TO PURCHASE IS QUALIFIED
BY REFERENCE TO EXHIBIT (C), COPIES OF WHICH MAY BE OBTAINED FROM THE SEC.
HOLDERS OF SHARES ARE URGED TO, AND SHOULD, READ SUCH REPORT IN ITS ENTIRETY.
In preparing its preliminary report, Xxxxxxx Xxxxx relied upon the accuracy
and completeness of all of the financial, accounting and other information
reviewed by it and has assumed such accuracy and completeness for purposes of
the report. Xxxxxxx Xxxxx was not asked to make, and did not assume
responsibility for making, any independent evaluation or appraisal of
Travelocity or its assets and liabilities, and did not verify, and has not
assumed any responsibility for making any independent verification of the
information Xxxxxxx Xxxxx reviewed.
THE PRELIMINARY REPORT DOES NOT CONSTITUTE A RECOMMENDATION AS TO WHETHER
ANY HOLDER OF SHARES SHOULD TENDER THEIR SHARES IN THE OFFER.
17
SUMMARY OF PRELIMINARY REPORT PREPARED BY XXXXXXX XXXXX
The following is a summary of the material financial analyses used by
Xxxxxxx Xxxxx in connection with the preliminary report to Sabre's Board of
Directors. The following summary, however, does not purport to be a complete
description of the analyses performed by Xxxxxxx Xxxxx. The order of the
analyses described and the results of the analyses do not represent relative
importance or weight given to these analyses by Xxxxxxx Xxxxx. The following
summaries of financial analyses include information presented in tabular format.
You should read these tables together with the text of each summary.
FINANCIAL COMPARISON OF TRAVELOCITY AND EXPEDIA. Xxxxxxx Xxxxx reviewed a
number of key metrics of financial information of both Travelocity and Expedia
based on information provided by these companies on a historical basis and by
securities analysts on a projected basis. For both Travelocity and Expedia,
Xxxxxxx Xxxxx reviewed:
- total gross bookings for calendar years 1999, 2000 and 2001 and as
projected by securities analysts for calendar year 2002;
- relative market share of total gross bookings on a quarterly basis for
calendar years 2000 and 2001 and on an annual basis for calendar year 2001
and as projected for calendar year 2002;
- sequential quarterly revenue growth for 2000 and 2001; and
- net revenue and quarterly earnings before interest, taxes, depreciation
and amortization ("EBITDA") margins.
Based on this review, Xxxxxxx Xxxxx calculated that Travelocity's share of
combined total gross bookings declined from 59% in the fourth calendar quarter
of 2000 to 47% in the fourth calendar quarter of 2001. In addition, Xxxxxxx
Xxxxx calculated that:
- Travelocity's gross bookings declined by 24% between the first and fourth
calendar quarters of 2001, from $833.6 million to $630.2 million, while
Expedia's gross bookings grew by 4% over the same period, from
$674.0 million to $704.0 million;
- Travelocity's revenue declined by 7% between the first and fourth quarter
of 2001, from $72.9 million to $68.1 million, while Expedia's revenue grew
by 43% over the same period, from $57.2 million to $81.8 million; and
- Expedia had a 26% EBITDA margin in the fourth calendar quarter of 2001
compared with an EBITDA margin of 12% for Travelocity in the same period.
QUOTED HISTORICAL SHARE PRICE SUMMARY. Xxxxxxx Xxxxx compiled and presented
(i) the historic reported price and trading activity for the Shares for the
period between March 8, 2000, the date Travelocity's common stock first became
publicly traded (the "Initial Trading Date"), and February 14, 2002, and
(ii) the historic reported price for the Shares for the period between
September 10, 2001 and February 14, 2002 and for specified dates during that
period.
VOLUME OF SHARES TRADED AT VARIOUS PRICES. Xxxxxxx Xxxxx compiled and
presented the historic trading activity at the various share prices for the
Shares during (i) the three-month period between November 14, 2001 and
February 14, 2002, (ii) the six-month period between August 14, 2001 and
February 14, 2002, (iii) the one-year period between February 14, 2001 and
February 14, 2002, and (iv) the period between the Initial Trading Date and
February 14, 2002. Xxxxxxx Xxxxx determined that the weighted average price and
total shares traded as a percentage of shares of common stock outstanding
(excluding 33 million shares of Travelocity Class A common stock held entirely
by Sabre
18
and its subsidiaries, which do not trade publicly but are exchangeable into
common stock) for each period was as follows:
TOTAL SHARES TRADED
WEIGHTED AS PERCENT OF SHARES
PERIOD AVERAGE PRICE OUTSTANDING
------ ------------- --------------------
November 14, 2001 to February 14, 2002................. $23.53 180.6%
August 14, 2001 to February 14, 2002................... 19.53 417.9
February 14, 2001 to February 14, 2002................. 22.69 750.0
Initial Trading Date to February 14, 2002.............. 22.06 962.3
COMPARISONS OF PUBLICLY TRADED ONLINE TRAVEL COMPANIES. Xxxxxxx Xxxxx
reviewed and compared certain financial information, including market
capitalization, enterprise values, and certain ratios and public market
multiples relating to Travelocity and corresponding information for three other
online travel companies:
- Expedia;
- Hotel Reservations Network, Inc.; and
- xxxxxxxxx.xxx Incorporated.
The following table presents for these online travel companies and
Travelocity:
- Closing price of February 14, 2002 expressed as a percent of the stock's
52-week high;
- Enterprise value, which is equity value plus debt plus book value of
minority interest minus cash;
- Enterprise value as a multiple of revenue and as a multiple of projected
EBITDA for years 2001 and 2002;
- EBITDA as a percentage of revenue, or margins, for fiscal years 2001 and
2002;
- Projected taxed cash price/earnings ("PE") multiples for calendar years
2002 and 2003;
- Five-year forecasted compound annual growth rate ("CAGR") of EPS; and
- The ratio of the PE to forecasted EPS growth rates (the "PEG Ratio") for
2002.
The multiples and other financial information calculated by Xxxxxxx Xxxxx
were based on the closing prices on February 14, 2002 for the selected online
travel companies' common stock and the most recent publicly available
information for the selected companies. The enterprise value revenue and EBITDA
multiples were based on securities analyst projections. The taxed cash PE
multiples, the PEG Ratio and EPS CAGR figures were based on estimates from IBES.
The values provided below are in millions.
ENTERPRISE VALUE MULTIPLES
FEBRUARY 14, -----------------------------------------
2002 CLOSING EBITDA
SHARE PRICE AS REVENUE EBITDA MARGINS
A % OF 52 ENTERPRISE ------------------- ------------------- -------------------
WEEK HIGH VALUE 2001 2002 2001 2002 2001 2002
-------------- ---------- -------- -------- -------- -------- -------- --------
Mean................. 67.6% $1,870 4.8x 3.3x 38.5x 23.4x 11.2% 13.1%
Median............... 70.4 1,838 4.1 3.0 34.8 22.2 11.7 14.5
Travelocity.......... 51.9 868 2.9 2.4 35.1 16.5 8.2 14.5
TAXED CASH
P/E
MULTIPLES 5-YEAR 2002
------------------- EPS PEG
2002 2003 CAGR RATIO
-------- -------- -------- --------
Mean................. 46.6x 31.1x 29.2% 1.5x
Median............... 47.3 29.1 30.0 1.5
Travelocity.......... 43.9 29.3 30.0 1.5
In addition, Xxxxxxx Xxxxx compiled, compared and presented in graphical
format the ratio of stock price to calendar year 2002 earnings, as projected by
IBES on a daily basis for Travelocity and Expedia for (i) the three-month period
from November 13, 2001 to February 14, 2002 and (ii) the period from May 1, 2001
to February 14, 2002.
19
BID PREMIUM SUMMARY. Xxxxxxx Xxxxx calculated hypothetical bid premiums at
a range of various bid prices (between $20.00 and $30.00) over the closing price
of Travelocity common stock of $19.67 on February 14, 2002, and at average
prices of the Shares for (i) the three-month period between November 14, 2001
and February 14, 2002, (ii) the six-month period between August 14, 2001 and
February 14, 2002, (iii) the one-year period between February 14, 2001 and
February 14, 2002, and (iv) the period between the Initial Trading Date and
February 14, 2002.
A summary of the results follows:
CLOSING PRICE PREMIUM (DISCOUNT) AT BID PRICES
OR AVERAGE ---------------------------------------------------------------
TIME PERIOD SHARE PRICE $20.00 $22.00 $24.00 $26.00 $28.00 $30.00
----------- ------------- -------- -------- -------- -------- -------- --------
February 14, 2002........................ $19.67 2% 12% 22% 32% 42% 53%
Since Initial Trading Date............... 22.69 (12) (3) 6 15 23 32
1 year................................... 23.28 (14) (6) 3 12 20 29
6 months................................. 21.04 (5) 5 14 24 33 43
3 months................................. 23.58 (15) (7) 2 10 19 27
In addition, Xxxxxxx Xxxxx calculated the implied PE ratio and PEG Ratio for
fiscal year 2002, using IBES median estimates for EPS, at the closing price of
Travelocity common stock of $19.67 on February 14, 2002, and at the range of bid
prices and for the date and time periods specified above. Xxxxxxx Xxxxx also
calculated the implied enterprise value EBITDA multiple for fiscal years 2001
and 2002 at the closing price of Travelocity common stock of $19.67 on
February 14, 2002, and at the range of bid prices and for the date and time
periods specified above. The results of these analyses are as follows:
AT MARKET BID PRICES
---------- ---------------------------------------------------------------
$19.67 $20.00 $22.00 $24.00 $26.00 $28.00 $30.00
---------- -------- -------- -------- -------- -------- --------
Implied 2002 PE Ratio...................... 43.9x 44.6x 49.1x 53.6x 58.0x 62.5x 67.0x
Implied 2002 PEG Ratio..................... 1.5 1.5 1.6 1.8 1.9 2.1 2.2
Implied 2001 Enterprise Value/
EBITDA Multiple.......................... 35.1 35.8 39.8 43.9 47.9 52.0 56.0
Implied 2002 Enterprise Value/
EBITDA Multiple.......................... 16.5 16.8 18.7 20.6 22.5 24.4 26.3
PREMIUM SUMMARY OF RECENT TRANSACTIONS. Xxxxxxx Xxxxx reviewed and compared
67 transactions involving the acquisition of all outstanding shares of a target
company by their respective majority or controlling stockholders between 1995
and February 14, 2002. The 67 transactions consisted of 44 all-cash
transactions, 15 all-stock transactions and eight transactions with both cash
and stock consideration. Based on this review, Xxxxxxx Xxxxx determined that for
the 67 transactions:
- the overall mean for the premium of initial bid to target stock price one
day prior to announcement was 20.9%;
- the overall median for the premium of initial bid to target stock price
one day prior to announcement was 15.8%;
- the overall mean for the premium of final price to the target stock price
one day prior to announcement was 32.2%; and
- the overall median for the premium of final price to the target stock
price one day prior to announcement was 22.6%.
PRO FORMA SUMMARY OF BUY-IN SCENARIOS. Xxxxxxx Xxxxx prepared pro forma
analyses of the financial impact of the transaction using IBES median earnings
estimates for Sabre of $1.85 in 2002 and $2.35 in 2003 and earnings estimates
for Travelocity based on tax-effected IBES median estimates of $0.45 in 2002 and
$0.67 in 2003. For each of years 2002 and 2003, using the closing price of Sabre
common stock of $45.23 and Travelocity common stock of $19.67 on February 14,
2002 and various hypothetical bid prices based on a range of buy-in premiums
paid over the closing price of Travelocity
20
common stock of 5% to 50%, Xxxxxxx Xxxxx compared the EPS of the Sabre common
stock, on a standalone basis, to the EPS of the Sabre common stock on a pro
forma basis under the four following financing options:
- Stock acquisition;
- Stock acquisition--assuming a 20% discount to the February 14, 2002 Sabre
stock price;
- Cash acquisition--assuming balance sheet cash is not replaced by equity;
and
- Cash acquisition--assuming an 8% pre-tax cost of debt in both 2002 and
2003 resulting from a 0.50% premium to Sabre's fixed rate debt cost.
The table below summarizes the results of the transaction to Sabre on a pro
forma basis calculated using the IBES estimates described above under the four
financing options assuming a 5% and 20% buy-in premium:
BUY-IN FINANCING OPTION
--------------------------------------------------------
SABRE STOCK AT SABRE STOCK BALANCE SHEET DEBT
CURRENT PRICE DOWN 20% CASH FINANCING
-------------- ----------- ------------- ---------
5% PREMIUM
Accretion/(Dilution) absolute
2002E................................ $(0.06) $(0.08) $0.00 $(0.06)
2003E................................ (0.05) (0.08) 0.01 (0.06)
Accretion/(Dilution)
2002E................................ (3.2)% (4.4)% 0.2% (3.0)%
2003E................................ (2.2) (3.3) 0.6 (2.4)
PE Multiple to Maintain Share Price
2002E................................ 25.3x 25.6x 24.4x 25.2x
2003E................................ 19.7 19.9 19.1 19.7
20% PREMIUM
Accretion/(Dilution) absolute
2002E................................ $(0.07) $(0.10) $0.00 $(0.07)
2003E................................ (0.07) (0.10) 0.01 (0.07)
Accretion/(Dilution)
2002E................................ (3.8)% (5.2)% 0.0% (3.7)%
2003E................................ (2.8) (4.1) 0.3 (3.1)
PE Multiple to Maintain Share Price
2002E................................ 25.4x 25.8x 24.4x 25.4x
2003E................................ 19.8 20.1 19.2 19.9
No company or transaction used in the above analyses as a comparison is
directly comparable to Sabre or Travelocity or the contemplated transaction.
