<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1997
REGISTRATION NO. 333-27495
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GALILEO INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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DELAWARE 7375 36-4156005
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
9700 WEST HIGGINS ROAD, SUITE 400
ROSEMONT, ILLINOIS 60018
(847) 518-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
BABETTA R. GRAY, ESQ.
SENIOR VICE PRESIDENT, LEGAL AND GENERAL COUNSEL
GALILEO INTERNATIONAL, INC.
9700 WEST HIGGINS ROAD, SUITE 400
ROSEMONT, ILLINOIS 60018
(847) 518-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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JOEL S. KLAPERMAN, ESQ. JEFFREY SMALL, ESQ.
SHEARMAN & STERLING DAVIS POLK & WARDWELL
599 LEXINGTON AVENUE 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10017
(212) 848-4000 (212) 450-4000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
] ____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ] ____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
This Amendment No 2 to the Registrant's Registration Statement on Form S-1
(File No. 333-27495) (the "Registration Statement") is being filed solely for
the purpose of filing certain exhibits, and no changes or additions are being
made hereby to the prospectus (the "Prospectus") which forms a part of the
Registration Statement. Accordingly, the Prospectus has been omitted from this
filing.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
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SEC registration fee........................................ $ 256,469
NASD filing fee............................................. 30,500
NYSE listing fee............................................ 450,000
Blue Sky fees and expenses.................................. 5,000
Attorneys' fees and expenses................................ 950,000
Accountants' fees and expenses.............................. 525,000
Transfer Agent's and Registrar's fees and expenses.......... 10,000
Printing and engraving expenses............................. 400,000
Miscellaneous............................................... 373,031
----------
Total.................................................. $3,000,000
==========
</TABLE>
The amounts set forth above are estimates except for the SEC registration
fee and the NASD filing fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, in summary,
that directors and officers of Delaware corporations are entitled, under certain
circumstances, to be indemnified against all expenses and liabilities (including
attorney's fees) incurred by them as a result of suits brought against them in
their capacity as a director or officer, if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful; provided that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the Company,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, they are fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Any such indemnification may be made by the Company only as authorized
in each specific case upon a determination by the shareholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct.
The Company's Restated Certificate of Incorporation provides that no
director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (i) for any breach of the director's duty of loyalty to
the Company or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) in
respect of certain unlawful dividend payments or stock redemptions or purchases;
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Restated Certificate of Incorporation and Restated By-Laws
provide for indemnification of its directors and officers to the fullest extent
permitted by Delaware law, as the same may be amended from time to time.
Section 9 of the Underwriting Agreement (Exhibit 1.1 hereto) contains
provisions for certain indemnification rights to the directors and officers of
the Registrant.
In addition, the Company maintains liability insurance for its directors
and officers.
II-1
<PAGE> 4
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with the merger of Galileo International Partnership into a
wholly owned limited liability company subsidiary of the Company, an aggregate
of 88,000,000 shares of the Company's Common Stock and seven shares of the
Company's Special Voting Preferred Stock will be issued to the partners of
Galileo International Partnership. Such issuances will be exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
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1.1** Form of Underwriting Agreement.
2.1** Form of General Partnership Interest Purchase Agreement
among United Air Lines Inc., Covia Corporation, U.S.
Airways, Inc., USAM Corp., Air Canada, Resnet Holdings,
Inc., Apollo Travel Services Partnership and Galileo
International Partnership.
2.2 Form of Share Purchase Agreement between SAirGroup and
Galileo International Partnership.
2.3 Form of General Share Purchase Agreement among Koninklijke
Luchtvaart Maatschappij N.V., Galileo Nederland BV and
Galileo International Partnership.
2.4** Form of Agreement and Plan of Merger by and among the
Registrant, Galileo International Partnership and Galileo
International, L.L.C.
3.1** Form of Restated Certificate of Incorporation of Registrant.
3.2** Form of Restated By-Laws of Registrant.
4.1** Form of Registration Rights Agreement among the Registrant
and Covia Corp., USAM Corp., Resnet Holdings, Inc.,
Distribution Systems Inc., Roscor A.G., Travel Industry
Systems B.V., Retford Limited, Racom Teledata S.p.A.,
Travidata Inc., Olynet Inc. and Coporga, Inc.
4.2* Specimen Certificate representing Common Stock.
5.1** Opinion of Shearman & Sterling as to the legality of the
Common Stock.
10.1 Form of Stockholders' Agreement among the Registrant,
certain of its stockholders and certain related parties of
such stockholders.
10.2** Form of Services Agreement among the Registrant, United Air
Lines, Inc., US Airways, Inc. and Air Canada.
10.3** Form of Services Agreement between the Registrant and
SAirGroup.
10.4** Form of Services Agreement between the Registrant and
Koninklijke Luchvaart Maatschappij N.V.
10.5 Form of Amended and Restated Non-Competition Agreement among
the Registrant, certain of its stockholders and certain
related parties of such stockholders.(c)
10.6 Form of Marketing Cooperation and Sales Representations
Agreement between United Air Lines, Inc. and the
Registrant.(c)
10.7 Form of Marketing Cooperation and Sales Representation
Agreement between US Airways, Inc. and the Registrant.(c)
10.8** Form of Rights Waiver Agreement between SAirGroup and
Galileo International Partnership.
10.9** Form of Rights Waiver Agreement between Koninklijke
Luchvaart Maatschappij N.V. and Galileo International
Partnership.
10.10 Form of Credit Agreements:
**(a) 364 day agreement
*(b) 5 year revolving credit agreement
</TABLE>
II-2
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
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10.11** Hillmead Lease.
10.12** Underlease, dated 1996, between The Galileo Company and
Lucent Technologies Network Systems UK Limited.
10.13** Lease, dated March 1, 1997, between St. Martins Property
Investments Limited and The Galileo Company.
10.14** Lease, dated December 2, 1987, between St. Martins Property
Investments Limited and Galileo Distribution Systems
Limited.
10.15** Englewood, Colorado Office Lease, dated April 18, 1988.
10.16 First Amendment to Englewood, Colorado Office Lease, dated
June 23, 1988.
10.17** Rosemont Office Lease, dated March 31, 1995.
10.18** Term Master Lease Agreement, dated May 9, 1988, between IBM
Credit Corporation and Covia Partnership.
10.19** Master Lease Agreement, dated November 11, 1988, between
Comdisco, Inc. and Covia Partnership.
10.20** Software License Agreement, dated August 1, 1994, between
Allen Systems Group, Inc. and Galileo International.
10.21 Master License Agreement between Candle Corporation and
Galileo International Partnership.
10.22** Foundation License between Galileo International and
Computer Associates International, Inc.
10.23 Software License Agreement, dated February 29, 1996, between
Sterling Software (U.S.A.), Inc. and Galileo International.
10.24** Master Equipment Lease, dated November 19, 1991, between
General Electric Capital Computer Leasing Corporation and
Covia Partnership.
10.25** Master Equipment Lease, dated April 4, 1996, between AT&T
Systems Leasing Corporation and Galileo International
Partnership.
10.26** Dun & Bradstreet Software Services Agreement.
10.27** Cover Agreement, dated October 8, 1996, between Sprint
Communications Company L.P. and Galileo International
Partnership.
10.28** Agreement for Telecommunications Services, dated January 1,
1996, between Societe Internationale de Telecommunications
Aeronautiques and Galileo International Partnership.
10.29** Master Agreement for MCI Enhanced Services, dated February
14, 1996, between MCI Global Resources, Inc. and Galileo
International Partnership.
10.30** Communications Services Agreement, dated April 1, 1997,
between Galileo International and AT&T Corp.
10.31** Galileo International Severance Plan.
10.32** Galileo International Savings and Investment Plan.
10.33** Galileo International car policy.
10.34** Galileo Retirement and Death Benefit Scheme.
10.35** Galileo International Employee Pension Plan.
10.36 Galileo International Flextrack Benefits Plan.
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
10.37** Form of Galileo International Distributor Sales and Service
Agreement.
10.38** Form of Global Airline Distribution Agreement.
10.39** Miscellaneous Services Agreement between The Galileo Company
and Galileo International Partnership.
10.40** Galileo International Retiree Medical Plan.
10.41** Galileo International, Inc. 1997 Stock Incentive Plan.
10.42** Galileo International, Inc. 1997 Non-Employee Director Stock
Plan.
10.43** Form of Deferred Compensation Arrangements.
10.44 Galileo UK Health Benefit Policy.
10.45 Employment Contract of James E. Barlett.
21.1 List of Subsidiaries.
23.1** Consent of KPMG Peat Marwick LLP.
23.2** Consent of Arthur Andersen LLP.
23.3** Consent of Shearman & Sterling (included in its opinion in
Exhibit 5.1).
23.4 Consent of Frederic F. Brace.
23.5** Consent of David A. Coltman.
23.6 Consent of James E. Goodwin.
23.7** Consent of Frank H. Rovekamp.
23.8** Consent of Georges P. Schorderet.
23.9** Consent of Derek Stevens.
24.1** Powers of Attorney.
27.1** Financial Data Schedule.
</TABLE>
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(c) Exhibits for which Registrant is seeking confidential treatment for certain
portions
* To be filed by amendment.
** Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES.
The schedules have been omitted because of the absence of circumstances
under which they could be required.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-4
<PAGE> 7
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the U.S. Underwriting Agreement and the
International Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
II-5
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this Amendment to the Registration Statement
on Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in Englewood, Colorado on June 27, 1997.
Galileo International, Inc.
By: *
------------------------------------
James E. Barlett
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
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SIGNATURE TITLE DATE
--------- ----- ----
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* Chairman of the Board of Directors, June 27, 1997
- --------------------------------------- President and Chief Executive Officer
James E. Barlett (principal executive officer)
* Director, Senior Vice President and Chief June 27, 1997
- --------------------------------------- Financial Officer (principal financial and
Paul H. Bristow accounting officer)
/s/ BABETTA R. GRAY Director June 27, 1997
- ---------------------------------------
Babetta R. Gray
</TABLE>
*By:
/s/ BABETTA R. GRAY
- ----------------------------------------
Babetta R. Gray
Attorney-in-Fact
II-6
<PAGE> 9
EXHIBIT INDEX
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ------------
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1.1** Form of Underwriting Agreement.
2.1** Form of General Partnership Interest Purchase Agreement
among United Air Lines Inc., Covia Corporation, U.S.
Airways, Inc., USAM Corp., Air Canada, Resnet Holdings,
Inc., Apollo Travel Services Partnership and Galileo
International Partnership.
2.2 Form of Share Purchase Agreement between SAirGroup and
Galileo International Partnership.
2.3 Form of General Share Purchase Agreement among Koninklijke
Luchtvaart Maatschappij N.V., Galileo Nederland BV and
Galileo International Partnership.
2.4** Form of Agreement and Plan of Merger by and among the
Registrant, Galileo International Partnership and Galileo
International, L.L.C.
3.1** Form of Restated Certificate of Incorporation of Registrant.
3.2** Form of Restated By-Laws of Registrant.
4.1** Form of Registration Rights Agreement among the Registrant
and Covia Corp., USAM Corp., Resnet Holdings, Inc.,
Distribution Systems Inc., Roscor A.G., Travel Industry
Systems B.V., Retford Limited, Racom Teledata S.p.A.,
Travidata Inc., Olynet Inc. and Coporga, Inc.
4.2* Specimen Certificate representing Common Stock.
5.1** Opinion of Shearman & Sterling as to the legality of the
Common Stock.
10.1 Form of Stockholders' Agreement among the Registrant,
certain of its stockholders and certain related parties of
such stockholders.
10.2** Form of Services Agreement among the Registrant, United Air
Lines, Inc., US Airways, Inc. and Air Canada.
10.3** Form of Services Agreement between the Registrant and
SAirGroup.
10.4** Form of Services Agreement between the Registrant and
Koninklijke Luchvaart Maatschappij N.V.
10.5 Form of Amended and Restated Non-Competition Agreement among
the Registrant, certain of its stockholders and certain
related parties of such stockholders.(c)
10.6 Form of Marketing Cooperation and Sales Representations
Agreement between United Air Lines, Inc. and the
Registrant.(c)
10.7 Form of Marketing Cooperation and Sales Representation
Agreement between US Airways, Inc. and the Registrant.(c)
10.8** Form of Rights Waiver Agreement between SAirGroup and
Galileo International Partnership.
10.9** Form of Rights Waiver Agreement between Koninklijke
Luchvaart Maatschappij N.V. and Galileo International
Partnership.
10.10 Form of Credit Agreements:
**(a) 364 day agreement
*(b) 5 year revolving credit agreement
</TABLE>
10.11** Hillmead Lease.
<PAGE> 10
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<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ------------
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10.12** Underlease, dated 1996, between The Galileo Company and
Lucent Technologies Network Systems UK Limited.
10.13** Lease, dated March 1, 1997, between St. Martins Property
Investments Limited and The Galileo Company.
10.14** Lease, dated December 2, 1987, between St. Martins Property
Investments Limited and Galileo Distribution Systems
Limited.
10.15** Englewood, Colorado Office Lease, dated April 18, 1988.
10.16 First Amendment to Englewood, Colorado Office Lease, dated
June 23, 1988.
10.17** Rosemont Office Lease, dated March 31, 1995.
10.18** Term Master Lease Agreement, dated May 9, 1988, between IBM
Credit Corporation and Covia Partnership.
10.19** Master Lease Agreement, dated November 11, 1988, between
Comdisco, Inc. and Covia Partnership.
10.20** Software License Agreement, dated August 1, 1994, between
Allen Systems Group, Inc. and Galileo International.
10.21 Master License Agreement between Candle Corporation and
Galileo International Partnership.
10.22** Foundation License between Galileo International and
Computer Associates International, Inc.
10.23 Software License Agreement, dated February 29, 1996, between
Sterling Software (U.S.A.), Inc. and Galileo International.
10.24** Master Equipment Lease, dated November 19, 1991, between
General Electric Capital Computer Leasing Corporation and
Covia Partnership.
10.25** Master Equipment Lease, dated April 4, 1996, between AT&T
Systems Leasing Corporation and Galileo International
Partnership.
10.26** Dun & Bradstreet Software Services Agreement.
10.27** Cover Agreement, dated October 8, 1996, between Sprint
Communications Company L.P. and Galileo International
Partnership.
10.28** Agreement for Telecommunications Services, dated January 1,
1996, between Societe Internationale de Telecommunications
Aeronautiques and Galileo International Partnership.
10.29** Master Agreement for MCI Enhanced Services, dated February
14, 1996, between MCI Global Resources, Inc. and Galileo
International Partnership.
10.30** Communications Services Agreement, dated April 1, 1997,
between Galileo International and AT&T Corp.
10.31** Galileo International Severance Plan.
10.32** Galileo International Savings and Investment Plan.
10.33** Galileo International car policy.
10.34** Galileo Retirement and Death Benefit Scheme.
10.35** Galileo International Employee Pension Plan.
10.36 Galileo International Flextrack Benefits Plan.
10.37** Form of Galileo International Distributor Sales and Service
Agreement.
10.38** Form of Global Airline Distribution Agreement.
</TABLE>
<PAGE> 11
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<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ------------
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10.39** Miscellaneous Services Agreement between The Galileo Company
and Galileo International Partnership.
10.40** Galileo International Retiree Medical Plan.
10.41** Galileo International, Inc. 1997 Stock Incentive Plan.
10.42** Galileo International, Inc. 1997 Non-Employee Director Stock
Plan.
10.43** Form of Deferred Compensation Arrangements.
10.44 Galileo UK Health Benefit Policy.
10.45 Employment Contract of James E. Barlett.
21.1 List of Subsidiaries.
23.1** Consent of KPMG Peat Marwick LLP.
23.2** Consent of Arthur Andersen LLP.
23.3** Consent of Shearman & Sterling (included in its opinion in
Exhibit 5.1).
23.4 Consent of Frederic F. Brace.
23.5** Consent of David A. Coltman.
23.6 Consent of James E. Goodwin.
23.7** Consent of Frank H. Rovekamp.
23.8** Consent of Georges P. Schorderet.
23.9** Consent of Derek Stevens.
24.1** Powers of Attorney.
27.1** Financial Data Schedule.
</TABLE>
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(c) Exhibits for which Registrant is seeking confidential treatment for certain
portions
* To be filed by amendment.