The analyses were prepared solely for purposes of Xxxxxxx Xxxxx' report to
Sabre's Board of Directors. These analyses do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of Sabre, Xxxxxxx
Xxxxx or any other person assumes responsibility if future results are
materially different from those forecast.
Xxxxxxx Xxxxx, as part of its investment banking business, is continually
engaged in preparing financial analyses with respect to businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and for estate, corporate and other
purposes. In addition to
21
having acted as financial advisor in connection with the Offer, Xxxxxxx Xxxxx
has provided certain investment banking services to Sabre from time to time,
including having acted as:
- financial advisor to AMR Corporation in connection with the spin off of
AMR Corporation's entire ownership interest in Sabre to the stockholders
of AMR Corporation in March 2000;
- financial advisor to Sabre in connection with the merger of Travelocity
with Preview Travel in March 2000;
- co-lender of Sabre under an $865 million bridge credit facility in October
2000, the balance of which has been paid in full;
- financial advisor to Sabre in connection with Sabre's acquisition of
GetThere Inc. in October 2000;
- financial advisor to Sabre in connection with the divestiture of Sabre's
information technology outsourcing business to Electronic Data Systems
Corp. in July 2001; and
- Lead Manager of the public offering of Sabre's 7.35% Notes due 2011, in
August 2001.
Xxxxxxx Xxxxx received customary fees in connection with the previous
engagements described above. Xxxxxxx Xxxxx may provide investment banking
services to Sabre in the future. Xxxxxxx Xxxxx provides a full range of
financial advisory and securities services and, in the course of its normal
trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of Sabre and Travelocity for its
own account and for the account of customers.
Pursuant to a letter agreement, executed in February 2002, Sabre engaged
Xxxxxxx Xxxxx to act as its financial advisor in connection with the possible
acquisition, directly or indirectly, of all or a portion of the common stock or
assets of Travelocity. Pursuant to the terms of the engagement letter, Sabre has
agreed to pay Xxxxxxx Xxxxx as compensation for its services as financial
advisor in connection with any such transaction, including the Offer, a
transaction fee of $4 million, $1.125 million of which became payable upon
delivery to Travelocity's Board of Directors of the Sabre proposal to acquire
all of the Shares, with the balance of the transaction fee due upon the closing
of the Offer. Sabre also has agreed to reimburse Xxxxxxx Xxxxx for its
reasonable out-of-pocket expenses, including attorneys' fees, and to indemnify
Xxxxxxx Xxxxx against certain liabilities, including certain liabilities under
the federal securities laws.
TRAVELOCITY FINANCIAL PROJECTIONS
PROJECTIONS PREPARED BY TRAVELOCITY. We understand that Travelocity does
not, as a matter of course, make public forecasts or projections as to future
sales, earnings or other income statement data, cash flows or balance sheet and
financial position information. However, as part of Travelocity's ongoing
financial planning process, Travelocity prepares financial projections, which
are not publicly available, of Travelocity's results of operations which are
provided to Sabre in the ordinary course of business on an annual basis for
Sabre's budgeting process (the "Travelocity Projections").
The following is a summary of the financial projections for 2002 provided by
Travelocity to Sabre in December 2001:
2002 FORECAST(1)
(IN MILLIONS)
----------------
Total Revenues.............................................. $380.2
Operating Expenses.......................................... 342.7
Operating Income............................................ $ 37.5
======
------------------------
(1) Does not include stock compensation expense and amortization of
intangibles from the Preview Merger.
22
CAUTIONARY STATEMENT CONCERNING PROJECTIONS. The Travelocity Projections
have been included in the Offer for the limited purpose of giving stockholders
access to financial projections that were prepared by Travelocity management and
delivered to Sabre. Such information was prepared by Travelocity management for
internal use and not with a view to publication.
The Travelocity Projections were based on assumptions concerning Travelocity
services, business prospects and other revenue and operating assumptions.
Travelocity has not provided these assumptions to Sabre, nor has Sabre had an
opportunity to discuss the Travelocity projections or the underlying assumptions
with Travelocity's management. Projected information of this type is considered
a forward looking statement based on estimates and assumptions that are
inherently subject to significant economic and competitive uncertainties and
contingencies, including those risks described in Travelocity's filings with the
SEC under the Exchange Act. These uncertainties and contingencies are difficult
to predict and many are beyond the ability of any company to control.
Accordingly, there can be no assurance that the projected results would be
realized or that actual results would not be significantly higher or lower than
those set forth above. In addition, the Travelocity Projections were not
prepared with a view to public disclosure or compliance with the published
guidelines of the SEC or the guidelines established by the American Institute of
Certified Public Accountants regarding projections and forecasts. Neither Sabre
nor Travelocity's independent accountants have examined, complied or applied any
agreed upon procedures to this information and, accordingly, assume no
responsibility for the accuracy of this information. We make no representation
as to the accuracy or validity of the foregoing projections.
CERTAIN TRAVELOCITY INFORMATION
Five of the nine directors of Travelocity are Sabre representatives. In
their capacities as directors of Travelocity, these five individuals from time
to time receive non-public information concerning Travelocity. This information
includes financial updates and other business information of Travelocity. These
individuals do not generally communicate information received in their
capacities as directors of Travelocity to others at Sabre and in particular have
not disclosed to others at Sabre any financial information. Sabre does not
believe that information received by these individuals in their capacities as
directors and not communicated to others at Sabre is in the possession of Sabre
for purposes of its disclosure requirements under the federal securities laws
and, accordingly, Sabre is not disclosing any such information.
Travelocity is required by the federal securities laws to provide
Travelocity stockholders with a "Solicitation/Recommendation Statement on
Schedule 14D-9" within ten business days from the date hereof. This will contain
important information and may include certain material non-public information
that Travelocity believes is necessary for stockholders to make a decision with
respect to the Offer. We urge all Travelocity stockholders to carefully review
this document when it becomes available.
TERMS AND STRUCTURE OF SABRE'S OWNERSHIP AND OPERATING RELATIONSHIPS WITH
TRAVELOCITY
HOLDING COMPANY/PARTNERSHIP STRUCTURE
In connection with the Preview Merger, Sabre combined the Travelocity
business unit and Preview Travel in a holding company/partnership structure with
Travelocity as a holding company whose sole assets are approximately 40% of the
Units. The remaining Units are held by Sabre and its subsidiaries. The
Partnership conducts the Travelocity business. For further information regarding
the Partnership, see "Special Factors--Operating Relationships--The
Partnership."
In connection with the Preview Merger, Travelocity, the Partnership, Sabre
and certain of Sabre's affiliates entered into various agreements governing the
operations of the Partnership, the management of the day-to-day affairs of the
Partnership by employees of Sabre's wholly owned subsidiary, Travelocity
Holdings, Inc., the contributions of the assets and liabilities of the
Travelocity business unit
23
and Preview Travel to the Partnership and other agreements related to the
separation of the Travelocity business unit from Sabre. For further information
regarding these agreements see "Special Factors--Operating
Relationships--Certain Related Party Transactions."
Travelocity is controlled by Sabre, which exercises voting control over all
matters requiring stockholder approval including the election of directors and
approval of significant corporate transactions. The Preview Merger converted the
shares of Travelocity's common stock that Sabre previously owned into what is
now 33,000,000 shares of Travelocity's Class A common stock. Such stock, at
Sabre's sole discretion, is convertible into Shares, receives dividends and
distributions and has voting rights, which, together with the Travelocity common
stock held by Sabre, gives Sabre approximately 70% of the voting power of
Travelocity. Assuming conversion of the Class A common stock and the exchange of
Sabre's 30,000,000 Units into Shares, Sabre would own an additional 33,000,000
Shares which, when combined with the 2,033,970 Shares already owned by Sabre,
would represent approximately 70% of the outstanding Shares on an as-converted
basis.
OPERATING RELATIONSHIPS
Travelocity and certain of its affiliates, directors and executive officers
have engaged in certain transactions and are parties to certain arrangements
with Sabre, Purchaser and certain of their affiliates, directors and executive
officers. Information regarding these transactions, including the amounts
involved, is set forth below and in note 11 to the consolidated financial
statements included in Travelocity's annual report for the year 2000 on
Form 10-K filed on April 2, 2001 and Form 10-K/A filed on August 1, 2001. The
description provided in this Offer for Purchase regarding these transactions is
qualified by reference to Travelocity's Form 10-K. See "The Offer--Certain
Information Concerning Travelocity--Available Information."
THE PARTNERSHIP
The Partnership is a Delaware limited partnership owning the combined
Travelocity business unit and Preview Travel businesses. The Partnership is
governed by a nine member board of directors. Sabre has the right to elect four
directors of the Partnership and Travelocity has the right to elect the
remaining five directors.
The partners in the Partnership are:
- Travelocity and its wholly owned subsidiary, Xxxxxxxxxxx.xxx LP
Sub, Inc., and
- Sabre and its wholly owned subsidiaries Sabre Inc., Travelocity
Holdings, Inc. and TSGL Holding, Inc. (together the "Sabre Partners").
The general partners are Travelocity and Travelocity Holdings, Inc. The
other partners are limited partners. As a result of the Preview Merger, the
Sabre Partners own an economic interest of approximately 70% in the Partnership,
composed of an approximate 60% direct interest in the Partnership and an
indirect interest through Travelocity of approximately 10%.
PARTNERSHIP UNITS EQUIVALENT TO TRAVELOCITY'S COMMON STOCK. One Unit is
economically equivalent to one Share. The organizational documents of the
Partnership and Travelocity provide that, when Travelocity issues new shares of
common stock, the Partnership will issue additional Units to Travelocity, and
when Travelocity acquires its own shares of common stock, it will return the
same number of Units to the Partnership.
To enable the Sabre Partners to maintain their proportionate interest in the
Partnership, Travelocity Holdings, Inc. has the right to contribute cash or
property to the Partnership in exchange for Units when the Partnership issues
additional partnership units to Travelocity because Travelocity is issuing new
shares of common stock. However, the Sabre Partners do not have this right when
Travelocity issues its common stock to employees upon the exercise of stock
options. The Sabre
24
Partners' equity interest in the Partnership, and the equity interest of
Travelocity's public stockholders, are diluted in such instances.
SPECIAL MAJORITY APPROVAL RIGHTS. As long as the Sabre Partners own 30% or
more of the Units, a special majority of the Partnership's board, including at
least one director designated by Travelocity and one director designated by
Travelocity Holdings, Inc., must approve any action: to admit a new partner; to
consolidate or merge the Partnership with another entity; to liquidate or
dissolve the Partnership, initiate bankruptcy proceedings, or dispose of
substantially all of the Partnership's assets; to enter into any line of
business other than providing consumer-direct travel content, travel reservation
services and related goods and services through internet websites; to issue,
directly or indirectly, any Units other than as the partnership agreement
expressly permits; or to make distributions of cash or property to partners, or
acquire partnership interests, except as the partnership agreement expressly
permits.
PARTNERS' ACCOUNTS AND DISTRIBUTIONS. The partnership agreement contains
customary provisions regarding the partners' capital accounts, the allocation of
profits and losses and distributions to the partners. The Partnership will make
distributions to the partners so they may pay any taxes they incur in connection
with their proportionate share of the results of operations of the Partnership.
As the partner responsible for tax matters, Travelocity Holdings, Inc. makes tax
elections for the Partnership and causes the Partnership to prepare tax returns.
The partnership agreement provides that Travelocity must contribute to the
Partnership the tax benefit that Travelocity realizes from the utilization of
net operating loss carryforwards acquired from Preview Travel in the Preview
Merger. As a result, the partners share the benefit associated with Preview
Travel's losses in proportion to their ownership of the Partnership. In
addition, the partnership agreement provides that Travelocity must make
contributions to the Partnership if Travelocity receives tax benefits
attributable to its share of the Partnership's losses.
CERTAIN RELATED PARTY TRANSACTIONS
In connection with the Preview Merger, Travelocity, the Partnership, Sabre
and certain of Sabre's affiliates entered into various agreements governing the
operations of the Partnership, the management of the day-to-day affairs of the
Partnership by employees of Travelocity Holdings, Inc., the contributions of the
assets and liabilities of the Travelocity business unit and Preview Travel to
the Partnership and other agreements related to the separation of the
Travelocity business unit from Sabre. These agreements are, from time to time,
amended, supplemented or modified by the parties thereto and approved by the
governance committee of Travelocity's Board of Directors, which committee
oversees and advises on the policies, practices and procedures relating to the
business and financial relationship between Sabre and Travelocity (the
"Governance Committee"). These agreements are described below.
NONCOMPETITION AGREEMENT. Sabre, Sabre Inc., Travelocity and the
Partnership entered into a noncompetition agreement which generally prohibits
Sabre and Sabre Inc., subject to certain exceptions, from competing with
Travelocity in the consumer-direct real-time travel reservations, service and
content business through the internet until March 7, 2002. In addition, Sabre
and Sabre Inc. are prohibited during this period of time from owning 20% or more
of the stock of any company over which Sabre or Sabre Inc. has effective control
if such company competes with Travelocity in the consumer-direct real-time
travel reservations, services and content business through the internet unless
Sabre or Sabre Inc. uses reasonable efforts to divest itself of the competing
portion of the business within one year. Despite the noncompetition agreement,
Sabre Inc. may continue to offer travel related reservations, services and
content through and to travel agencies, corporations and travel suppliers
through which such entities enable consumers to book reservations through the
Internet, and may continue to offer its "Virtually There Online" product
directly to consumers over the Internet as long as such product does not enable
air, car, hotel, tour and cruise bookings other than through Travelocity.
25
MANAGEMENT SERVICES AGREEMENT. Travelocity Holdings, Inc. and the
Partnership entered into a management services agreement under which Travelocity
Holdings, Inc. supervises and manages the day-to-day operations of the
Partnership, subject to the direction and oversight of the Partnership's Board
of Directors. As the Partnership's agent, Travelocity Holdings, Inc. acts for
the Partnership with respect to the management of the Partnership's operations,
personnel, maintenance of accounting records and execution and performance of
contracts and licenses, among other responsibilities. Travelocity
Holdings, Inc. does not have the authority to act for the Partnership with
respect to any agreement or transaction between the Partnership and Travelocity
Holdings, Inc. or any of its affiliates. In addition, Travelocity
Holdings, Inc. does not have the authority to approve, on the Partnership's
behalf, any decisions that would require a supermajority vote under certain
provisions of the partnership agreement.
Travelocity Holdings, Inc. designates the executive officers of the
Partnership, subject to the approval of the Partnership's Board of Directors.
Travelocity Holdings, Inc. employs and pays the senior executive officers of the
Partnership and all other persons providing services under the management
services agreement (approximately ten other persons).
In return for its services, the Partnership pays Travelocity Holdings, Inc.
a fee equal to 105% of Travelocity Holdings, Inc.'s costs and expenses in
performing services under the management services agreement (including executive
salaries). In each of 2000 and 2001, the Partnership paid approximately
$4 million to Travelocity Holdings, Inc. for its services under the agreement.
The Partnership has granted to Travelocity Holdings, Inc. options to acquire
Travelocity's common stock to enable Travelocity Holdings, Inc. to concurrently
grant to its employees options to acquire Travelocity's common stock on the same
terms. When these options are exercised, the Partnership will transfer shares of
Travelocity's common stock to Travelocity Holdings, Inc., which will then
transfer such shares to its employees. This will dilute the interests of Sabre
and the Travelocity public stockholders in the Partnership.
The parties agreed to indemnify each other for losses resulting from their
breach of the management services agreement. Travelocity Holdings, Inc. will
indemnify the Partnership for losses resulting from its gross negligence or
willful misconduct.
The management services agreement will terminate:
- at any time, by the mutual consent of the parties;
- if one party breaches the agreement and the other party elects to
terminate; or
- if Sabre directly or indirectly owns less than 35% of the Partnership and
Travelocity Holdings, Inc. or the Partnership elects to terminate the
agreement.
MARKETING AGREEMENT. A subsidiary of Sabre and Abacus International
Holdings Ltd ("Abacus Holdings") is the owner of the joint venture company
Abacus International Pte Ltd. ("Abacus"). An agreement between the joint venture
parties, which was executed while Travelocity was a wholly-owned business unit
of Sabre, may restrict Travelocity from directing promotions of its services to
consumers in Southeast Asia, Australia, New Zealand, Japan, India and other
nearby regions. The agreement also provides Abacus the first opportunity to
market Travelocity's underling technology to Internet service providers in this
area. In addition, after Travelocity becomes profitable, as measured by
generally accepted accounting principles, it will be required to transfer a
proportional amount of revenues based upon the percentage of bookings made in
the restricted marketing area to Abacus. Sabre, Xxxxxx and Abacus Holdings have
recently executed a waiver pursuant to which certain restrictions under the
Marketing Agreement have been waived subject to the satisfaction of conditions
precedent which have not yet been fulfilled.
26
TRANSACTIONS BETWEEN SABRE AND THE PARTNERSHIP
In contemplation of the Preview Merger and subsequent transactions, the
Partnership entered into various agreements with Sabre and certain of Sabre's
affiliates. The most significant of these agreements are described below. In
addition to the terms summarized below, the agreements include provisions for
early termination, confidentiality, indemnification, limitation of liability and
other terms and conditions. These agreements are, from time to time, amended,
supplemented or modified by the parties thereto and approved by the Governance
Committee.
ACCESS AGREEMENT. The Partnership and Sabre Inc. entered into an access
agreement for the provision of booking services and travel content to the
Partnership. The agreement generally restricts the Partnership's use of
specified booking services that compete with Sabre Inc.'s services. The
agreement requires the Partnership to use the Sabre computer reservation system,
in any particular year, for a number of bookings that is at least equal to a
specified percentage of its total bookings during the prior year. If the
Partnership fails to meet this minimum booking threshold, then it will have to
pay Sabre Inc. liquidated damages. In addition, the Partnership must use its
reasonable efforts to maintain a system on the Partnership's website that
enables referrals of bookings for ticketing by Sabre Inc. agencies.
Sabre Inc. pays fees to the Partnership based on:
- the gross number of travel segments that are booked through the
Partnership in the Sabre system; and
- the gross number of passenger name records in the Sabre system which
originate through the Partnership and are referred to a Sabre Inc. travel
agency for ticketing.
Sabre Inc. also pays fees to the Partnership for additional marketing
obligations undertaken by the Partnership. In 2000 and 2001, Sabre paid the
Partnership approximately $44 million and $67 million, respectively, for access
fees and marketing obligations. The Partnership pays fees to Sabre based on the
Partnership's use of messages and terminal addresses in the Sabre system. In
2000 and 2001, the Partnership paid Sabre approximately $14 million and
$24 million, respectively, in connection with its use of messages and terminal
addresses in the Sabre system. At the end of each four year period, beginning on
the fourth anniversary of March 7, 2000, the pricing structure is open for
negotiation, within parameters appropriate for Sabre customers of similar size,
configuration and business activity to the partnership and other relevant market
comparisons.
The term of the agreement is 15 years, although the Partnership may
terminate the agreement earlier if Sabre fails to remain one of the four largest
global distribution systems in the North American market, as determined by the
number of air travel bookings in North America.
MARKETING AND FARES AGREEMENT. Effective in August 2001, Sabre Inc. and the
Partnership entered into a marketing and fares agreement in which Sabre Inc.
agreed to pay the Partnership a marketing fee to reimburse it for a portion of
the incentives that the Partnership provides to suppliers for access to certain
supplier inventory. Under the agreement, Sabre Inc. pays the Partnership the
marketing fee for bookings made by consumers in the United States on the
Travelocity websites via the Sabre system, for which Sabre Inc. receives a
booking fee. In exchange for the marketing fee, the Partnership agreed to
provide Sabre Inc. with equivalent economic value in various ways, or to refund
the marketing fee to Sabre without interest. In 2001, Sabre Inc. paid the
Partnership approximately $1.3 million pursuant to these arrangements.
TECHNOLOGY SERVICES ARRANGEMENTS. In March 2000, the Partnership and Sabre
Inc. entered into a technology services agreement for the provision of certain
base services, including desktop, voice and data management services, web
hosting services and development services. The agreement also covered
non-exclusive variable services that Sabre could provide at the Partnership's
request. Sabre's fees for technology services were determined annually, based on
current market rates. In 2000, the Partnership
27
paid Sabre approximately $5 million for its services under the agreement. Under
the agreement, Sabre had the exclusive right to provide the base services and
specified variable services to the Partnership.
In July 2001, the Partnership and Sabre Inc. agreed to terminate this
agreement and replace it with two separate agreements: a web hosting agreement,
to cover web hosting and e-mail services, and a technology services agreement,
to cover the remaining technology services. In 2001, the Partnership paid Sabre
approximately $7 million for its services under the two agreements.
- The web hosting agreement covers network connectivity, server monitoring,
data center security, backup services and capacity planning, as well as
electronic mail services, and Sabre assigned its obligations and rights
thereunder to EDS Information Services, L.L.C. ("EDS") in July 2001. The
agreement is exclusive as to those services, requiring the Partnership to
obtain all of its requirements for those services from EDS. The term of
the agreement runs until June 30, 2003, and may only be terminated for a
material breach by one of the parties. However, the Partnership may
terminate the e-mail services at any time by providing sixty days written
notice.
Because the web hosting agreement includes revised pricing for the web
hosting services that the parties agreed would be retroactively effective
as of January 1, 2001, Sabre Inc. issued the Partnership a credit on its
June 2001 invoice to reflect the new pricing for services provided from
January 1, 2001 through April 30, 2001. Sabre Inc.'s obligation to issue
this credit was documented through a separate Memorandum of Understanding
with the Partnership.
In addition, the Travelocity web hosting represents a large portion of
Sabre Inc.'s total bandwidth usage under Sabre Inc.'s agreements with
various Internet service providers. Therefore, the Partnership has agreed
that, in the event that the web hosting agreement is terminated as a
result of the Partnership's material breach, the Partnership will ensure
that Sabre is not materially adversely affected under its agreements with
its Internet service providers as a result of the loss of the Travelocity
traffic. This obligation of the Partnership was documented through a
different Memorandum of Understanding between Sabre and the Partnership.
- Pursuant to the technology services agreement, Sabre Inc. provides
standard data and voice management services to the Partnership, including
management of a domestic data network, custom data network, remote
connectivity, inbound/outbound voice, voicemail and 800 services. Data and
voice management services generally are priced as a pass-through of
charges assessed by third party network providers, together with a
management fee payable to Sabre Inc.
This agreement covers application development services as well as data
and voice network services. The Partnership purchases systems development
resources relating to the Sabre system from Sabre Inc. In addition
thereto, Sabre Inc. provides the Partnership with related development
services based on rolling annual development requirements and project
plans. The agreement is exclusive as to the application development
services, provided that the Partnership may perform these services
in-house if it desires. The parties establish guidelines designed to
protect and, in some cases, license and sublicense the intellectual
property developed through the development services provided by Sabre Inc.
or by the Partnership or through the joint development of a project by
Sabre Inc. and the Partnership.
The term of this agreement runs through March 6, 2015 for the
application development services and through March 31, 2003 for the data
and voice services. The agreement may be terminated for a material breach
by one of the parties. In addition, Sabre Inc.'s obligation to provide the
development services will terminate when the access agreement between
Sabre Inc. and the Partnership terminates. For a more detailed description
of the access agreement, see above under "Access Agreement."
INTELLECTUAL PROPERTY AGREEMENT. Sabre and the Partnership entered into an
intellectual property agreement. Under the agreement, the rights granted and
restrictions imposed on both parties with
28
respect to the pool of intellectual property subject to the agreement continue
in perpetuity. Each party agrees, for a period of 15 years, to contribute any
new intellectual property that has application in the other party's business,
whether developed internally or acquired from a third party, to the pool of
intellectual property that will be freely and irrevocably available for use by
the other in its own business.
The obligation of both parties to contribute newly acquired or developed
intellectual property to the pool:
- will automatically terminate in the event that Sabre Inc. no longer
possesses at least 20% of the Units or otherwise no longer has control of
the Partnership;
- may be terminated by the Partnership if, after the expiration of the
two-year non-competition agreement described above, Sabre Inc. enters into
a business that would have been subject to the non-competition
restriction; and
- may be terminated by Sabre Inc. if the Partnership enters into the
business of distributing travel inventory directly to travel agents or
corporations or travel technology to any travel industry suppliers.
The agreement imposes no restrictions on a party's ability to license its
own intellectual property, except that certain intellectual property paid for by
the other party at specified rates may not be licensed to its competitors. Each
party also may grant sublicenses under the other party's intellectual property,
but only to third parties who are not competitors of such party. Except under
specific circumstances, neither party will be subject to any licensing fee or
royalty payment in connection with its use or permitted sublicensing of the
other party's intellectual property contributed to the pool.
ADMINISTRATIVE SERVICES AGREEMENT. Sabre Inc. provides administrative
services to the Partnership for a term of 15 years with automatic renewals for
one-year periods. The administrative services agreement categorizes the services
as optional administrative services, such as human resources administration,
legal, medical, finance, accounting, facilities, corporate travel and executive
support, and required services, such as tax administration and human resources
compliance service. Generally, any optional administrative service may be
terminated by either party on six months' notice, effective as of June 1 or
December 1 of the applicable calendar year. Most of the optional services are
provided at Sabre Inc.'s cost plus a 10% margin and the required services are
provided at Sabre Inc.'s sole cost. The Partnership may request additional
optional services at least 90 days prior to the start of Sabre Inc.'s fiscal
year. Sabre Inc. may reclassify certain mandatory services as optional services
upon notice to the Partnership. In 2000 and 2001, the Partnership paid Sabre
Inc. approximately $2.5 million and $1.8 million, respectively, for its services
under the agreement.
CONTRIBUTION AGREEMENTS. Immediately prior to the Preview Merger, the
Partnership entered into contribution agreements with Sabre Inc. and TSGL
Holding, Inc.
In connection with the Preview Merger, Sabre Inc. contributed to the
Partnership specified assets used in the Travelocity business unit and
approximately $100 million in cash. Sabre also transferred to the Partnership
all liabilities related to the contributed assets, except for specific
obligations the parties identified. Sabre represented that it assigned all of
the assets necessary to operate the Travelocity business unit, but did not make
any other representation concerning the assets. TSGL Holding, Inc., which owned
the trademarks used in the Travelocity business unit, assigned some of its
intellectual property rights and related liabilities to the Partnership.
Immediately after the Preview Merger, the Partnership and Travelocity
entered into a contribution agreement and Travelocity assigned all of Preview
Travel's assets and liabilities it received in the merger to the Partnership.
REGISTRATION RIGHTS AGREEMENT. Travelocity entered into a registration
rights agreement with Sabre Inc., TSGL Holding, Inc. and Travelocity Holdings,
Inc. relating to the registration of all Travelocity's
29
common stock that Sabre and its affiliates held at the time of the Preview
Merger or would acquire in the future.
Under this agreement, Sabre has the right to require Travelocity to use its
best efforts to register under the Securities Act of 1933, as amended, all
shares of Travelocity's common stock Sabre holds, including common stock Sabre
receives on the exchange of partnership units owned by Sabre and its affiliates.