** Previously filed.
<PAGE> 1
Exhibit 2.2
SHARE PURCHASE AGREEMENT
between
SAIRGROUP, a Swiss corporation having its registered domicile in Zurich,
Switzerland
(hereinafter the "SELLER"),
and
GALILEO INTERNATIONAL PARTNERSHIP, a Delaware general partnership whose
principal place of business is in Rosemont, Illinois, and any successor in
interest thereto, including, without limitation, the corporation or limited
liability company formed in connection with the IPO (as such term is defined
below)
(hereinafter the "PURCHASER";
each of the Purchaser and the Seller
is referred to herein
as a "PARTY", and the Purchaser and the Seller are referred
to herein collectively as the "PARTIES")
regarding the purchase of the entire share capital of
Traviswiss AG, a Swiss company having its
registered domicile in Kloten, Switzerland
(hereinafter the "Company")
<PAGE> 2
ARTICLE I
DEFINITIONS
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SECTION 1.01. Certain Defined Terms ..................................... 1
SECTION 1.02. Other Defined Terms ....................................... 5
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares ........................... 7
SECTION 2.02. Purchase Price ............................................ 7
SECTION 2.03. Closing ................................................... 7
SECTION 2.04. Closing Deliveries ........................................ 7
SECTION 2.05. Cash Mechanism ............................................ 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.01. Organization, Authority and Qualification of the Seller ... 10
SECTION 3.02. Organization, Authority and Qualification of the Company .. 11
SECTION 3.03. Company Interests ......................................... 11
SECTION 3.04. No Conflict ............................................... 12
SECTION 3.05. Consents and Approvals .................................... 12
SECTION 3.06. Financial Information and Books and Records ............... 12
SECTION 3.07. No Undisclosed Liabilities ................................ 13
SECTION 3.08. Conduct in the Ordinary Course, Absence of Certain Changes,
Events and Conditions ................................ 13
SECTION 3.09. Litigation ................................................ 15
SECTION 3.10. Compliance with Laws ...................................... 15
SECTION 3.11. Environmental and Other Permits and Licenses; Related
Matters .............................................. 16
SECTION 3.12. Material Contracts ........................................ 16
SECTION 3.13. Intellectual Property ..................................... 18
SECTION 3.14. Real Property and Leases .................................. 18
SECTION 3.15. Assets .................................................... 19
SECTION 3.16. Employee Benefit Matters .................................. 20
SECTION 3.17. Labor Matters ............................................. 21
SECTION 3.18. Taxes ..................................................... 21
SECTION 3.19. Insurance ................................................. 22
SECTION 3.20. Brokers ................................................... 23
SECTION 3.21. Year 2000 Compliance ...................................... 23
</TABLE>
i
<PAGE> 3
<TABLE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization, Authority and Qualification of the Purchaser .. 24
SECTION 4.02. No Conflict ................................................. 24
SECTION 4.03. Governmental Consents and Approvals ......................... 25
SECTION 4.04. Investment Purpose .......................................... 25
SECTION 4.05. Brokers ..................................................... 25
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing .................... 25
SECTION 5.02. Access to Information ....................................... 26
SECTION 5.03. Confidentiality ............................................. 27
SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents.... 28
SECTION 5.05. Notice of Developments ...................................... 29
SECTION 5.06. No Solicitation of Employees ................................ 29
SECTION 5.07. Use of Intellectual Property ................................ 29
SECTION 5.08. Monthly Financial Statements ................................ 30
SECTION 5.09. Pre-Closing Balance Sheet ................................... 30
SECTION 5.10. Company Pension Fund ........................................ 31
SECTION 5.11. Insurance Coverage by the Seller ............................ 32
SECTION 5.12. Certain Services ............................................ 32
SECTION 5.13. Certain Intercompany Payments ............................... 34
SECTION 5.14. Intercompany Loan ........................................... 34
SECTION 5.15. Right of First Refusal ...................................... 35
SECTION 5.16. Transfer of Certain Company Intellectual Property............ 35
SECTION 5.17. Further Action .............................................. 36
ARTICLE VI
TAX MATTERS
SECTION 6.01. Tax Indemnity ............................................... 36
SECTION 6.02. Apportionment of Taxes ...................................... 37
SECTION 6.03. Returns and Payments ........................................ 37
SECTION 6.04. Contests .................................................... 39
SECTION 6.05. Survival of Obligations ..................................... 41
SECTION 6.06. Conveyance Taxes ............................................ 41
SECTION 6.07. Tax Refunds, Credits and Other Payments ..................... 41
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller ..................... 42
SECTION 7.02. Conditions to Obligations of the Purchaser .................. 43
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties .................. 45
SECTION 8.02. Indemnification by the Seller ............................... 46
SECTION 8.03. Tax Matters ................................................. 48
SECTION 8.04. Indemnification by the Purchaser ............................ 48
SECTION 8.05. Indemnification Procedures .................................. 48
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.01. Termination ................................................. 50
SECTION 9.02. Effect of Termination ....................................... 50
SECTION 9.03. Waiver ...................................................... 51
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Expenses ................................................... 51
SECTION 10.02. Notices .................................................... 51
SECTION 10.03. Public Announcements ....................................... 53
SECTION 10.04. Headings ................................................... 53
SECTION 10.05. Severability ............................................... 53
SECTION 10.06. Entire Agreement ........................................... 53
SECTION 10.07. Assignment ................................................. 53
SECTION 10.08. No Third Party Beneficiaries ............................... 54
SECTION 10.09. Amendment .................................................. 54
SECTION 10.10. Arbitration ................................................ 54
SECTION 10.11. Seller's Disclosure Schedule ............................... 56
SECTION 10.12. Governing Law .............................................. 56
SECTION 10.13. Counterparts ............................................... 56
SECTION 10.14. Specific Performance ....................................... 56
</TABLE>
iii
<PAGE> 5
WHEREAS, the Seller owns 200 registered shares of the Company's
capital stock, nominal value CHF 10,000 per share (the "Shares"), which
constitute one hundred percent (100%) of the outstanding share capital of the
Company; and
WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, the Shares upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the Parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Accounting Principles" means the rules set out in art. 662a et seq.
of the Swiss Code of Obligations as applied by members of the Swiss Accountants'
Organization ("Schweizerische Treuhand und Revisionskammer").
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"After-Tax Basis" means, (i) with respect to any Loss that is
required to be indemnified pursuant to Article VI or Article VIII on an
After-Tax Basis, that the indemnification payment will be calculated so as to
take into account both the deductibility or creditability by the indemnitee or
the Company for Tax purposes of the Loss being indemnified and the taxability to
the indemnitee of the indemnifying payment (including taxability of any payments
made to gross up for the taxability of the indemnifying payment), and (ii) with
respect to any refund or credit that is required to be paid on an After-Tax
Basis pursuant to Section 6.07, that the refund or credit payable by the
Purchaser to the Seller will be calculated so as to take into account both the
deductibility by the Company for Tax purposes of the payment of such refund or
credit to the Seller and (a) the taxability to the Company of the receipt of the
refund or credit and (b) any tax to the Company or the Purchaser (or any
Affiliate thereof) in connection with any distribution of the credit or refund
(or any portion thereof) to the Purchaser (or any Affiliate thereof).
<PAGE> 6
2
"Agreement" or "this Agreement" means this Share Purchase Agreement,
dated as of , 1997, between the Seller and the Purchaser (including the Exhibits
hereto and the Seller's Disclosure Schedule) and all amendments hereto made in
accordance with the provisions of Section 10.09.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in the
City of Zurich, Switzerland.
"Company Intellectual Property" means all trademarks, trademark
rights, trade names, trade name rights, patents, patent rights, industrial
models, inventions, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
as currently conducted or as contemplated (by existing Company management) to be
conducted, together with all applications currently pending for any of the
foregoing.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage, lien
(including without limitation, environmental and Tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Environment" means surface waters, groundwaters, surface water
sediment, soil, subsurface strata and ambient air.
"Environmental Claims" means any and all actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation, notices of
liability or potential liability, investigations, proceedings, consent orders or
consent agreements relating in any way to any Environmental Law, any
Environmental Permit or any Hazardous Material or arising from any alleged
injury or threat of injury to health, safety or the Environment.
"Environmental Law" means any Law, now or hereafter in effect and as
amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
pollution or protection of the
<PAGE> 7
3
Environment, health or safety or to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required to operate the business of the
Company under any applicable Environmental Law.
"Governmental Authority" means any Swiss or foreign federal, state
or local government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority, other than any rules and regulations (whether promulgated by order or
otherwise) which apply generally to the computer reservations system industry.
"Hazardous Materials" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals, materials
or substances regulated as toxic or hazardous or as pollutant, contaminant or
waste under any applicable Environmental Law.
"Income Taxes" means Taxes based on or measured by net income.
"Independent Accounting Firm" means any one of the "big six"
accounting firms other than the Purchaser's Accountants, the Seller's
accountants and the Company's accountants.
"Law" means any Swiss or foreign federal, state or local statute,
law, ordinance, regulation, rule, code, order, other requirement or rule of law.
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law (including without limitation, any Environmental Law), Action or
Governmental Order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"Material Adverse Effect" means any change in or effect on the
business of the Company that, when taken individually or together with all other
adverse changes and effects, is or is reasonably likely to be materially adverse
to the business, operations, properties, condition (financial or otherwise),
assets or Liabilities of the Company or prevents consummation of the
transactions contemplated hereby.
<PAGE> 8
4
"Net Asset Test Reference Balance Sheet" means the audited balance
sheet (including the related notes and schedules thereto) of the Company, dated
as of 31 December 1996, excluding (i) any indebtedness for borrowed money of the
Company and (ii) any Cash other than cash in the amount of any checks
outstanding, a copy of which is set forth in Section 3.06(a) of the Seller's
Disclosure Schedule.
"Net Assets" means the excess of total assets over total liabilities
of the Company shown on the Pre-Closing Balance Sheet or the Seasonally Adjusted
Net Asset Test Reference Balance Sheet, as applicable.
"Ordinary Course Taxes" means Taxes, other than Income Taxes,
capital Taxes or VAT, relating to operations, activities or ownership during
periods (or portions thereof) prior to the Closing Date and paid by the Company
after the Closing Date in the ordinary course of business and not as a result of
an audit or examination by a government or Tax authority or an administrative or
judicial proceeding or a settlement or compromise thereof in connection with a
Tax previously paid or a Return previously filed.
"Permitted Encumbrances" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) liens for Taxes, assessments and governmental charges or
levies not yet due and payable; (b) Encumbrances imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations;
(c) pledges or deposits to secure obligations under workers' compensation laws
or similar legislation or to secure public or statutory obligations; and (d)
minor survey exceptions, reciprocal easement agreements and other customary
encumbrances on title to real property that (i) were not incurred in connection
with any indebtedness for borrowed money of the Company, (ii) do not render
title to the property encumbered thereby unmarketable and (iii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group.
"Purchaser's Accountants" means KPMG Peat Marwick LLP, independent
accountants of the Purchaser.
"Real Property" means the real property leased or owned by the
Company.