Travelocity is not required to effect more than one demand registration in any
12-month period. Sabre also has the right to participate in, or piggy-back onto,
registrations connected to equity offerings initiated by Travelocity, subject to
reduction of the size of the offering on the advice of the managing underwriter.
Sabre pays all expenses relating to the demand registration requests under the
agreement, and Travelocity pays all expenses relating to piggy-back
registrations under the agreement. In either case, Sabre is responsible for
underwriters' discounts and selling commissions with respect to the sale of the
Shares Sabre owns and the fees and expenses of its counsel in connection with
each registration.
CERTAIN MATTERS RELATING TO ACQUISITIONS BY SABRE AND TRAVELOCITY
Travelocity and Sabre are each currently engaged in discussions concerning
the acquisition of certain businesses in the travel industry. Each of these
proposed transactions may result in the other company receiving benefits, such
as better or more cost effective access to additional travel content, marketing
capabilities and intellectual property for developing new applications. In light
of the fact that each company may recognize significant benefits or
opportunities from the other's acquisitions, the companies have been cooperating
in analyzing the merits of the proposed acquisitions and in certain aspects of
execution of these transactions. The Special Committee has been informed of the
cooperative efforts, and Sabre understands that the Special Committee has
authorized Travelocity to continue its cooperative efforts on a business as
usual basis. In this regard Sabre offered in mid-February 2002 to provide a
loan, directly or through one of its subsidiaries, to Travelocity in an
aggregate amount of up to approximately $40 million to help Travelocity fund the
purchase price for one of its proposed transactions. The loan, which would not
be contingent on the success or completion of the Offer, would bear interest at
a rate equivalent to the yield on Sabre's marketable securities portfolio.
CONDUCT OF TRAVELOCITY'S BUSINESS IF THE OFFER IS NOT COMPLETED
If the Offer is not completed because the Minimum Condition or another
condition is not satisfied or waived, Sabre and Purchaser expect that
Travelocity's current management will continue to operate the business of
Travelocity substantially as presently operated. However, in that event, Sabre
will re-evaluate the role of Travelocity within the overall strategy being
pursued by Sabre. In particular, Sabre may consider:
- engaging in open market or privately negotiated purchases of Shares to
increase Sabre's and its subsidiaries' aggregate ownership of the Shares
to at least 90% of the then outstanding Shares on an as-converted basis
and then effecting a short-form merger;
- proposing that Purchaser and Travelocity enter into a merger agreement,
which would require the approval of the Travelocity Board (which probably
would refer the matter to a committee of independent directors) and the
vote of Shares in favor of the merger (which vote in favor of the Merger
would be assured by virtue of Sabre's beneficial ownership of the Shares);
or
- keeping outstanding the public minority interest in Travelocity.
If Sabre and Purchaser were to pursue any of these alternatives, it might
take considerably longer for the public stockholders of Travelocity to receive
any consideration for their Shares (other than through sales in the open market)
than if they had tendered their Shares in the Offer. Any such transaction may
result in proceeds per Share to the public stockholders of Travelocity that are
more or less than or the same as the Offer price.
30
THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 11, "The Offer--Certain
Conditions of the Offer," and if the Offer is extended or amended, the terms and
conditions of such extension or amendment (the "Offer Conditions")), Purchaser
will accept for payment, and pay for, Shares validly tendered on or prior to the
Expiration Date (as defined herein) and not withdrawn as permitted by
Section 4, "The Offer--Rights of Withdrawal." The term "Expiration Date" means
12:00 midnight, New York City time, on April 5, 2002, unless and until Purchaser
shall have extended the period for which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by Purchaser, shall expire. The period until 12:00 midnight, New
York City time, on April 5, 2002, as such may be extended is referred to as the
"Offering Period."
Subject to the applicable rules and regulations of the SEC, Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the Offering Period by giving oral or written notice of such
extension to the Depositary. During any such extension of the Offering Period,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4, "The Offer--Rights of Withdrawal."
Subject to the applicable regulations of the SEC, Purchaser also expressly
reserves the right, in its sole discretion, at any time or from time to time
prior to the Expiration Date,
(i) to delay acceptance for payment of or (regardless of whether such Shares
were theretofore accepted for payment) payment for, any tendered Shares,
or to terminate or amend the Offer as to any Shares not then paid for,
on the occurrence of any of the events specified in Section 11, "The
Offer--Certain Conditions of the Offer;" and
(ii) to waive any condition and to set forth or change any other term and
condition of the Offer except as otherwise specified in Section 11,
"The Offer--Certain Conditions of the Offer;"
in each case, by giving oral or written notice of such delay, termination or
amendment to the Depositary and by making a public announcement thereof. If
Purchaser accepts any Shares for payment pursuant to the terms of the Offer, it
will accept for payment all Shares validly tendered during the Offering Period
and not withdrawn, and, on the terms and subject to the conditions of the Offer,
including but not limited to the Offer Conditions, it will promptly pay for all
Shares so accepted for payment and will immediately accept for payment and
promptly pay for all Shares as they are tendered in any Subsequent Offering
Period (as defined herein). Purchaser confirms that its reservation of the right
to delay payment for Shares that it has accepted for payment is limited by
Rule 14e-1(c) under the Exchange Act, which requires that a tender offeror pay
the consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(d), 14d-6(c) and 14e-1 under
the Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change) and without limiting the manner in which Purchaser
may choose to make any public announcement, Purchaser shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release or other announcement.
31
If, during the Offering Period, Purchaser, in its sole discretion, shall
decrease the percentage of Shares being sought or increase or decrease the
consideration offered to holders of Shares, such increase or decrease shall be
applicable to all holders whose Shares are accepted for payment pursuant to the
Offer and, if at the time notice of any increase or decrease is first published,
sent or given to holders of Shares, the Offer is scheduled to expire at any time
earlier than the tenth business day from and including the date that such notice
is first so published, sent or given, the Offer will be extended until the
expiration of such ten business day period. Purchaser confirms that if it makes
a material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, Purchaser will extend
the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or change in percentage of securities
sought, will depend upon the relevant facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the SEC has stated its views that an offer must remain open for
a minimum period of time following a material change in the terms of the Offer
and that waiver of a material condition is a material change in the terms of the
Offer. The release states that an offer should remain open for a minimum of five
business days from the date a material change is first published or sent or
given to security holders and that, if material changes are made with respect to
information that approaches the significance of price and percentage of Shares
sought, a minimum of ten business days may be required to allow for adequate
dissemination to stockholders and investor response. For purposes of the Offer,
a "business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
Purchaser may elect, in its sole discretion, to provide a subsequent
offering period of 3 to 20 business days (the "Subsequent Offering Period"). A
Subsequent Offering Period, if one is provided, is not an extension of the
Offering Period. A Subsequent Offering Period would be an additional period of
time, following the expiration of the Offering Period, in which stockholders may
tender Shares not tendered during the Offering Period. If Xxxxxxxxx decides to
provide for a Subsequent Offering Period, Purchaser will make an announcement to
that effect by issuing a press release no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
All Offer Conditions must be satisfied or waived prior to the commencement of
any Subsequent Offering Period. If Purchaser elects to provide a Subsequent
Offering Period, it expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the Subsequent Offering Period (not beyond
a total of 20 business days) by giving oral or written notice of such extension
to the Depositary. During a Subsequent Offering Period, tendering stockholders
will not have withdrawal rights. See Section 4, "The Offer--Rights of
Withdrawal."
Sabre has exercised its rights as a stockholder of Travelocity to request
Travelocity's stockholder list and security position listings for the purpose of
disseminating the Offer to stockholders. Travelocity has provided Purchaser with
Travelocity's stockholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase and the
related Letter of Transmittal will be mailed to record holders of Shares and
will be furnished to brokers, banks and similar person whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment, and will pay for, Shares validly tendered and not withdrawn as promptly
as practicable after the expiration of the Offering Period. If there is a
Subsequent Offering
32
Period, all Shares tendered during the Offering Period will be immediately
accepted for payment and promptly paid for following the expiration thereof and
Shares tendered during a Subsequent Offering Period will be immediately accepted
for payment and paid for as they are tendered. Subject to applicable rules of
the SEC, Purchaser expressly reserves the right to delay acceptance for payment
of or payment for Shares in order to comply, in whole or in part, with any
applicable law. See Section 11, "The Offer--Certain Conditions of the Offer." In
all cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of
(i) certificates evidencing such Shares (or a confirmation of a book-entry
transfer of such Shares (a "Book-Entry Confirmation") into the
Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility"));
(ii) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees or, in the
case of a book-entry transfer, an Agent's Message (as defined herein)
in lieu of the Letter of Transmittal; and
(iii) any other required documents.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering stockholders for
the purpose of receiving payments from Purchaser and transmitting such payments
to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR TENDERED SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, "The Offer--Procedure for Tendering Shares," such Shares will be
credited to an account maintained with the Book-Entry Transfer Facility), as
soon as practicable following expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign in whole or in part from
time to time to one or more of its affiliates the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
VALID TENDER. To tender Shares pursuant to the Offer,
(i) a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions of the Letter of
Transmittal, with any required signature guarantees, certificates for
Shares to be tendered and any other documents required by the Letter of
Transmittal, must be received by the Depositary prior to the Expiration
Date at one of its addresses set forth on the back cover of this Offer
to Purchase;
(ii) such Shares must be delivered pursuant to the procedures for book-entry
transfer described below (and the Book-Entry Confirmation of such
delivery received by the Depositary, including an Agent's Message (as
defined herein) if the tendering stockholder has not delivered a Letter
of Transmittal), prior to the Expiration Date; or
33
(iii) the tendering stockholder must comply with the guaranteed delivery
procedures set forth below.
The term "Agent's Message" means a message transmitted electronically by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares which are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against the participant.
BOOK-ENTRY DELIVERY. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program or by any other "Eligible Guarantor Institution," as such term
is defined in Rule 17 Ad-15 under the Exchange Act (each, an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed
(i) if the Letter of Transmittal is signed by the registered holders (which
term, for purposes of this section, includes any participant in the Book-Entry
Transfer Facility's systems whose name appears on a security position listing as
the owner of the Shares) of Shares tendered therewith and such registered holder
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) if such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made, or certificates for Shares
not tendered or not accepted for payment are to be returned, to a person other
than the registered holder of the certificates surrendered, then the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. If the Letter of Transmittal or
stock powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by Purchaser, proper evidence
satisfactory to Purchaser of their authority to so act must be submitted. See
Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. A stockholder who desires to tender Shares pursuant to
the Offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedure for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary
34
prior to the Expiration Date, may tender such Shares by following all of the
procedures set forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, is received by the
Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal), and any other required
documents, are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market is open
for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail to the
Depositary or transmitted by telegram or facsimile transmission to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THE SHARES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
OTHER REQUIREMENTS. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates evidencing such
Shares or a timely Book-Entry Confirmation with respect to such Shares into the
Depositary's account at the Book-Entry Transfer Facility, (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message in lieu of the Letter of Transmittal) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates for
Shares or Book-Entry Confirmations with respect to Shares are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF
THE TENDERED SHARES BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
APPOINTMENT OF PROXIES. By executing a Letter of Transmittal as set forth
above, the tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for payment by Purchaser
(and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares on or after the date of this Offer to
Purchase). All such powers of attorney and proxies will be considered coupled
with an interest in the tendered Shares. Such appointment is effective when, and
only to the extent that, Purchaser deposits the payment for such Shares with the
Depositary. Upon the effectiveness of such appointment, all prior powers of
attorney, proxies and consents given by such stockholder will be revoked, and no
subsequent powers of attorney, proxies and consents may be given (and, if given,
will
35
not be deemed effective). Purchaser's designees will, with respect to the Shares
for which the appointment is effective, be empowered to exercise all voting and
other rights of such stockholder as they, in their sole discretion, may deem
proper at any annual, special or adjourned meeting of the stockholders of
Travelocity, by written consent in lieu of any such meeting or otherwise.
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon Purchaser's payment for such Shares,
Purchaser must be able to exercise full voting rights with respect to such
Shares.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole discretion, which determination will
be final and binding. Purchaser reserves the absolute right to reject any and
all tenders determined by it not to be in proper form or the acceptance for
payment of or payment for which may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any defect or
irregularity in the tender of any Shares of any particular stockholder whether
or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities relating thereto have been cured or waived to the
satisfaction of Purchaser. None of Purchaser, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and Instructions thereto) will be
final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct TIN on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 30%. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained by filing a tax return with the IRS. All
stockholders who are United States persons surrendering Shares pursuant to the
Offer should complete and sign the main signature form and the Substitute
Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to Purchaser
and the Depositary). Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. Non-corporate foreign stockholders should complete and sign
the main signature form and a statement, signed under penalties of perjury,
attesting to that stockholder's exempt status (such forms may be obtained from
the Depositary), in order to avoid backup withholding. See Instruction 8 to the
Letter of Transmittal.
4. RIGHTS OF WITHDRAWAL
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
expiration of the Offering Period and, unless theretofore accepted for payment
by Purchaser pursuant to the Offer, may also be withdrawn at any time after
May 3, 2002. There will be no withdrawal rights during any Subsequent Offering
Period for Shares tendered during the Subsequent Offering Period.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person
36
having tendered the Shares to be withdrawn, the number or amount of Shares to be
withdrawn and the names in which the certificate(s) evidencing the Shares to be
withdrawn are registered, if different from that of the person who tendered such
Shares. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account of
any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section 3, "The
Offer--Procedure for Tendering Shares," any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Shares to be withdrawn must also be furnished to the Depositary
as aforesaid prior to the physical release of such certificates. All questions
as to the form and validity (including time of receipt) of any notice of
withdrawal will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding. None of Sabre, Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification.
Withdrawals of tender for Shares may not be rescinded, and any Shares
properly withdrawn will be deemed not to have been validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by following one of
the procedures described in Section 3, "The Offer--Procedure for Tendering
Shares," at any time prior to the Expiration Date or during a Subsequent
Offering Period if one is provided.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares, or is unable to accept for payment Shares pursuant to the Offer, for any
reason, then, without prejudice to Purchaser's rights under this Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
Any such delay will be accompanied by an extension of the Offer to the extent
required by law.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
cash in the Merger. The summary is based on the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable current and proposed
United States Treasury Regulations issued thereunder, judicial authority and
administrative rulings and practice, all of which are subject to change,
possibly with retroactive effect, at any time and, therefore, the following
statements and conclusions could be altered or modified. The discussion does not
address holders of Shares in whose hands Shares are not capital assets, nor does
it address holders who hold Shares as part of a hedging, "straddle," conversion
or other integrated transaction, or who received Shares upon conversion of
securities or exercise of warrants or other rights to acquire Shares or pursuant
to the exercise of employee stock options or otherwise as compensation, or to
holders of restricted shares received as compensation or to holders of Shares
who are in special tax situations (such as insurance companies, tax-exempt
organizations, financial institutions, United States expatriates or non-U.S.
persons). Furthermore, the discussion does not address the tax treatment of
holders who exercise appraisal rights in the Merger, nor does it address any
aspect of state, local or foreign taxation or estate and gift taxation.
The United States federal income tax consequences set forth below are
included for general informational purposes only and are based upon current law.
The following summary does not purport to consider all aspects of United States
federal income taxation that might be relevant to stockholders of Travelocity.
Because individual circumstances may differ, each holder of Shares should
consult such holder's own tax advisor to determine the applicability of the
rules discussed below to such stockholder
37
and the particular tax effects of the Offer and the Merger, including the
application and effect of state, local and other tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for United States federal income tax purposes (and also may
be a taxable transaction under applicable state, local, foreign and other income
tax laws). In general, for United States federal income tax purposes, a holder
of Shares will recognize gain or loss equal to the difference between the
holder's adjusted tax basis in the Shares sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received therefor. Gain
or loss must be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) sold pursuant to the Offer or
converted to cash in the Merger. If the Shares exchanged constitute capital
assets in the hands of the stockholder, gain or loss will be capital gain or
loss. In general, capital gains recognized by an individual will be subject to a
maximum United States federal income tax rate of 20% if the Shares were held for
more than one year on the date of sale (or, if applicable, the date of the
Merger), and if held for one year or less they will be subject to tax at
ordinary income tax rates. Certain limitations may apply on the use of capital
losses.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a 30% rate. Backup withholding generally applies if a
holder (a) fails to furnish its social security number or other taxpayer
identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails
properly to include a reportable interest or dividend payment on its United
States federal income tax return or (d) under certain circumstances, fails to
provide a certified statement, signed under penalties of perjury, that the TIN
provided is its correct number and that it is not subject to backup withholding.
Backup withholding is not an additional tax but merely an advance payment, which
may be refunded to the extent it results in an overpayment of tax. Certain
persons generally are entitled to exemption from backup withholding, including
corporations, financial institutions and certain foreign stockholders if such
foreign stockholders submit a statement, signed under penalties of perjury,
attesting to their exempt status. Certain penalties apply for failure to furnish
correct information and for failure to include reportable payments in income.
Each stockholder should consult such stockholder's own tax advisor as to its
qualification for exemption from backup withholding and the procedure for
obtaining such exemption.
All stockholders who are United States persons surrendering Shares pursuant
to the Offer should complete and sign the main signature form and the Substitute
Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to Offeror
and the Depositary). Non-corporate foreign stockholders should complete and sign
the main signature form and a statement, signed under penalties of perjury,
attesting to that stockholder's exempt status (such forms can be obtained from
the Depositary), in order to avoid backup withholding.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS
SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED
STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING
THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
38
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed and principally traded on the Nasdaq National Market
under the symbol "TVLY". The following table sets forth, for the calendar
quarters indicated, the high and low sales prices for the Shares on the Nasdaq
National Market based upon public sources:
SALES PRICE
-------------------
HIGH LOW
-------- --------
CALENDAR YEAR
2000:
First Quarter............................................. $46.75 $29.38
Second Quarter............................................ 32.11 14.69
Third Quarter............................................. 20.00 10.69
Fourth Quarter............................................ 17.13 9.03
2001:
First Quarter............................................. 28.89 11.69
Second Quarter............................................ 37.90 14.88
Third Quarter............................................. 35.80 11.87
Fourth Quarter............................................ 29.49 12.67
2002:
First Quarter through February 15, 2002................... 28.71 18.56
On February 15, 2002, the last full trading day prior to announcement of the
Offer, the reported closing price of the Shares on the Nasdaq National Market
was $19.20 per Share. On March 4, 2002, the last full trading day prior to
commencement of the Offer, the reported closing price of the Shares on the
Nasdaq National Market was $26.60 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A
CURRENT MARKET QUOTATION FOR THE SHARES.
To date, Travelocity has never declared or paid cash dividends on the
Shares.
7. CERTAIN INFORMATION CONCERNING TRAVELOCITY
Except for information contained in "Special Factors--Travelocity Financial
Projections," "Special Factors--Certain Travelocity Information" and "Special
Factors--Operating Relationships" or as otherwise set forth herein, the
information concerning Travelocity contained in this Offer to Purchase has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources and is qualified in its entirety by reference
thereto. Although Sabre, Purchaser and the Information Agent have no knowledge
that would indicate that any statements contained herein based on such documents
and records are untrue, Sabre, Purchaser and the Information Agent cannot take
responsibility for the accuracy or completeness of the information contained in
such documents and records, or for any failure by Travelocity to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Sabre, Purchaser or the Information Agent.
GENERAL. Travelocity is a Delaware corporation with its principal corporate
offices located at 00000 Xxxxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxx 00000 (telephone
number (000) 000-0000). Travelocity has described its business as follows:
Travelocity, through the Partnership, is engaged in consumer-direct
travel distribution over the Internet. Through its online travel websites,
which are accessible free of charge through the Internet and online
services, leisure and business travelers can compare prices, make travel
reservations and obtain destination information. Travelocity features
booking and purchase capability for airlines, car rental and hotel
companies, cruises and vacation packages, and offers access to a database of
information regarding specific destinations and other information of
39
interest to travelers. The Internet address for Travelocity's main website
is xxx.xxxxxxxxxxx.xxx. During 2001, members purchased approximately
$3.1 billion in travel services from associates through the Xxxxxxxxxxx.xxx
website.
In addition to Xxxxxxxxxxx.xxx's main U.S. website, it operates multiple
websites tailored to customers in the United Kingdom, Canada and Germany.
Xxxxxxxxxxx.xxx is the exclusive provider of travel booking services for
various America Online, Inc. services, including AOL, XXX.xxx, Netscape,
CompuServe and Digital City in the United States and Canada. Xxxxxxxxxxx.xxx
is also an exclusive provider of some of the travel booking services on
websites operated by Yahoo!, Inc. in the United States and Canada. In 2001,
Xxxxxxxxxxx.xxx announced that following approval from the European
Commission, Travelocity and Xxxx, a global leader in direct marketing and
Europe's top direct marketing firm, consummated plans to launch Travelocity
Europe, a new multi-channel travel company, making Travelocity Europe one of
the leading European online agencies. Finally, Travelocity also launched
Xxxxxxxxxxx.xx en francais for its Canadian customers, providing the most
comprehensive French and English language online planning and buying choices
across air, car, hotel, rail and vacation travels.
INTENT TO TENDER; RECOMMENDATION; TRAVELOCITY OPINION. As of the date
hereof, (i) Purchaser and Sabre do not know whether or not any executive
officer, director or affiliate of Travelocity intends to tender Shares in the
Offer, (ii) none of Travelocity, its executive officers, directors or affiliates
have made any public recommendation with respect to the Offer (other than the
Special Committee which has publicly announced its belief that the Offer price
is inadequate) and (iii) Travelocity has not made public any appraisal, report
or opinion on the fairness of this transaction.
AVAILABLE INFORMATION. Travelocity is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Travelocity's directors and officers, their remuneration,
stock options granted to them, the principal holders of Travelocity's
securities, any material interests of such persons in transactions with
Travelocity and other matters is required to be disclosed in proxy statements
distributed to Travelocity's stockholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at the
public reference room at the SEC's offices at 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000. Copies may be obtained, by mail, upon payment of the
SEC's customary charges, by writing to its principal office at 000 Xxxxx Xxxxxx,
X.X., Xxxxxxxxx Xxxxx, Xxxxxxxxxx, X.X. 00000 and can be obtained electronically
on the SEC's website at xxxx://xxx.xxx.xxx.
40
FINANCIAL INFORMATION.
XXXXXXXXXXX.XXX INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial
data for Travelocity as of and for the nine months ended September 30, 2001 and
2000 and as of and for each of the years ended December 31, 2000 and 1999.
This data and the comparative per share data set forth below are extracted
from, and should be read in conjunction with, the audited consolidated financial
statements and other financial information contained in Travelocity's Annual
Report on Form 10-K for the year ended December 31, 2000, as amended, and the
unaudited consolidated interim financial information contained in Travelocity's
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2001,
June 30, 2001 and September 30, 2001, as amended, including the notes thereto.
More comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operation) and other documents filed by Travelocity with the SEC, and the
following summary is qualified in its entirety by reference to such reports and
other documents and all of the financial information and notes contained
therein. Copies of such reports and other documents may be examined at or
obtained from the SEC in the manner set forth above. These documents are
incorporated by reference in this Offer to Purchase. See "--Available
Information" on page 43.
NINE MONTHS ENDED FOR THE YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- -------------------
2001 2000 2000 1999
----------- ----------- -------- --------
(UNAUDITED) (UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS
AND RATIOS)
Income Statement Data:
Total revenues.................................. $233,655 $127,182 $192,670 $ 64,187
Total operating costs and expenses.............. 301,142 213,512 306,474 84,818
Net income (loss)............................... (60,601) (34,770) (46,902) (20,631)
Balance Sheet Data:
Current assets.................................. $168,345 $ 72,850 $109,506 $ 3,454
Non-current assets.............................. 164,218 284,016 218,462 6,185
Current liabilities............................. 41,757 20,973 17,653 8,773
Non-current liabilities......................... 26,256 18,711 4,027 69,428
Total stockholders' equity...................... 264,550 317,182 306,288 (68,562)
Cash dividends declared per common share........ $ 0 $ 0 $ 0 $ 0
Average shares of common stock outstanding........ 19,653 22,463 21,647 0
Travelocity historically has not reported a ratio of earnings to fixed
charges.
41
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data for
Travelocity. Basic and diluted earnings per common share and book value per
share is presented for the nine months ended September 30, 2001 and 2000 and for
each of the years ended December 31, 2000 and 1999.
NINE MONTHS ENDED FOR THE YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- -------------------
2001 2000 2000 1999
----------- ----------- -------- --------
(UNAUDITED) (UNAUDITED)
Basic and diluted net income (loss) per share..... $ (3.08) $ (1.55) $ (2.17) $ 0
Book value per share.............................. $ 13.46 $ 14.12 $ 14.15 $ 0
Book value per share is not a term defined by generally accepted accounting
principles. Book value per share is calculated by dividing stockholders' equity
by the weighted average number of shares of common stock outstanding.
8. CERTAIN INFORMATION CONCERNING SABRE AND PURCHASER
GENERAL. Purchaser is a Delaware corporation that currently does not own
any Shares. Purchaser is an indirect wholly owned subsidiary of Sabre. The
principal executive offices of Purchaser are located at 0000 Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxx 00000 (telephone number (000) 000-0000).
Sabre is a holding company incorporated under the laws of the State of
Delaware and has its principal executive offices at 0000 Xxxxx Xxxxx, Xxxxxxxxx,
Xxxxx 00000 (telephone number (000) 000-0000). Sabre beneficially owns
35,033,970 Shares on an as-converted basis, as shown in Schedule B to this
Offer. As a holding company, Sabre engages in business activities only through
its subsidiaries. Unless the context otherwise requires, references herein to
Sabre agreeing to take or refrain from taking business actions refer to Sabre
causing its operating subsidiaries to so act or refrain.
Sabre is a leading provider of technology, distribution and marketing
services for the travel industry and has approximately 5,500 employees in 45
countries. Sabre maintains an ownership interest of approximately 70 percent in
Travelocity on an as-converted basis.
Purchaser and Sabre have made no arrangements in connection with the Offer
to provide holders of Shares access to their corporate files or to obtain
counsel or appraisal services at their expense. For discussion of appraisal
rights, see Section 9, "The Offer--Merger; Appraisal Rights; Rule 13e-3."
The name, citizenship, business address, business telephone number, current
principal occupation (including the name, principle business and address of the
organization in which such occupation is conducted), and material positions held
during the past five years, of each of the directors and executive officers of
Sabre and Purchaser are set forth in Schedule A to this Offer to Purchase.
Except as set forth under "Special Factors" or on Schedule B hereto, neither
Sabre nor Purchaser, nor, to the best of their knowledge, any of the persons
listed in Schedule A hereto nor any associate or majority-owned subsidiary of
Sabre or Purchaser, has effectuated any transactions in Shares in the past
60 days. In addition, Schedule B hereto sets forth any acquisitions of
Travelocity's securities by Purchaser and Sabre during the past two years.