"Return" means any return, report or form relating to a Tax or
Taxes.
"Seasonally Adjusted Net Asset Test Reference Balance Sheet" means
the Net Asset Test Reference Balance Sheet adjusted to multiply current assets
reflected thereon by
<PAGE> 9
5
the appropriate seasonal adjustment factors set forth on Schedule 1.01(a) hereto
and current liabilities by the appropriate seasonal adjustment factors set forth
on Schedule 1.01(b) hereto.
"Tax" or "Taxes" means any and all taxes, contributions, fees,
levies, duties, tariffs, imposts, and other similar charges (together with any
and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any government or taxing authority (whether
federal, state, local, cantonal, municipal, foreign or otherwise), including,
without limitation: Income Taxes, VAT, any other taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, capital, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges.
"Tax Benefit" means the value, when actually received, of any
deduction, loss, credit or refund to the Purchaser, the Company or the Seller,
as the case may be.
"VAT" means Value Added Tax as defined in the Swiss VAT ordinance of
the 22nd of June, 1994, a Tax imposed on turnover of goods and services,
including imports of goods and services.
SECTION 1.02. Other Defined Terms. Each of the following terms is
defined in the Section set forth opposite such term:
<TABLE>
<CAPTION>
Terms Section
----- -------
<S> <C>
Agreement ...................................... Preamble
Arbitration Request ............................ 10.10(a)
Arbitrator ..................................... 10.10(a)
Assets ......................................... 3.15(a)
Association .................................... 10.10(a)
atraxis ........................................ 5.12(a)
Average Cash Amount ............................ 2.05(b)
aviReal ........................................ 5.12(a)
Award .......................................... 10.10(a)(v)
Cash ........................................... 2.05(b)
Closing ........................................ 2.03
Closing Date ................................... 2.03
Commencement Date .............................. 10.10(a)(i)
Company ........................................ Cover Page
Company Charter Documents ...................... 3.02
Company Interest ............................... 5.15
Company Licenses ............................... 3.13
</TABLE>
<PAGE> 10
6
<TABLE>
<S> <C>
Company Names .................................. 5.07(a)
Company Post-Closing License ................... 5.16(b)
Dispute Notice ................................. 10.10(a)
Dollar Equivalent .............................. 2.05(b)
Escrow Agent ................................... 2.05(f)(i)
Escrow Amount .................................. 2.05(f)(i)
Financial Statements ........................... 3.06
First Refusal Price ............................ 5.15
Indemnified Party .............................. 6.01, 8.05
Indemnifying Party ............................. 8.05
Independent Firm ............................... 6.03(b)
Intercompany Loan .............................. 5.14
IPO ............................................ 2.03
Loss ........................................... 8.02
Material Contracts ............................. 3.12(a)
Measuring Period ............................... 2.05(b)
New Company Fund ............................... 5.10(b)(i)
Non-Disclosure Agreement ....................... 5.03(a)
Notice of Exercise ............................. 5.15(b)
Notice of Intention ............................ 5.15
Option Period .................................. 5.15(b)
Parties ........................................ Cover Page
Party .......................................... Cover Page
Pension Transfer Agreement ..................... 5.10(b)(ii)
Petitioner ..................................... 10.10(a)
Plan ........................................... 3.16(a)
Pre-Closing Balance Sheet ...................... 5.09
Prospective Buyer .............................. 5.15
Prospective Seller ............................. 5.15
Purchase Price ................................. 2.02
Purchase Price Adjustment Amount ............... 2.05(b)
Purchaser ...................................... Cover Page
Purchaser Indemnified Party .................... 8.02(a)
Returnable Refund or Credit .................... 6.07
Respondent ..................................... 10.10(a)
Response ....................................... 10.10(a)(ii)
Returnable Refund or Credit .................... 6.07
Seller ......................................... Cover Page
Seller Indemnified Party ....................... 8.04(a)
Seller Post-Closing License .................... 5.16(a)
Seller's Disclosure Schedule ................... 3.02
Seller's Pension Funds ......................... 5.10(a)
Shares ......................................... Recitals
</TABLE>
<PAGE> 11
7
<TABLE>
<S> <C>
Statement ...................................... 10.10(a)
Third Party Claim .............................. 8.05
Transaction Agreement .......................... 7.01(f)
Transferred Intellectual Property .............. 5.16(a)
Transition Period .............................. 5.11
</TABLE>
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms and
subject to the conditions of this Agreement, at the Closing, the Seller will
transfer to the Purchaser the Shares and the Purchaser shall accept such
transfer.
SECTION 2.02. Purchase Price. Subject to adjustment as provided in
Section 2.05, the purchase price for the Shares shall be the sum of (i)
US$8,000,000 plus (ii) the Purchase Price Adjustment Amount, payable in cash
(the "Purchase Price").
SECTION 2.03. Closing. Upon the terms and subject to the conditions
of this Agreement, the sale and purchase of the Shares shall take place at a
closing (the "Closing") to be held at the offices of [Shearman & Sterling, 599
Lexington Avenue, New York, New York] at 10:00 a.m. New York time on the day of
the consummation of the proposed initial public offering by the Purchaser (the
"IPO"), or at such other place or at such other time or on such other date as
the Seller and the Purchaser may mutually agree upon in writing (the day on
which the Closing takes place being the "Closing Date").
SECTION 2.04. Closing Deliveries. (a) At the Closing and upon
confirmation of payment of the Purchase Price, the Seller shall deliver to the
Purchaser (i) one or more stock certificates evidencing the Shares duly endorsed
in blank, or accompanied by stock powers duly executed in blank, in form
satisfactory to the Purchaser, and (ii) any documents required to be delivered
by the Seller pursuant to Section 7.02.
(b) At the Closing and upon receipt of the documents described in
Section 2.04(a), the Purchaser shall deliver to the Seller (i) any documents
required to be delivered by the Purchaser pursuant to Section 7.01, and (ii) a
banker's check in the amount of the Purchase Price less the Escrow Amount.
SECTION 2.05. Cash Mechanism. (a) Subject to the provisions of this
Section 2.05, the Purchase Price Adjustment Amount will be paid by the Purchaser
to the Seller in accordance with Section 2.05(b).
<PAGE> 12
8
(b) For purposes of this Section 2.05, (i) the "Average Cash Amount"
means, subject to adjustment as set forth in Section 2.05(c), the amount of cash
that is equal to the simple average daily balance of cash, time deposits,
certificates of deposit, marketable securities and other short term investments
and cash equivalents ("Cash") of the Company at the close of business on each
Business Day during the Measuring Period, (ii) "Measuring Period" means the
period commencing at 12:01 a.m. on the date of the month immediately preceding
the month in which the Closing Date occurs that is the same date of the month as
the Closing Date (or if such date is not a calendar date, the date that
corresponds most closely to the date that is the Closing Date) and ending at
11:59 p.m. on the day immediately preceding the Closing Date, (iii) "Purchase
Price Adjustment Amount" means the Dollar Equivalent of (A) the Average Cash
Amount less (B) the checks issued by the Company that have not cleared on the
Closing Date, and (iv) "Dollar Equivalent" means, with respect to an amount
expressed in any currency other than United States dollars, the dollar
equivalent of such amount as determined by reference to the noon buying rate in
The City of New York (as of the Business Day immediately preceding the Closing
Date) for cable transfers in such currency as certified for customs purposes by
(or if not so certified, as otherwise determined by) the Federal Reserve Bank of
New York.
(c) The Average Cash Amount will be adjusted in the event the
Company makes (i) any Cash distribution (in respect of the Shares) to the
Seller, (ii) any broker payments pursuant to Section 3.20 or (iii) any payment
to the Seller with respect to the Intercompany Loan during the Measuring Period
by subtracting the amount of any such distribution or payment from the daily
amount of Cash in each of the days during the Measuring Period immediately
preceding the date of such distribution or payment.
(d) During the Measuring Period, the Purchaser shall, and the Seller
shall cause the Company to, make all payments that are to be made to the Company
or the Purchaser, as applicable, under existing contractual arrangements or
agreements in the ordinary course of business consistent with past practice. In
addition, during the Measuring Period, the Seller shall cause the Company to
conduct its business in the ordinary course consistent with past practice,
including, without limitation, not shortening or lengthening the customary
payment time for any of its payables or receivables and continuing its
purchasing and capital purchasing practices in accordance with past practice. To
facilitate the foregoing, (i) the Seller shall circulate to the relevant
personnel of the Company at least thirty days prior to the expected commencement
of the Measuring Period written instructions to such effect and (ii) the Seller
shall cause the Company to provide representatives of the Purchaser with access,
at reasonable times, to all offices, personnel, books and records of the Company
that the Purchaser may reasonably request for purposes of monitoring the
compliance by the Company with this Section 2.05(d) and the calculation by the
Company of the Average Cash Amount and the Purchase Price Adjustment Amount in
accordance with
<PAGE> 13
9
this Section 2.05. During the period from 11:59 p.m. on the day immediately
preceding the Closing Date through the Closing, the Seller shall cause the
Company not to make any payments of cash except pursuant to normal banking
transactions, including check clearing or deposits, that are not under the
control of the Company, or pursuant to contractual obligations with third
parties that were previously disclosed to the Purchaser or that were entered
into in the ordinary course of business consistent with past practice.