Except as set forth under "Special Factors" or Schedule B hereto, there have
been no negotiations, transactions or material contacts during the past two
years between Purchaser or Sabre, or, to the best of their knowledge, any of the
persons listed in Schedule A hereto, on the one hand, and Travelocity or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of any class of Travelocity's
securities, an election of Travelocity's directors, or a sale or other transfer
of a material amount of assets of Travelocity nor to the best knowledge of Sabre
and Purchaser have there been any negotiations or material contacts between
(i) any affiliates of Travelocity
42
or (ii) Travelocity or any of its affiliates and any person not affiliated with
Travelocity who would have a direct interest in such matters. Except as
described under "Special Factors", neither Sabre nor Purchaser, nor, to the best
of their knowledge, any of the persons listed in Schedule A hereto, has since
the date hereof had any transaction with Travelocity or any of its executive
officers, directors or affiliates that would require disclosure under the rules
and regulations of the SEC applicable to the Offer.
INTENT TO TENDER. As of the date hereof, Xxxxxxxxx and Sabre do not know
whether or not any of their executive officers or directors, any person
controlling either of them or any executive officer or director of any
corporation ultimately in charge of Purchaser or Sabre intends to tender Shares
in the Offer.
AVAILABLE INFORMATION. Additional information concerning Sabre is set forth
in Sabre's Annual Report on Form 10-K for the year ended December 31, 2001,
which may be obtained from the SEC in the manner set forth with respect to
information concerning Travelocity in Section 7, "The Offer--Certain Information
Concerning Travelocity."
FORWARD-LOOKING DISCLAIMER. Statements Purchaser and Sabre may publish,
including those in this Offer to Purchase, that are not strictly historical are
"forward-looking" statements. Although Purchaser and Sabre believe the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, they can give no assurance that their expectations will
be realized. Forward-looking statements involve known and unknown risks which
may cause Purchaser's or Sabre's actual results and corporate developments to
differ materially from those expected. Factors that could cause results and
developments to differ materially from Purchaser's or Sabre's expectations
include, without limitation, federal and state regulatory developments,
technology developments and capital expenditures, competition within each
business segment, cyclicality of the markets for the products of a major
segment, litigation, the effects of acquisitions and divestitures, the ability
of Sabre to effect all of its strategic initiatives as contemplated and other
risks described from time to time in Sabre's SEC reports including quarterly
reports on Form 10-Q, annual reports on Form 10-K and reports on Form 8-K.
9. MERGER; APPRAISAL RIGHTS; RULE 13E-3
MERGER. If, pursuant to the Offer, Purchaser acquires Shares which,
together with Shares beneficially owned by Purchaser and its affiliates on an
as-converted basis, constitute at least 90% of the outstanding Shares, Sabre
currently intends to transfer (and cause any such affiliates to transfer) the
Shares owned by Sabre and any such affiliates to Purchaser to permit Purchaser
to consummate a "short-form" merger pursuant to Section 253 of the DGCL.
Section 253 of the DGCL provides that if Purchaser owns at least 90% of the
outstanding Shares and at least 90% of the Class A Common Stock of Travelocity
(if any such Class A Common Stock is outstanding), Purchaser may merge
Travelocity into itself by executing, acknowledging and filing, in accordance
with Section 103 of the DGCL, a certificate of such ownership and merger setting
forth a copy of the resolution of Purchaser's Board of Directors to so merge
(including a statement of the terms and conditions of the merger and the
consideration to be paid by Purchaser upon surrender of Shares not owned by
Purchaser) and the date of its adoption. Under Section 253 of the DGCL, such a
merger of Travelocity with Purchaser would not require the approval or any other
action on the part of the Board of Directors, the Special Committee or the
stockholders of Travelocity. Purchaser intends to effect the Merger without a
meeting of holders of Shares. The Merger is currently expected to occur as soon
as possible after completion of the Offer.
If, after the Offer is completed but prior to consummation of the Merger,
the aggregate beneficial ownership by Sabre and its subsidiaries, including
Purchaser, of the outstanding Shares should fall below 90% on an as-converted
basis due to the exercise of outstanding options to acquire Shares or for
43
any other reason, Purchaser may decide to acquire additional Shares on the open
market or in privately negotiated transactions to the extent required for such
ownership to equal or exceed 90%. Any such purchases would be made at market
prices or privately negotiated prices at the time of purchase, which may be
higher or lower than or the same as the Offer price.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH SABRE OR PURCHASER MIGHT MAKE WILL BE MADE PURSUANT TO
SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS
OF SECTION 14(A) OF THE EXCHANGE ACT.
APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, each holder of
Shares who has neither voted in favor of the Merger nor consented thereto in
writing and who properly demands an appraisal of their shares under Section 262
of the DGCL will be entitled to, in lieu of receiving the Merger consideration,
an appraisal by the Delaware Court of Chancery of the fair value of his or her
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid from the date of the Merger. In determining such fair value, the Court may
consider all relevant factors. The value so determined could be more or less
than the consideration to be paid in the Offer and the Merger. Any judicial
determination of the fair value could be based upon considerations other than or
in addition to the market value of the Shares, including, among other things,
asset values and earning capacity.
Since holders of Shares do not have appraisal rights in connection with the
Offer, no demand for appraisal under Section 262 should be made at this time.
Not later than ten days following the effective date of the Merger, the
surviving corporation in the Merger will notify the record holders of Shares as
of the effective date of the Merger of the consummation of the Merger and of the
availability of and procedure for demanding appraisal rights.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal as
provided in the DGCL, the Shares of such stockholder will be converted into the
right to receive the cash consideration offered in the Merger. A stockholder may
withdraw his demand for appraisal by delivery to Purchaser of a written
withdrawal of his demand for appraisal.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL which is attached as Schedule C to this Offer to
Purchase.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
RULE 13E-3. Because Sabre is an affiliate of Travelocity, the transactions
contemplated herein constitute a "going private" transaction under Rule 13e-3
under the Exchange Act. Rule 13e-3 requires, among other things, that certain
financial information concerning Travelocity and certain information relating to
the fairness of the Offer and the Merger and the consideration offered to
minority stockholders be filed with the SEC and disclosed to minority
stockholders prior to consummation of the Merger. Purchaser and Sabre have
provided such information in this Offer to Purchase.
10. SOURCE AND AMOUNT OF FUNDS
Purchaser estimates that the total amount of funds required to purchase all
of the outstanding Shares (other than those already owned by Purchaser) pursuant
to the Offer and to pay related fees and expenses will be approximately
$380 million. Sabre will assure that Purchaser will obtain these funds from cash
on hand and working capital, including ordinary course intercompany borrowings
from Sabre affiliates.
44
11. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or pay for any Shares, may postpone the
acceptance for payment of or pay for tendered Shares, and may, in its sole
discretion, terminate or amend the Offer as to any Shares not then paid for if
(i) at the expiration of the Offering Period, the Minimum Condition has not been
satisfied or (ii) if on or after February 19, 2002, and at or prior to the time
of the expiration of the Offer or, any of the following events shall occur:
(a) any preliminary or permanent judgment, order, decree, ruling,
injunction, action, proceeding or application shall be pending or threatened
before any court, government or governmental authority or other regulatory
or administrative agency or commission, domestic or foreign, which would or
might restrain, prohibit or delay consummation of, or materially alter or
otherwise materially affect, the Offer or the Merger or materially impair
the contemplated benefits of the Offer or the Merger to Sabre; or
(b) any statute, including without limitation any state anti-takeover
statute, rule, regulation or order or injunction shall be sought, proposed,
enacted, promulgated, entered, enforced or deemed or become applicable or
asserted to be applicable to the Offer or the Merger, which would or might
restrain, prohibit or delay consummation of, or materially alter or
otherwise materially affect, the Offer or the Merger or materially impair
the contemplated benefits of the Offer or the Merger to Sabre; or
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened that has or might
have a materially adverse effect on the business, properties, assets,
liabilities, capitalization, stockholders' equity, financial condition,
operations, results of operations or prospects of Travelocity or any of its
subsidiaries; or
(d) there shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any national
securities exchange or in the over-the-counter market, (ii) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) the outbreak or escalation of a war (whether or not
declared), acts of terrorism, armed hostilities or other international or
national calamity directly or indirectly involving the United States,
(iv) any limitation (whether or not mandatory) by any governmental authority
on, or any other event which might affect the extension of credit by banks
or other lending institutions, (v) a suspension of or limitation (whether or
not mandatory) on the currency exchange markets or the imposition of, or
material changes in, any currency or exchange control laws in the United
States or (vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof;
or
(e) any tender or exchange offer with respect to some or all of the
outstanding shares of common stock of Sabre or the outstanding Shares (other
than the Offer), or a merger, acquisition or other business combination
proposal for Sabre or Travelocity (other than the Offer and the Merger),
shall have been proposed, announced or made by any person, entity or group;
or
(f) Travelocity and Purchaser or Sabre shall have reached an agreement
or understanding that the Offer be terminated or amended or Sabre or
Purchaser (or one of their respective affiliates) shall have entered into a
definitive agreement or an agreement in principle to acquire Travelocity by
merger or similar business combination, or purchase of Shares or assets of
Travelocity; or
(g) there shall have occurred or be in existence any other event,
circumstance or condition, which, in the reasonable judgment of Sabre, would
prevent Sabre or Purchaser from effecting the Merger following the
completion of the Offer;
45
which in the reasonable judgment of Xxxxxxxxx and Sabre with respect to each and
every matter referred to above makes it inadvisable to proceed with the Offer or
with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and Sabre and
may be asserted by Purchaser or Sabre regardless of the circumstances (including
any action or inaction by Purchaser or Sabre) giving rise to any such conditions
or may be waived by Purchaser or Sabre in whole or in part at any time and from
time to time in their reasonable discretion. The determination as to whether any
condition has occurred shall be in the sole and reasonable judgment of Purchaser
and Sabre and will be final and binding on all parties. The failure by Purchaser
or Sabre at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time. Notwithstanding the
foregoing, Sabre and Purchaser shall not purchase Shares in the Offer if less
than a majority of the outstanding Shares, excluding Shares beneficially owned
by Sabre and its subsidiaries, are validly tendered and not withdrawn.
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver. All Offer Conditions must be
satisfied or waived prior to the commencement of any Subsequent Offering Period.
12. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date hereof, Travelocity should (i) split, combine or
otherwise change the Shares or its capitalization, (ii) acquire currently
outstanding Shares or otherwise cause a reduction in the number of outstanding
Shares or (iii) issue or sell additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, to acquire any of the foregoing, other than Shares
issued pursuant to the exercise of stock options outstanding as of the date
hereof, then, subject to the provisions of Section 11, "The Offer--Certain
Conditions of the Offer," Purchaser, in its sole discretion, may make such
adjustments as it deems appropriate in the Offer price and other terms of the
Offer, including, without limitation, the number or type of securities offered
to be purchased.
If, on or after the date hereof, Travelocity should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to Purchaser or its
nominee or transferee on Travelocity's stock transfer records, then, subject to
the provisions of Section 11, "The Offer--Certain Conditions of the Offer,"
(i) the Offer price and other terms of the Offer may, in the sole discretion of
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (ii) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders will (a) be received and
held by the tendering stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of Purchaser, be exercised
for the benefit of Purchaser, in which case the proceeds of such exercise will
promptly be remitted to Purchaser. Pending such remittance and subject to
applicable law, Purchaser will be entitled to all rights and privileges as owner
of any such noncash dividend, distribution, issuance or proceeds and may
withhold the entire Offer price or deduct from the Offer price the amount or
value thereof, as determined by Purchaser in its sole discretion.
46
13. CERTAIN LEGAL MATTERS
GENERAL. Except as otherwise disclosed herein, based upon an examination of
publicly available filings with respect to Travelocity, Purchaser and Sabre are
not aware of any licenses or other regulatory permits which appear to be
material to the business of Travelocity and which might be adversely affected by
the acquisition of Shares by Purchaser pursuant to the Offer or of any approval
or other action by any governmental, administrative or regulatory agency or
authority which would be required for the acquisition or ownership of Shares by
Purchaser pursuant to the Offer. Should any such approval or other action be
required, it is currently contemplated that such approval or action would be
sought or taken. However, Purchaser does not intend to delay the purchase of
Shares tendered pursuant to the Offer pending the outcome of any action or the
receipt of any such approval. There can be no assurance that any such approval
or action, if needed, would be obtained or, if obtained, that it will be
obtained without substantial conditions or that adverse consequences might not
result to Travelocity's or Purchaser's business or that certain parts of
Travelocity's or Purchaser's business might not have to be disposed of in the
event that such approvals were not obtained or such other actions were not
taken, any of which could cause Purchaser to elect to terminate the Offer
without the purchase of the Shares thereunder. Purchaser's obligation under the
Offer to accept for payment and pay for Shares is subject to certain conditions.
See Section 11, "The Offer--Certain Conditions of the Offer."
ANTITRUST COMPLIANCE. Under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and certain waiting period requirements have been satisfied. As explained more
fully below, however, the Offer is not a reportable transaction under the HSR
Act.
Under HSR Act reporting regulations, Purchaser is deemed in "control" of
Travelocity. In particular, these regulations provide that the term "controls"
means holding 50 percent or more of the outstanding voting securities of an
issuer. Therefore, because Purchaser holds approximately 70% of Travelocity's
voting securities on an as-converted basis, Purchaser believes no HSR Act filing
is required in connection with the Offer and the Merger.
SECTION 203 OF THE DGCL. In general, Section 203 of the DGCL is an
anti-takeover statute that prevents an "Interested Stockholder" (defined
generally as a person with 15% or more of a corporation's outstanding voting
stock) of a Delaware corporation from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers) with such corporation
for three years following the date such person became an Interested Stockholder
unless certain conditions, such as approval from the board of directors or
owning at least 85% of the voting stock of the corporation prior to the Business
Combination, are met. Section 203 does not apply to any stockholder which became
an interested stockholder at a time when the corporation was not publicly held.