(e) On the Closing Date, the Seller shall cause the Company to
inform each of the Seller and the Purchaser of the (i) Average Cash Amount, as
well as the calculations resulting therein, and (ii) the aggregate amount with
respect to which checks of the Company have been issued but not cleared on the
Closing Date.
(f) (i) Prior to the Closing, the Purchaser and the Seller shall
enter into an Escrow Agreement, in substantially the form attached hereto as
Exhibit 2.05(f), with a third party selected by the Purchaser and reasonably
acceptable to the Seller (the "Escrow Agent"). In accordance with the terms of
the Escrow Agreement, the Purchaser will, on the Closing Date, deposit the sum
of US$250,000 (the "Escrow Amount") (to be deducted from the Purchase Price in
accordance with Section 2.04(b)) with the Escrow Agent, which will hold such
amount in an interest bearing account until the later of (A) the 90th day
following the Closing Date or (B) the date on which any dispute pursuant to
Section 2.05(f)(ii) has been resolved, to be managed and paid out in accordance
with the Escrow Agreement and this Section 2.05.
(ii) In the event the Purchaser determines, within 90 days following
the Closing Date, that the agreements of the Seller to cause the Company to
comply with the requirements contained in Section 2.05(d) were not complied with
and, as a result of such non-compliance, the Average Cash Amount was either
greater or lesser than the average amount of Cash that the Company would have
had during the Measuring Period had such provisions been complied with, the
Purchaser will provide written notice to the Seller (with a copy to the Escrow
Agent) to such effect, specifying the amount of the difference and its reasons
for such determination. In the absence of any written notice of dispute
delivered by the Seller to the Purchaser and the Escrow Agent within 10 days
after receipt of the Purchaser's written notice as to such determination and the
amount of such difference, (x) in the event the Average Cash Amount is greater
than it would have been, the Purchaser will receive from the Escrow Agent and
the Seller, if appropriate, a cash payment equal to the amount of such
difference, together with interest thereon, as set forth in clause (iii) below,
and (y) in the event the Average Cash Amount is less than it would have been,
the Seller will receive from the Purchaser a cash payment equal to the amount of
such difference, together with interest thereon, as set forth in clause (iii)
below. In the event the Seller delivers such a written notice disputing such
determination or the amount of such difference, such dispute will be submitted
for resolution to the Independent Accounting
<PAGE> 14
10
Firm, which will resolve such dispute within 30 days of the date of such
submission and whose decision will be final and binding on the Seller and the
Purchaser. The fees and expenses of the Independent Accounting Firm will be
allocated between the Purchaser, on the one hand, and the Seller, on the other
hand, in the same proportion that the aggregate amount of the difference so
submitted to the Independent Accounting Firm that is unsuccessfully disputed by
the Seller, on the one hand, or the Purchaser, on the other hand, bears to the
total amount of the difference so submitted.
(iii) In the event any payment is to be made to the Purchaser
pursuant to clause (ii) above, the Escrow Agent will pay such amount to the
Purchaser, together with the appropriate amount of interest thereon, and if such
payment is less than the amount of such difference, the Purchaser will recover
such excess amount from the Seller, together with interest thereon from the
Closing Date to and including the date of payment by the Seller to the Purchaser
at the Interest Rate (as such term is defined in the Escrow Agreement), pursuant
to the provisions of Section 8.02 (except that the provisions of Section
8.02(b)(i) and (ii) will not apply). In the event any payment is to be made to
the Seller pursuant to clause (ii) above, the Purchaser will pay such amount to
the Seller, together with interest thereon from the Closing Date to and
including the date of payment by the Purchaser to the Seller at the Interest
Rate, pursuant to the provisions of Section 8.04. In the event any amount
remains in the Escrow Fund (as such term is defined in the Escrow Agreement) on
the later of (A) the 90th day following the Closing Date or (B) the date on
which any dispute pursuant to Section 2.05(f)(ii) has been resolved, all amounts
held by the Escrow Agent on such day, after giving effect to any payments to be
made to the Purchaser hereunder, will be paid to the Seller, including all
interest accrued on the remaining principal amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this Agreement, the
Seller represents and warrants to the Purchaser as follows:
SECTION 3.01. Organization, Authority and Qualification of the
Seller. The Seller is a corporation duly organized, validly existing and in good
standing under the laws of Switzerland and has all necessary power and authority
to enter into this Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The Seller is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business make such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified would not adversely affect the ability of the Seller
to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement. The execution and delivery of this
<PAGE> 15
11
Agreement by the Seller, the performance by the Seller of its obligations
hereunder and the consummation by the Seller of the transactions contemplated
hereby have been duly authorized by all requisite action on the part of the
Seller. This Agreement has been duly executed and delivered by the Seller and
(assuming due authorization, execution and delivery by the Purchaser) this
Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity.
SECTION 3.02. Organization, Authority and Qualification of the
Company. (a) The Company is an organization duly organized, validly existing and
in good standing under the laws of Switzerland and is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
licensing and qualification necessary (except in those jurisdictions set forth
in Section 3.02(a) of the disclosure schedule which has been delivered by the
Seller to the Purchaser prior to the date hereof and which is attached hereto
(the "Seller's Disclosure Schedule"). The Company has all the necessary power
and authority to own, operate or lease the properties and assets owned, operated
or leased by it and to carry on its business as it has been and is currently
conducted by the Company. All material actions taken by the Company have been
duly authorized, and the Company has not taken any material action that in any
respect conflicts with or results in a violation of any provision of the
Company's organizational documents (the "Company Charter Documents"). A true and
correct copy of the Company Charter Documents, as in effect on the date hereof,
has been delivered by the Seller to the Purchaser.
(b) There are no corporations, partnerships, limited liability
companies or other legal entities in which the Company owns any direct or other
interests or any right (contingent or otherwise) to acquire the same. The
Company is not, directly or indirectly, a participant in any joint venture.
SECTION 3.03. Company Interests. As of the date hereof, the Shares
are owned, beneficially and of record, by the Seller, free and clear of all
Encumbrances. None of the outstanding equity interests in the Company was issued
in violation of any preemptive rights. There are no options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the Shares or obligating the Seller or the Company
to issue or sell any equity-related interest in the Company. There are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any equity interests of or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person. The Shares constitute all the issued outstanding equity interests
in the Company and are owned of record and beneficially solely by the Seller,
free and clear of all Encumbrances. Upon
<PAGE> 16
12
consummation of the transactions contemplated by Article II, the Purchaser will
fully own the Shares, free and clear of any Encumbrances (other than
Encumbrances created by the Purchaser). There are no voting trusts, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any of the Shares.
SECTION 3.04. No Conflict. The execution, delivery and performance
of this Agreement by the Seller do not and will not (a) violate, conflict with
or result in the breach of any provision of the articles of association (or
similar organizational documents) of the Seller or the Company, (b) conflict
with or violate (or cause an event which could have a Material Adverse Effect as
a result of) any Law or Governmental Order applicable to the Seller or the
Company, or any of their respective assets, properties or businesses, or (c)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Shares or on any of the assets or
properties of the Seller or the Company pursuant to, any note, bond, mortgage or
indenture, or material contract, agreement, lease, sublease, license,
sublicense, permit, franchise or other instrument or arrangement to which the
Seller or the Company is a party or by which any of the Shares or any of the
Company's assets or properties is bound or affected.
SECTION 3.05. Consents and Approvals. The execution, delivery and
performance of this Agreement by the Seller do not and will not require any
consent, approval, authorization or other order of, action by, filing with or
notification to any Governmental Authority or any other Person, except for the
consents, approvals and authorizations set forth in Section 3.05 of the Seller's
Disclosure Schedule.
SECTION 3.06. Financial Information and Books and Records. (a) True
and complete copies of the audited balance sheet of the Company for each of the
three fiscal years ended as of 31 December 1994, 31 December 1995 and 31
December 1996, and the related audited statements of income, together with all
related notes and schedules thereto, accompanied by the reports thereon of the
Company's accountants (collectively referred to herein as the "Financial
Statements") have been delivered by the Seller to the Purchaser. The Financial
Statements and the Net Asset Test Reference Balance Sheet (i) were prepared in
accordance with the books of account and other financial records of the Company,
(ii) present fairly the financial condition and results of operations of the
Company as of the dates thereof or for the periods covered thereby, (iii) have
been prepared in accordance with the Accounting Principles and (iv) include all
adjustments (consisting only of normal adjustments) that are necessary for a
fair presentation of the financial condition of the Company and the results of
the operations of the Company as of the dates thereof or for the periods covered
thereby, except in the case of the Net Asset Test Reference Balance Sheet (a
<PAGE> 17
13
copy of which is set forth in Section 3.06(a) of the Seller's Disclosure
Schedule), which excludes (x) any indebtedness for borrowed money of the Company
and (y) any Cash other than cash in the amount of any checks outstanding.
(b) The books of account and other financial records of the Company:
(i) reflect all items of income and expense and all assets and Liabilities
required to be reflected therein in accordance with the Accounting Principles
and (ii) are in all material respects complete and correct, and do not contain
or reflect any material inaccuracies or discrepancies.
(c) The minute books of the Company contain accurate records of all
meetings and accurately reflect all other actions taken by the Company or by the
Seller as sole stockholder thereof. Complete and accurate copies of all such
minute books have been provided to the Purchaser.
SECTION 3.07. No Undisclosed Liabilities. There are no Liabilities
of the Company, other than Liabilities (i) reflected or reserved against on the
Net Asset Test Reference Balance Sheet, (ii) incurred since 31 December 1996 in
the ordinary course of the business, consistent with the past practice, of the
Company or (iii) disclosed in this Agreement or in Section 3.07 of the Seller's
Disclosure Schedule and which do not and could not have a Material Adverse
Effect.
SECTION 3.08. Conduct in the Ordinary Course, Absence of Certain
Changes, Events and Conditions. Except as disclosed in Section 3.08 of the
Seller's Disclosure Schedule, since 31 December 1996, the business of the
Company has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, since 31
December 1996, except as disclosed in Section 3.08 of the Seller's Disclosure
Schedule, the Company has not:
(i) permitted or allowed any of its assets or properties (whether
tangible or intangible) to be subjected to any Encumbrance, other than
Permitted Encumbrances;
(ii) except in the ordinary course of business consistent with past
practice, discharged or otherwise obtained the release of any Encumbrance
or paid or otherwise discharged any Liability, other than current
liabilities reflected on the Net Asset Test Reference Balance Sheet and
current liabilities incurred in the ordinary course of business consistent
with past practice since 31 December 1996;
(iii) made any loan to, guaranteed any indebtedness of or otherwise
incurred any indebtedness on behalf of any Person;
<PAGE> 18
14
(iv) redeemed any of the Shares;
(v) except as specifically requested by the Purchaser or as required
to accommodate changes in the Purchaser's business practices, made any
material changes in the customary methods of operations of the Company
including, without limitation, practices and policies relating to
marketing, selling and pricing;
(vi) merged with, entered into a consolidation with or acquired any
interest in any Person or acquired a substantial portion of the assets or
business of any Person or any division or line of business thereof, or
otherwise acquired any material assets;
(vii) made any capital expenditure or commitment for any capital
expenditure in excess of the capital expenditures contemplated by the
planned budget, a true and complete copy of which has been provided to the
Purchaser;
(viii) sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation, leasehold interests and intangible assets) with an
individual value in excess of CHF 25,000;
(ix) issued or sold any Shares or other equity interest or any
option, warrant or other right to acquire the same of, or any other
interest in, the Company, except as contemplated by this Agreement;
(x) except for agreements, arrangements or transactions with the
Purchaser or having an individual value of less than CHF 25,000, entered
into any agreement, arrangement or transaction with any of its directors,
officers, employees or stockholders (or with any relative, beneficiary,
spouse or Affiliate of such Person):
(xi) (A) granted any increase, or announced any increase, in the
wages, salaries, compensation, bonuses, incentives, pension or other
benefits payable by the Company to any of its employees, including,
without limitation any increase or change pursuant to any Plan, or (B)
established or increased or promised to increase any benefits under any
Plan, in either case except for ordinary increases consistent with the
past practices of the Company:
(xii) revalued any assets of the Company other than in accordance
with Applicable Accounting Principles;
<PAGE> 19
15
(xiii) amended, terminated, canceled or compromised any material
claims of the Company or waived any other rights of material value to the
Company;
(xiv) made any material change in any method of accounting or
accounting practice or policy used by the Company;
(xv) amended or restated the organizational documents of the
Company;
(xvi) made any express or deemed election or settled or compromised
any liability that is the subject of a dispute with any government or
taxing authority, with respect to (A) Taxes of the Company or (B) Taxes,
insofar as Company items are involved, of the Seller;
(xvii) suffered any casualty loss or damage with respect to any of
the Assets which individually has a replacement cost of more than CHF
25,000, which loss or damage shall not have been covered by insurance;
(xviii) suffered any Material Adverse Effect; or
(xix) agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.08 or granted any options to purchase,
rights of first refusal, rights of first offer or any other similar rights
or commitments with respect to any of the actions specified in this
Section 3.08.
SECTION 3.09. Litigation. Except as set forth in Section 3.09 of the
Seller's Disclosure Schedule, there are no Actions by or against the Company (or
by or against the Seller or any Affiliate thereof and relating to the Company or
its business) or affecting any of the Assets, pending or threatened before any
Governmental Authority. Neither the Company nor any of the Assets nor the Seller
is subject to any Governmental Order, nor are there any such Governmental Orders
threatened to be imposed by any Governmental Authority which has or could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.10. Compliance with Laws. (a) The Company has conducted
and continues to conduct its business in accordance with all Laws and
Governmental Orders applicable to the Company or any of the Assets or such
business, and the Company is not in violation of any such Law or Governmental
Order.
(b) Except as set forth in Section 3.10(b) of the Seller's
Disclosure Schedule, no Governmental Order applicable to the Company or any of
the Assets or its business has or could reasonably be expected to have a
Material Adverse Effect.
<PAGE> 20
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SECTION 3.11. Environmental and Other Permits and Licenses; Related
Matters. (a) (i) Neither the Seller nor the Company has received notice of any
violation of any Environmental Laws; (ii) the Company has obtained all
Environmental Permits and is and has been in material compliance with their
requirements; (iii) except as disclosed in Section 3.11(a)(iii) of the Seller's
Disclosure Schedule, or as permitted by or as would not result in any material
liability under applicable Environmental Laws, there are no underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been treated, stored
or disposed on any of the owned, or leased properties or, with respect to the
period of the Company's ownership, tenancy or operation of such property, on any
real property formerly owned, leased or occupied by the Company; (iv) there is
no asbestos or asbestos-containing material on any of the owned or leased
properties, except as permitted by or as would not result in any material
liability under applicable Environmental Laws; (v) the Company has not released,
discharged or disposed of an amount of Hazardous Materials on any of the owned
or leased properties or on any real property formerly owned, leased or occupied
by the Company in any manner or quantity which would have a material effect on
the Company; (vi) the Company is not undertaking, has not completed, and is not
required to conduct, any investigation or assessment or remedial or response
action relating to any release, discharge or disposal of or contamination with
an amount of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law which would have a material effect on the
Company; and (vii) there are no past, pending or threatened in writing
Environmental Claims against the Company, or any of its properties, and there
are no facts which can form the basis of any such Environmental Claim.
(b) Except as disclosed in Section 3.11(b) of the Seller's
Disclosure, Schedule, there are no environmental audit reports, studies or
analyses in the possession of the Seller or the Company or under their control
relating to the owned or leased properties or the operations of the Company.
SECTION 3.12. Material Contracts. (a) Section 3.12(a) of the
Seller's Disclosure Schedule lists each of the following contracts and
agreements (including, without limitation, oral contracts and agreements) of the
Company (such contracts and agreements being "Material Contracts"):
(i) all broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing consulting
and advertising contracts and agreements to which the Company is a party
under which the Company can reasonably be expected to pay or be paid at
least CHF 40,000 during the course of the twelve months following the date
hereof;
<PAGE> 21
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(ii) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the Company
is a party, which are not cancelable without penalty or further payment
and without more than 30 days' notice, and under which the Company can be
reasonably expected to pay or be paid at least CHF 25,000 during the
course of the twelve months following the date hereof;
(iii) all contracts and agreements relating to indebtedness of the
Company;
(iv) any agreements that are material to the business of the Company
and that are currently in effect with subscribers that have generated
annual Galileo air booking fees of US$350,000 or more per annum over the
course of any of the last three fiscal years;
(v) all contracts and agreements with any Governmental Authority to
which the Company is a party, and under which the Company can be
reasonably expected to pay or be paid at least CHF 25,000 during the
course of the twelve months following the date hereof;
(vi) all contracts and agreements that limit or purport to limit the
ability of the Company to compete in any line of business or with any
Person or in any geographic area or during any period of time;
(vii) all contracts and agreements between or among the Company and
the Seller or an Affiliate of the Seller; and
(viii) all other contracts and agreements whether or not made in the
ordinary course of business, which are material to the Company or the
conduct of its businesses or the absence of which would have a Material
Adverse Effect.
(b) Each Material Contract: (i) is valid and binding on the
respective parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement, except to the
extent that any consents set forth in Section 3.05 of the Seller's Disclosure
Schedule are not obtained, shall continue in full force and effect without
penalty or other adverse consequence. The Company is not in breach of, or
default under, any Material Contract. The Seller has furnished the Purchaser
with true and complete copies of all Material Contracts.
(c) To the best knowledge of the Seller and the Company, no other
party to any Material Contract is in breach thereof or default thereunder
<PAGE> 22
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(d) There is no contract, agreement or other arrangement granting
any Person any preferential right to purchase, other than in the ordinary course
of business consistent with past practice, any of the properties or assets of
the Company.