Since Travelocity Holdings, Inc. owned all the outstanding stock of Travelocity
prior to the Preview Merger in March 2000, Sabre and Purchaser believe that
Section 203's restrictions do not apply to this Offer or the proposed Merger.
FEDERAL RESERVE BOARD REGULATIONS. Regulations T, U and X (the "Margin
Regulations") promulgated by the Federal Reserve Board place restrictions on the
amount of credit that may be extended for the purpose of purchasing margin stock
(including the Shares) if such credit is secured directly or indirectly by
margin stock.
STATE TAKEOVER LAWS. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations which are
incorporated in such states and/or which have substantial assets, stockholders,
principal executive offices or principal places of business therein. In XXXXX X.
MITE CORPORATION, the Supreme Court of the United States held in 1982 that the
Illinois Business Takeover
47
Statute, which made the takeover of certain corporations more difficult, imposed
a substantial burden on interstate commerce and was therefore unconstitutional.
In 1987, however, in CTS CORPORATION V. DYNAMICS CORPORATION OF AMERICA, the
Supreme Court held that as a matter of corporate law, and in particular, those
laws concerning corporate governance, a state may constitutionally disqualify an
acquiror of "Control Shares" (ones representing ownership in excess of certain
voting power thresholds, e.g., 20%, 33% or 50%) of a corporation incorporated in
its state and meeting certain other jurisdictional requirements from exercising
voting power with respect to those shares without the approval of a majority of
the disinterested stockholders. Subsequently, in TLX ACQUISITION CORP. V. TELEX
CORP., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma, because they would subject those corporations to inconsistent
regulations. Similarly, in TYSON FOODS, INC. X. XXXXXXXXXX, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United State Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in GRAND
METROPOLITAN PLC X. XXXXXXXXXXX, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
Travelocity conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. Neither Sabre nor Purchaser
has determined whether any of these state takeover laws and regulations will by
their terms apply to the Offer or the Merger, and, except as set forth above,
neither Sabre nor Purchaser has recently attempted to comply with any state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from, the
relevant state authorities, and Purchaser might be unable to accept for payment
or pay for Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer or the Merger. In such case, Purchaser may not be obliged to accept
for payment or pay for any Shares tendered pursuant to the Offer. See
Section 11, "The Offer--Certain Conditions of the Offer."
STOCKHOLDER LITIGATION. Sabre, Travelocity, and the directors of
Travelocity have been named as defendants in nine separate lawsuits brought by
ten individual shareholders of Travelocity. These lawsuits were filed in the
Delaware Court of Chancery in and for New Castle County on February 19, 2002. An
additional lawsuit was filed in the District Court of Tarrant County, Texas on
February 21, 2002 naming Travelocity and certain directors of Travelocity as
defendants. Another lawsuit was filed in the District Court of Tarrant County,
Texas on February 25, 2002 naming Sabre and certain directors of Travelocity as
defendants. The complaints generally allege that:
- the defendants breached their fiduciary duties as a result of the Offer;
- the Offer is unfair to minority stockholders and the Offer price is
inadequate;
- the defendants are engaging in unfair self-dealing, not acting in good
faith towards Travelocity's public stockholders; and
- that the Offer is a product of the conflict of interest between Sabre and
Travelocity's public stockholders.
The lawsuits seek, among other things, to recover unspecified damages and
costs and to enjoin or rescind the transactions contemplated by this Offer to
Purchase. Sabre and Purchaser believe that these lawsuits are without merit and
intend to defend against them vigorously.
48
14. CERTAIN EFFECTS OF THE OFFER
PARTICIPATION IN FUTURE GROWTH. If you tender your Shares in the Offer, you
will not have the opportunity to participate in the future earnings, profits and
growth of Travelocity and will not have the right to vote on corporate matters
relating to Travelocity. If the Offer and the Merger are completed, Sabre, as
the ultimate parent company of Travelocity, will indirectly own a 100% interest
in the net book value and net earnings of Travelocity and will benefit from any
future increase in the value of Travelocity. Similarly, Sabre will bear the risk
of any decrease in the value of Travelocity and you will not face the risk of a
decline in the value of Travelocity. Upon the completion of the Merger, Sabre's
beneficial interest in Travelocity's net book value and net loss would increase
from approximately 70% (on a fully-diluted basis) to 100%.
MARKET FOR SHARES. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
STOCK QUOTATION. The Shares are quoted on the Nasdaq National Market.
According to published guidelines of the National Association of Securities
Dealers, the Shares might no longer be eligible for quotation on the Nasdaq
National Market if, among other things, either
- the number of Shares publicly held is less than 750,000, there are fewer
than 400 holders of round lots, the aggregate market value of publicly
held Shares is less than $5,000,000, stockholder's equity is less than
$10,000,000 and there are fewer than two registered and active market
makers for the Shares; or
- the number of Shares publicly held is less than 1,100,000, there are fewer
than 400 holders of round lots, the aggregate market value of publicly
held Shares is less than $15,000,000, there are fewer than four registered
and active market makers, and either (i) Travelocity's market
capitalization is less than $50,000,000 or (ii) the total assets and total
revenue of Travelocity for the most recently completed fiscal year or two
of the last three most recently completed fiscal years, is less than
$50,000,000.
Shares held directly or indirectly by directors, officers or beneficial
owners of more than 10% of the Shares are not considered as being publicly held
for this purpose. According to Travelocity's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001, as of the close of business on
November 9, 2001, there were 16,921,738 Shares outstanding.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges or in the
over-the-counter market, and that price quotations would be reported by such
exchanges, or through the National Association of Securities Dealers Automated
Quotation System Inc. ("NASDAQ") or other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of stockholders and/or the aggregate market value of the
Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
of the Shares under the Exchange Act and other factors.
MARGIN REGULATIONS. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve Board (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations in which event the Shares would be ineligible
as collateral for margin loans made by brokers.
49
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by Travelocity upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
the information required to be furnished by Travelocity to its stockholders and
to the SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement to
furnish a proxy statement in connection with stockholders' meetings pursuant to
Section 14(a) and the related requirement to furnish an annual report to
stockholders, no longer applicable with respect to the Shares. Furthermore, the
ability of "affiliates" of Travelocity and persons holding "restricted
securities" of Travelocity to dispose of such securities pursuant to Rule 144
under the Securities Act of 1933, as amended, may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be eligible for NASDAQ reporting or for continued inclusion on
the Federal Reserve Board's list of "margin securities". Purchaser intends to
seek to cause Travelocity to apply for termination of registration of the Shares
as soon as possible after consummation of the Offer if the requirements for
termination of registration are met.
15. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Shares pursuant to
the Offer.
Sabre has retained Xxxxxxx Xxxxx as financial advisors in connection with
the Offer. Sabre has agreed to pay Xxxxxxx Xxxxx a transaction fee of
$4 million, $1.125 million of which became payable upon delivery to
Travelocity's Board of Directors of the Sabre proposal to acquire all of the
Shares, with the balance of the transaction fee due upon closing of the Offer,
as well as reimbursement for Xxxxxxx Xxxxx' reasonable out-of-pocket expenses,
including the fees and expenses of its counsel, in connection with the Offer and
to indemnify Xxxxxxx Xxxxx against certain liabilities, including certain
liabilities under federal securities laws.
Sabre has also retained X.X. Xxxx & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation for such services, plus
reimbursement of out-of-pocket expenses, and Purchaser will indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including liabilities under the federal securities laws.
Purchaser has retained The Bank of New York, to act as the Depositary in
connection with the Offer. Purchaser will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by Purchaser for customary mailing
and handling expenses incurred by them in forwarding material to their
customers.
In addition, Travelocity will incur its own fees and expenses in connection
with the Offer.
50
The following is an estimate of the fees and expenses to be incurred by
Purchaser and Sabre:
Filing Fees................................................. $ 37,101
Financial Advisor's Fees and Expenses....................... 4,000,000
Accounting Fees and Expenses................................ 50,000
Depositary Fees............................................. 15,000
Information Agent Fees...................................... 15,000
Legal, Printing and Miscellaneous Fees and Expenses......... 1,250,000
----------
Total..................................................... $5,367,101
==========
16. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Purchaser may, however, in its sole discretion, take such action
as it may deem necessary to make the Offer in any such jurisdiction and extend
the Offer to holders of Shares in such jurisdiction.
Neither Purchaser nor Sabre is aware of any jurisdiction in which the making
of the Offer or the acceptance of Shares in connection therewith would not be in
compliance with the laws of such jurisdiction.
Purchaser and Sabre have filed with the SEC a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Statement includes within it the
information required by the SEC's Statement on Schedule 13E-3 relating to "going
private" transactions. Such Statement and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the principal office
of the SEC in Washington, D.C. in the manner set forth in Section 7, "The
Offer--Certain Information Concerning Travelocity."
No person has been authorized to give any information or make any
representation on behalf of Purchaser or Sabre not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
TRAVELOCITY HOLDINGS SUB INC.
SABRE HOLDINGS CORPORATION
March 5, 2002
51
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF SABRE AND PURCHASER
The following persons are the executive officers and/or directors of Sabre
and Purchaser as of the date of this Offer to Purchase. None of these persons
has been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors), nor has any of these
persons been a party to any judicial or administrative proceeding during the
past five years that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws or a finding of any violation of federal or state
securities laws. The following tables set forth the name, business address,
present principal occupation, principal business and address of any corporation
or other organization in which the employment or occupation is conducted, and
material occupations, positions, offices or employment held within the past five
years of each director and executive officer of Sabre and Purchaser. Unless
otherwise specified, each person listed below is a citizen of the United States
and has his or her principal business address at 0000 Xxxxx Xxxxx, Xxxxxxxxx,
Xxxxx 00000.
SABRE HOLDINGS CORPORATION
EXECUTIVE OFFICERS
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxx ........... Chairman of the Board and Chief Xx. Xxxxxxxx is Chairman of the
Executive Officer. Board of Directors and Chief
Executive Officer of Sabre
Holdings Corporation. He has
served as a director and as
Chief Executive Officer since
December 1999 and as Chairman
of the Board of Directors since
March 2000. He served as
President of SBC Global Markets
in 1999; President of Business
Communication Services for
Southwestern Bell/SBC from 1998
to 1999; Chair of SBC DataComm
Strategy Task Force and
Regional President of Central &
West Texas for Southwestern
Bell from 1997 to 1998; and
Vice President of Business and
Government Markets of Pacific
Bell from 1996 to 1997. Xx.
Xxxxxxxx has also served as
director of Travelocity since
March 2000.
A-1
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx ............ Executive Vice President, Chief Xx. Xxxxxxx is Executive Vice
Financial Officer and President, Chief Financial
Treasurer. Officer and Treasurer of Sabre
Holdings Corporation and has
served in this capacity since
May 1999. He served as Senior
Vice President, Chief Financial
Officer and Treasurer of Sabre
Holdings Corporation from
August 1998 to May 1999; Vice
President and Controller for
American Airlines from January
1998 to August 1998; and Vice
President--Corporate
Development and Treasurer for
American Airlines from March
1995 to January 1998. He has
also served as a director of
Travelocity since March 2000.
Xxxxx X. Xxxxxxxx ............. Executive Vice President and Xx. Xxxxxxxx is Executive Vice
General Counsel. President and General Counsel
of Sabre Holdings Corporation
and has served in this capacity
since March 2000. He served as
Director of the law firm of
Xxxxx, Xxxx & Xxxxxxx from July
1998 to March 2000 and Managing
Director of International
Affairs of American Airlines
from December 1996 to July
1998.
Xxxx X. Xxxxx ................. Executive Vice President. Xx. Xxxxx is Executive Vice
President of Sabre Holdings
Corporation and has served in
this capacity since May 1999.
He has also served as President
and Executive Vice President--
Marketing & Distribution of
Sabre Inc. since July 2000;
Senior Vice President of SABRE
Travel Information Network from
March 1997 to May 1999; and
Vice President of Sabre Travel
Information Network's European
Unit from August 1995 to March
1997.
A-2
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxx X. Xxxxxxxx ............. Corporate Secretary. Xx. Xxxxxxxx is Corporate
Secretary of Sabre Holdings
Corporation and has served in
this capacity since March 2000.
He has also served as Senior
Vice President, Deputy General
Counsel and Corporate Secretary
of Sabre Inc. since March 2000
and Senior Vice President,
Associate General Counsel of
Sabre Inc. from October 1996 to
March 2000.
SABRE HOLDINGS CORPORATION
DIRECTORS
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxx ........... Chairman of the Board and Xx. Xxxxxxxx has been a
Chairman of the Executive director of Sabre Holdings
Committee. Corporation since December
1999. Please refer to "Sabre
Holdings Corporation--
Executive Officers" for
additional information
regarding Xx. Xxxxxxxx'x
employment history.
Xxxxx X. Xxxxxxxx ............. Member of the Audit Committee Xx. Xxxxxxxx is a retired Vice
No Business Address and Compensation/Nominating Chairman of SBC Communications
Committee. Inc. He served as President and
Chief Executive Officer of
Southwestern Bell Corporation
from 1995 to 1996; President
and Chief Executive Officer of
SBC Operations from 1997 to
1998; and Vice Chairman of SBC
Corporation from 1998 to 2001.
Xx. Xxxxxxxx has been a
director of Sabre Holdings
Corporation since May 2001. He
has also been a director of
Cullen/ Frost Bankers since May
1995 and American Movil, S.A.
De C.V. in Mexico City since
January 2001 and serves as an
unpaid director of Abilene
Christian University.
A-3
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxx X. Xxx, Xx. .............. Member of the Audit Committee, Xx. Xxx is President of Santa
President Compensation/Nominating Xxxx Xxxxxx and has served in
Santa Xxxx Yachts Committee, and Executive this capacity since 1995. He
3 Alexis Court Committee. served as General Partner of
Menlo Park, CA 94025 Alpha Partners from 1989 to
1997. Xx. Xxx has been a
director of Sabre Holdings
Corporation since January 1997.