SECTION 3.13. Intellectual Property. The Company owns or possesses
adequate licenses or other valid rights to use all of the Company Intellectual
Property which is material to the conduct of the business of the Company, and
there is no assertion or claim challenging the validity of such Company
Intellectual Property. On the Closing Date, the Company will own the Transferred
Intellectual Property, free and clear of any Encumbrances. There are no
infringements of any Company Intellectual Property. There are no pending or
threatened interferences, reexaminations, oppositions or nullities involving any
patents, patent rights or applications therefor of the Company which are
material to the conduct of the business of the Company. Section 3.13 of the
Seller's Disclosure Schedule lists each material license or other agreement
pursuant to which the Company has the right to use Company Intellectual Property
utilized in connection with any services provided by the Company (the "Company
Licenses"). There is no breach or violation of any Company License by the
Company or by any third party or threatened or actual loss of rights accruing to
the Company under any Company License. Each Company License is a legal, valid
and binding agreement of the Company and each Company License is a legal, valid
and binding agreement of the other parties thereto. The consummation of the
transactions contemplated by this Agreement will not result in the termination
of, or any modification to, any Company License, except where the foregoing
would not have a material effect on the conduct of the business of the Company.
The Company has taken reasonable measures to maintain the confidentiality of the
know-how of the Company, the value of which to the Company is dependent upon the
maintenance of the confidentiality thereof. The Company has not licensed or
otherwise permitted the use by any third party of any proprietary information on
terms or in a manner that is reasonably likely to have a Material Adverse
Effect. The conduct of the business of the Company as currently conducted or as
currently contemplated (by existing Company management) to be conducted does not
and will not infringe upon or conflict with, in any way, any license, trademark,
trademark right, trade name, trade name right, patent, patent right, industrial
model, invention, service mark or copyright of any third party that is
reasonably likely to be material to the Company's operations.
SECTION 3.14. Real Property and Leases. (a) The Company owns no
real property.
(b) All leases of real property leased for the use or benefit of the
Company to which the Company is a party which are material, individually or in
the aggregate, to the business of the Company, and all amendments and
modifications thereto are in full force and effect and have not been modified or
amended, and there exists no default under any such lease by the Company, nor
any event which with
<PAGE> 23
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notice or lapse of time or both would constitute a default thereunder by the
Company which would permit any such lease to be terminated by the other party
thereto.
SECTION 3.15. Assets. (a) The Company owns, leases or has the legal
right to use all material properties and assets, including, without limitation,
the Company Intellectual Property, used or intended to be used in the conduct of
its business or otherwise owned, leased or used by the Company and, with respect
to contract rights, is a party to and enjoys the right to the benefits of all
material contracts, agreements and other arrangements used or intended to be
used by the Company or in, or relating to the conduct of its business (all such
properties, assets and contract rights being the "Assets"). Set forth on Section
3.15(a) of the Seller's Disclosure Schedule is a list of all of the tangible
Assets as of the date hereof. The Company has good and marketable title to, or,
in the case of leased or subleased Assets, valid and subsisting leasehold
interests in, all the Assets, free and clear of all Encumbrances, except for
Permitted Encumbrances.
(b) The Assets constitute all the material properties, assets and
rights forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of, the business
(as currently conducted by existing Company management) of the Company. At all
times since 31 December 1996, the Company has caused the Assets to be maintained
in accordance with good business practice, and the Assets are generally in good
operating condition and repair and are suitable for the purposes for which they
are used and intended, except for ordinary wear commensurate with the age and
depreciated value of such Assets.
(c) Following the consummation of the transactions contemplated by
this Agreement, either the Company will continue to own, pursuant to good and
marketable title, or lease, under valid and subsisting leases, or otherwise
retain its interest in the Assets without incurring any penalty or other adverse
consequence, including, without limitation, any increase in rentals, royalties,
or licenses or other fees imposed as a result of, or arising from, the
consummation of the transactions contemplated by this Agreement (except, with
respect to contractual arrangements to the extent that any consents set forth in
Section 3.05 of the Seller's Disclosure Schedule are not obtained). Immediately
following the Closing, (i) in the case of books and records other than
Tax-related books and records, the Company shall own or possess all documents,
books, records, agreements and financial data of any sort used by the Company
which is material to the conduct of its business, and (ii) in the case of
Tax-related books and records (including all information (including copies of
Returns, original work papers, correspondence with authorities, and source
documents (or copies thereof)) relating to any and all Tax filings of the
Company), the Company shall own or possess all of such books and records.
<PAGE> 24
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SECTION 3.16. Employee Benefit Matters. (a) Plans and Material
Documents. Section 3.16(a) of the Seller's Disclosure Schedule lists (i) all
employee benefit plans and all bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, pension, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, termination, severance or other contracts
or agreements, to which the Company is a party, with respect to which the
Company has any obligation or which are maintained, contributed to or sponsored
by the Company for the benefit of any current or former employee, officer or
director of the Company, (ii) each employee benefit plan for which the Company
could incur liability in the event such plan has been or were to be terminated,
(iii) any contracts, arrangements or understandings between the Seller or any of
its Affiliates and any employee of the Company, including, without limitation,
any contracts, arrangements or understandings relating to the sale of the
Company (collectively, the "Plans"). Except as disclosed in the Seller's
Disclosure Schedule, each Plan is in writing and the Seller has furnished the
Purchaser with a complete and accurate copy of each Plan and a complete and
accurate copy of each material document prepared in connection with each such
Plan including, without limitation, (x) a copy of each trust or other funding
arrangement, (y) each summary plan description and a summary of material
modifications, and (z) the most recently prepared actuarial report and financial
statement in connection with each such Plan.
(b) Compliance with Applicable Law. Each Plan is in compliance with
all material requirements of all applicable Law, and all Persons who participate
in the operation of such Plans have always acted in accordance with the
provisions of all applicable Laws. The Company has performed all obligations
required to be performed by it under, is not in any respect in default under or
in violation of, and has no knowledge of any default or violation by any party
to, any Plan. Except as disclosed in the Seller's Disclosure Schedule, no legal
action, suit or claim is pending or threatened with respect to any Plan (other
than claims for benefits in the ordinary course) and no fact or event exists
that could reasonably be expected to give rise to any such action, suit or
claim.
(c) Plan Contributions and Funding. All contributions, premiums or
payments required to be made with respect to any Plan have been made on or
before their due dates. All such contributions are deductible for income tax
purposes. Except as disclosed in the Seller's Disclosure Schedule, as of the
Closing Date, no Plan will have an unfunded benefit liability.
(d) Bonus Payments. All employee bonus payments with respect to
fiscal year 1996 have been paid, or shall be paid prior to the first day of the
Measuring Period.
<PAGE> 25
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(e) Severance or Redundancy Payments. All employee severance or
redundancy payments that have been made since 31 December 1995 were made in
compliance with applicable Law and any relevant Plans and there are no legal
actions, suits or claims pending or threatened with respect to any such
severance or redundancy payments and no fact or event exists that could
reasonably be expected to give rise to any such action, suit or claim.
SECTION 3.17. Labor Matters. Except as set forth in Section 3.17 of
the Seller's Disclosure Schedule, (a) the Company is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company and currently there are no organizational
campaigns, petitions or other unionization activities seeking recognition of a
collective bargaining unit which could affect the Company; (b) there are no
material controversies, strikes, slowdowns or work stoppages pending or
threatened between the Company and any of its employees and the Company has not
experienced any such material controversy, strike, slowdown or work stoppage
within the past three years; (c) the Company has not breached or otherwise
failed to comply with the provisions of any collective bargaining or union
contract and there are no grievances outstanding against the Company under any
such agreement or contract which could have a Material Adverse Effect; (d) there
are no unfair labor practice complaints pending against the Company before any
Governmental Authority or any current union representation questions involving
employees of the Company which could have a Material Adverse Effect; and (e) the
Company is currently in compliance with all applicable Laws relating to the
employment of labor, including those related to wages, hours, collective
bargaining and the payment and withholding of taxes and other sums as required
by the appropriate Governmental Authority and has withheld and paid to the
appropriate Governmental Authority or is holding for payment not yet due to such
Governmental Authority all amounts required to be withheld from employees of the
Company and is not liable for any material arrears of wages, taxes, penalties or
other sums for failure to comply with any of the foregoing
SECTION 3.18. Taxes. Except as set forth in Section 3.18 of the
Seller's Disclosure Schedule, (a) (i) All returns and reports in respect of
Taxes required to be filed with respect to the Company for all periods ending on
or before the Closing Date have been timely filed (or will be timely filed by
the Company); (ii) all Taxes required to be shown on such returns and reports or
otherwise due or assessed have been timely paid; (iii) all returns and reports
relating to Income Taxes are true, correct and complete and all returns and
reports of the Company relating to Taxes other than Income Taxes are true,
correct and complete in all material respects; (iv) no adjustment relating to
such returns has been proposed in writing formally or informally by any Tax
authority and no basis exists for any such adjustment; (v) there are no pending
or, to the best knowledge of the Seller after due inquiry, threatened actions or
proceedings for the assessment or collection of Taxes against the Company;
<PAGE> 26
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(vi) there are no Tax liens on any assets of the Company except liens for Taxes
not yet due and payable; (vii) the Company has not been at any time a member of
any partnership or joint venture or the holder of a beneficial interest in any
trust for any period for which the statute of limitations for any Tax has not
expired; (viii) there are no outstanding waivers or agreements extending the
statute of limitations for any period with respect to any Tax to which the
Company may be subject; (ix) the Company does not have any income reportable for
a period ending after the Closing Date but attributable to the sale of property
or the provision of services (e.g., an installment sale) occurring in or a
change in accounting method made for a period ending on or prior to the Closing
Date which resulted in a deferred reporting of income which economically accrued
in a period ending on or before the Closing Date from such transaction or from
such change in accounting method; (x) there are no requests by any Tax authority
for information currently outstanding with respect to the Taxes of the Company;
(xi) there are no proposed reassessments of any property owned by the Company or
other taxpayer specific proposals that could increase the amount of any Tax to
which the Company would be subject, (xii) no power of attorney that is currently
in force has been granted with respect to any matter relating to Taxes of the
Company, (xiii) the Company is not doing business or engaged in a trade or
business in any jurisdiction in which it has not filed all required income or
franchise tax Returns and (xiv) no returns have been or will be filed by or on
behalf of the Company on a consolidated, combined or unitary basis.