He has also served as a
director of Parker Hannifin
Corporation since December
1984, Tektronix, Inc. since
December 1992 and Travelocity
since March 2000.
Xxxxx X. Xxxxxxxx, Xx. ........ Member of the Audit Committee, Xx. Xxxxxxxx is President and
President and Chief Executive Compensation/Nominating Chief Executive Officer of
Officer Committee, and Executive XxxXxxxxx.xxx, Inc. and has
XxxXxxxxx.xxx, Inc. Committee. served in this capacity since
000 Xxxxxxx Xxxxxx, Xxx. 307 July 2000. He served as Chief
Lowell, MA 01854 Executive Officer, President
and Co-Chairman of the Board of
Faroudja, Inc. from October
1998 to June 2000 and President
and Chief Executive Officer of
PageNet, Inc. from December
1995 to August 1997. He has
been a director of Sabre
Holdings Corporation since
November 1996. Xx. Xxxxxxxx
also served as Chairman of the
Board of Additech, Inc. since
October 1997 and director of
Sage, Inc. since June 2000,
Covio, Inc. since April 2000,
and Travelocity since March
2000. He also served as
director of PageNet, Inc. from
December 1995 to August 1997.
A-4
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxx X. Xxxxxx ............... Member of the Audit Committee Xx. Xxxxxx is President of AT&T
President and Compensation/Nominating Corporation and has served in
AT&T Corporation Committee. this capacity since December
000 Xxxxx Xxxxx Xxx., Xx 0000X0 2000. He served as Chief
Basking Ridge, NJ 07920 Executive Officer of Concert, a
global venture created by AT&T
and British Telecom, from March
1999 to November 2000;
Chairman, President and Chief
Executive Officer of PointCast
from November 1997 to March
1999; and Chairman, President
and Chief Executive Officer of
Pacific Bell from July 1994 to
November 1997. He has been a
director of Sabre Holdings
Corporation since October 2000.
Xx. Xxxxxx has also served as a
director of AT&T Corporation
since February 2002, Science
Application International
Corporation since 1998 and
Scientific-Atlantic, Inc. since
1998. He served as director of
3Com Corporation from 1995 to
January 2000; Pacific Bell
Corp. from 1995 to 1998; and
Etek Dynamics from 1998 to
2000.
Xxx X. Xxxxxx ................. Chairman of the Compensation/ Xx. Xxxxxx has been an
No Business Address Nominating Committee and Member Independent Business Executive
of the Audit Committee and since June 1999. He was
Executive Committee. President and Chief Executive
Officer of Wal-Mart
International, Inc. from
September 1992 to June 1999.
Xx. Xxxxxx has been a director
of Sabre Holdings Corporation
since January 1997. He has
served as a director of
Edgewater Technology, Inc.
since September 1999.
A-5
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxx X. Xxxxxxx ............. Member of the Audit Committee Xx. Xxxxxxx has been President
President and Chief Executive and Compensation/Nominating and Chief Executive Officer of
Officer Committee. Exelon Energy Delivery since
Exelon Energy Delivery 2001; Executive Vice President
00 Xxxxx Xxxxxxxx Xxxxxx, xx Exelon Corporation since
37th Floor October 2000; and Vice Chair of
Chicago IL 60690-3005 ComEd since October 2000. She
also served as President of
Exelon Energy Delivery from
October 2000 to 2001; Executive
Vice President of ComEd from
December 1998 to October 2000;
and Senior Vice President and
General Counsel of ComEd from
June 1993 to October 1997.
Xx. Xxxxxxx has been a director
of Sabre Holdings Corporation
since October 2000. Xx. Xxxxxxx
has served as a director of IMC
Global since June 1999. She was
also a director of BadgeMeter
from 1998 to 2001.
Xxxx Xxxxx Xxxxxx ............. Member of the Audit Committee Xx. Xxxxxx has been an
No Business Address and Compensation/Nominating Independent Business Consultant
Committee. since 2000. She served as
Chairman and Chief Executive
Officer of XxxxXxxxxx.xxx, Inc.
from 1999 to 2000; Corporate
Executive Vice President of
Global Operations and
Technology of Citibank N.A.
from 1997 to 1999; and Senior
Vice President of The Americas
and the Caribbean, FDX
Corporation from 1980 to 1996.
Xx. Xxxxxx has been a director
of Sabre Holdings Corporation
since May 2000. She also served
as a director of XxxXxx.xxx
Inc. from October 2000 to
November 2001 and
XxxxXxxxxx.xxx, Inc. from
September 1999 to September
2000.
A-6
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxxx X. Xxxxxx ............. Chairman of the Audit Committee Xx. Xxxxxx served as Chairman
First Chicago NBD Corporation and a member of the of First Chicago NBD
1 Bank One Plaza, Compensation/Nominating Corporation from 1992 to 1996.
Mail Code IL1-0158 Committee. Xx. Xxxxxx has been a director
Chicago IL 60670-0518 of Sabre Holdings Corporation
since November 1996. He has
also served as a director of
IMC Global, Inc. since 1996,
PMI Group, Inc. since 1996,
Xxxx Xxx Corporation since 1976
and Exelon Corporation f/k/a
Unicom Corporation since 1998.
TRAVELOCITY HOLDINGS SUB INC.
DIRECTORS AND OFFICERS
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxx ........... Director, President and Chief Xx. Xxxxxxxx is a Director and
Executive Officer. President and Chief Executive
Officer of Travelocity Holdings
Sub Inc. He has been a director
of Travelocity Holdings Sub
Inc. since March 2002. Please
refer to "Sabre Holdings
Corporation--Executive
Officers" for additional
information regarding Xx.
Xxxxxxxx'x employment history.
Xxxxxxx X. Xxxxxxx ............ Director, Executive Vice Xx. Xxxxxxx is a Director and
President and Chief Financial Executive Vice President and
Officer. Chief Financial Officer of
Travelocity Holdings Sub Inc.
He has been a director of
Travelocity Holdings Sub Inc.
since March 2002. Please refer
to "Sabre Holdings
Corporation--Executive
Officers" for additional
information regarding Xx.
Xxxxxxx'x employment history.
A-7
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
---- ------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxxxx .......... Director and Executive Vice Xx. Xxxxxxxxx is a Director and
President. Executive Vice President of
Travelocity Holdings Sub Inc.
He is also Executive Vice
President and Chief Marketing
Officer of Sabre Inc. and has
served in this capacity since
March 2001. He also served as
Senior Vice President and Chief
Marketing Officer of Sabre Inc.
from June 2000 to March 2001;
Senior Vice President Product
Marketing for Sabre Inc. from
May 1999 to June 2000 and
Senior Vice President and
General Manager, Sabre Business
Travel Solutions for Sabre Inc.
from January 1996 to May 1999.
Xx. Xxxxxxxxx has been a
director of Travelocity
Holdings Sub Inc. since March
2002.
Xxxxx X. Xxxxxx ............... Treasurer. Xx. Xxxxxx is Treasurer of
Travelocity Holdings Sub Inc.
He is also Senior Vice
President, Corporate
Development and Treasurer of
Sabre Inc. and has served in
this capacity since June 1997.
Xx. Xxxxxx also served as
Senior Vice President, North
American Sales and Service of
Sabre Inc. from October 1994 to
June 1997. He has been a
director of Travelocity
Holdings Sub Inc. since March
2002.
Xxxxx X. Xxxxxxxx ............. Corporate Secretary. Xx. Xxxxxxxx is Corporate
Secretary of Travelocity
Holdings Sub Inc. He has been a
director of Travelocity
Holdings Sub Inc. since March
2002. Please refer to "Sabre
Holdings Corporation--
Executive Officers" for
additional information
regarding Xx. Xxxxxxxx'x prior
employment history.
A-8
SCHEDULE B
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the current ownership of Shares by Xxxxxxxxx
and Sabre (including their respective directors and executive officers).
AMOUNT AND NATURE OF PERCENTAGE OF
FILING PERSON(S) BENEFICIAL OWNER STOCK(1)
---------------- -------------------- -------------
Sabre Holdings Corporation............................ 35,033,970 70%
Sabre Inc............................................. 35,033,970(2) 70%
Travelocity Holdings, Inc............................. 35,033,970(2) 70%
Xxxx X. Xxx........................................... 31,000(3) *
Xxxxx X. Xxxxxxxx, Xx................................. 30,500(3) *
Xxxxxx X. Xxxxxxx..................................... 1,000(3) *
------------------------
* Less than 1%
(1) Based upon the latest information received from Travelocity that, as of
January 31, 2002, there were 33,000,000 shares of Class A common stock
outstanding and 17,051,811 shares of common stock outstanding. Accordingly,
upon Purchaser's conversion of the Class A common stock and exchange of the
Units, 50,051,811 Shares will be outstanding.
(2) Share ownership is based on Sabre's 100% ownership of Travelocity Holdings
Inc. and Sabre Inc.
(3) Represents all of the Shares and stock options owned, including Shares owned
directly and beneficially, and vested and unvested stock options regardless
of vesting period.
TRANSACTIONS IN SHARES DURING THE PAST SIXTY DAYS. On January 30, 2002,
Xxxxxxx X. Xxxxxx, a director of Sabre, sold the following Shares: (i) 500
shares held by the Xxxxxxx X. Xxxxxx Xx. Irrevocable Trust Dated 4/9/90 at
$26.22 per Share, (ii) 500 Shares held by the Xxxxx X. Xxxxxx Xxxxxxxxxxx Trust
Dated 4/9/90 at prices ranging from $26.05 to $26.16 per Share, (iii) 500 Shares
held by the Xxxxx X. Xxxxxxx Irrevocable Trust Dated 4/9/90 at prices ranging
from $26.06 to $26.07 per share, (iv) 500 Shares held by the Xxxxxx Xxxxxx
Xxxxxxx Trust U/A/D 12/21/92 at $26.06 per Share, (v) 500 Shares held by the
Xxxxxxxxx Xxxxxxxxx Xxxxxxx Trust U/A/D 6/25/94 at $26.23 per share, (vi) 2,000
Shares held by the Xxxxxx Family Ltd. Partnership at prices ranging from $26.15
to $26.22 per Share, (vii) 2,800 Shares held by Xxxxx X. Xxxxxx at $25.80 per
Share and (viii) 3,600 Shares held by Xxxxxxx X. Xxxxxx at $25.80 per Share. The
transactions described in item (i) through (vi) were effectuated through Banc
One Securities Corporation, whereas the transactions described in items (vii)
and (viii) were effectuated through Bank One Advisory Accounts at Bank One Trust
Company.
Except as disclosed above, Sabre has no knowledge of Share transactions
effectuated in the past sixty days by Sabre or Purchaser, any of their executive
officers or directors, any of Sabre's subsidiaries, or Travelocity or any
pension, profit sharing or similar plan of Travelocity or its affiliates.
PRIOR SHARE PURCHASES BY SABRE AND THE PURCHASER. In the past two years,
Sabre and Purchaser have not acquired any securities of Travelocity, except for
(i) the Shares acquired by Sabre in its initial investment in Travelocity and
(ii) certain Shares acquired by Sabre, through Travelocity Holdings, Inc., in
the first quarter of 2001. Between January and March 2001, Travelocity
Holdings, Inc. purchased a total of 857,500 Shares at a price range of $14.00 to
$29.00 per Share and at an average price of $20.88 per Share.
B-1
SCHEDULE C
EXCERPTS FROM THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE RELATING TO THE RIGHTS OF
DISSENTING STOCKHOLDERS PURSUANT TO SECTION 262
262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the Shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257,
Section 258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the Shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the Shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to Sections
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
C-1
d. Any combination of the Shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the Shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the Shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections
(d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the Shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will
be sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the merger
or consolidation shall not constitute such a demand. A stockholder electing
to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to section 228
or section 253 of this title, then either a constituent corporation before
the effective date of the merger or consolidation or the surviving or
resulting corporation within 10 days thereafter shall notify each of the
holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall,
also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within
20 days after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting
C-2
corporation shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such second
notice is sent more than 20 days following the sending of the first notice,
such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such xxxxxx's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the Shares, determining their fair value exclusive of any element
of value arising from the accomplishment
C-3
or expectation of the merger or consolidation, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account all relevant
factors. In determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the surviving or
resulting corporation would have had to pay to borrow money during the pendency
of the proceeding. Upon application by the surviving or resulting corporation or
by any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings and
may proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection
(f) of this section and who has submitted such stockholder's certificates of
stock to the Register in Chancery, if such is required, may participate fully in
all proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the Shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the Shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the Shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
C-4
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for the
Shares and any other required documents should be sent by each stockholder of
Travelocity or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
The Bank of New York
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
The Bank of New York The Bank of New York The Bank of New York
Tender & Exchange Dept. Tender & Exchange Dept. Tender & Exchange Dept.
P.O. Box 11248 5th Floor 3rd Floor
Church Street Station 000 Xxxxx Xxxx Xxxx Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000 Xxxx Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
FOR NOTICE OF GUARANTEED DELIVERY
BY FACSIMILE TRANSMISSION:
(000) 000-0000
TO CONFIRM FACSIMILE TRANSMISSION ONLY:
(000) 000-0000
FOR TELEPHONE ASSISTANCE:
0 (000) 000-0000
Questions or requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
at the telephone numbers and location listed below. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
X.X. XXXX & CO., INC.
00 XXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
BANKS AND BROKERS CALL COLLECT:
(000) 000-0000
ALL OTHERS CALL TOLL-FREE:
(000) 000-0000