(b) For purposes of the Seller's indemnification of the Purchaser
pursuant to Section 6.01, the representations in Section 3.18(a) shall be deemed
to have been made with no exception for items disclosed in Section 3.18 of the
Seller's Disclosure Schedule or otherwise.
(c) (i) Section 3.18 of the Seller's Disclosure Schedule lists all
Returns filed by the Company for taxable periods ended on or after 28 September
1993, indicates the most recent Return for each relevant jurisdiction and type
of Tax for which an audit has been completed or the statute of limitations has
lapsed and indicates all Returns that currently are the subject of audit; (ii)
the Seller has made available to the Purchaser correct and complete copies of
all Returns, examination reports, Tax assessments or proposals of assessment,
Tax audit reports, agreements with tax authorities and statements of
deficiencies assessed against or agreed to by the Company since 28 September
1993; and (iii) the Seller has delivered to the Purchaser a true and complete
copy of any tax-sharing or allocation agreement or arrangement to which the
Company is a party and a true and complete description of any such unwritten or
informal agreement or arrangement.
SECTION 3.19. Insurance. (a) Section 3.19 of the Seller's Disclosure
Schedule sets forth a complete list of all material policies of insurance
(including without limitation, errors and omissions insurance) that the Company
has in effect.
<PAGE> 27
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(b) With respect to each such insurance policy: (i) the policy is
legal, valid, binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary course, is in
full force and effect; (ii) the Company is not in breach or default (including
any breach or default with respect to the payment of premiums or the giving of
notice), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default or permit termination or modification,
under the policy; (iii) no party to the policy has repudiated or given notice of
an intent to repudiate, any provision thereof; and (iv) to the best knowledge of
the Seller and the Company after due inquiry, no insurer on the policy has been
declared insolvent or placed in receivership, conservatorship or liquidation.
(c) Section 3.19(c) of the Seller's Disclosure Schedule sets forth a
general description of all risks of a nature generally insured against which the
Company is self-insured or which are covered under any risk retention program in
which the Company participates.
(d) All material assets, properties and risks of the Company are
covered by valid and, except for policies that have expired under their terms in
the ordinary course, currently effective insurance policies or binders of
insurance (including, without limitation, general liability insurance, property
insurance and workers' compensation insurance) issued in favor of the Company,
in each case with responsible insurance companies, in such types and amounts and
covering such risks as are consistent with customary practices and standards of
companies engaged in businesses and operations similar to those of the Company.
(e) No insurance policy listed in Section 3.19(a) of the Seller's
Disclosure Schedule will cease to be legal, valid, binding or enforceable in
accordance with its terms and in full force and effect on terms identical to
those in effect as of the date hereof as a result of the consummation of the
transactions contemplated by this Agreement.
SECTION 3.20. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Seller or the Company. Any amounts owing for
services provided to the Company or the Seller by any Person in connection with
the transactions contemplated by this Agreement or any other transaction
involving the Company (including, without limitation, any other sale of the
Company or public offering of the Company) will be settled by the Company prior
to the Closing Date or by the Seller.
SECTION 3.21. Year 2000 Compliance. All software licensed by the
Company pursuant to a Company License (other than any software licensed from the
<PAGE> 28
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Purchaser), and all other products used by the Company in connection with its
business (other than any product obtained from the Purchaser), is Year 2000
compliant, or will be Year 2000 compliant, in either case, with respect to
software owned by the Company or licensed to the Company by the Seller or one of
its Affiliates, at the expense of the Seller, in sufficient time to avoid any
disruption to the Company's business. For purposes of this Section 3.21, such
software and such other products shall be deemed to be Year 2000 compliant to
the extent they can manage and manipulate data involving the transition of dates
from 1999 to 2000 without functional or data abnormality and without inaccurate
results related to such dates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the
Purchaser hereby represents and warrants to the Seller as follows:
SECTION 4.01. Organization, Authority and Qualification of the
Purchaser. The Purchaser is a general partnership, and on or prior to the
Closing will be a corporation or a limited liability company, duly organized and
validly existing under the laws of the State of Delaware and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified would not adversely affect the ability of the
Purchaser to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement. The Purchaser has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on its part. This Agreement has been duly executed and delivered by the
Purchaser and (assuming due authorization, execution and delivery by the Seller)
this Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
SECTION 4.02. No Conflict. Except as may result from any facts or
circumstances relating solely to the Seller or the Company, the execution,
delivery and performance of this Agreement by the Purchaser do not and will not
(a) violate, conflict with or result in the breach of any provision of the
Purchaser's Partnership Agreement, (b) conflict with or violate any Law or
Governmental Order applicable to
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the Purchaser or [(c) except for the Credit Agreement dated as of 3 July 1996,
among the Purchaser, the banks parties thereto, the letter of credit issuing
banks named therein and Morgan Guaranty Trust Company of New York as agent,]
conflict with or result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation, or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of the
Purchaser pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which the Purchaser is a party or by which any of such assets or
properties are bound or affected which would have a material adverse effect on
the ability of the Purchaser to consummate the transactions contemplated by this
Agreement.
SECTION 4.03. Governmental Consents and Approvals. The execution,
delivery and performance of this Agreement by the Purchaser do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority[, except as
described in a writing given to the Seller by the Purchaser on or prior to the
date of this Agreement].
SECTION 4.04. Investment Purpose. The Purchaser is acquiring the
Shares solely for the purpose of investment and not with a view to, or for offer
or sale in connection with, any distribution thereof.
SECTION 4.05. Brokers. Except for J.P. Morgan, the fees and expenses
of which will be paid for by the Purchaser, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) The
Seller covenants and agrees that, except as described in Section 5.01(a) of the
Seller's Disclosure Schedule, between the date hereof and the time of the
Closing, it shall cause the Company to conduct its business in the ordinary
course and consistent with the Company's prior practice. Without limiting the
generality of the foregoing, except as described in Section 5.01(a) of the
Seller's Disclosure Schedule, as requested by the Purchaser, or as required to
accommodate changes in the Purchaser's business practices, the Seller shall
cause the Company to (i) continue its advertising and promotional activities,
and pricing and purchasing policies, including capital
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purchasing, in accordance with past practice; (ii) not shorten or lengthen the
customary payment cycles for any of its payables or receivables; (iii) use all
reasonable efforts to (A) preserve intact its business organization, (B) keep
available to the Purchaser the services of the employees of the Company, (C)
continue in full force and effect without material modification all existing
policies or binders of insurance currently maintained in respect of the Company
and its business and (D) preserve its current relationships with its customers,
suppliers and other persons with which it has significant business
relationships; (iv) exercise, but only after notice to the Purchaser and receipt
of the Purchaser's prior written approval, any rights of renewal pursuant to the
terms of any of the material leases or subleases which by their terms would
otherwise expire: and (v) not engage in any practice, take any action, fail to
take any action or enter into any transaction which could cause any
representation or warranty of the Seller to be untrue or result in a breach of
any covenant made by the Seller in this Agreement.
(b) Except as described in Section 5.01(b) of the Seller's
Disclosure Schedule, the Seller covenants and agrees that, prior to the Closing,
the Seller shall cause the Company not to do any of the things enumerated in the
second sentence of Section 3.08 (including, without limitation, clauses (i)
through (xix) thereof) without the prior written consent of the Purchaser;
provided, however, that if the Company desires to take any of the actions
enumerated in Section 3.08(v) in response to general industry conditions, the
Seller shall provide written notice of the proposed actions to the Purchaser and
the Purchaser shall respond to such written notice not more than two Business
Days after the receipt thereof.
SECTION 5.02. Access to Information. (a) From the date hereof until
the Closing, upon reasonable notice, the Seller shall cause the Company to, and
shall cause each of the Company's officers, directors, employees, agents,
representatives, accountants and counsel to: (i) afford the officers, employees
and authorized agents, accountants, counsel, underwriters, financing sources and
representatives of the Purchaser reasonable access, during normal business
hours, to the offices, properties, plants, other facilities, books and records
of the Company (including access to the Company's 1996 financial audit work
papers) and to those officers, directors, employees, agents, accountants and
counsel of the Company who have any knowledge relating to the Company or its
business and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel, underwriters, financing sources and representatives of the
Purchaser such additional financial and operating data and other information
regarding the assets, properties and goodwill of the Company (excluding any
Returns or other Tax information of the Seller) and its business (or legible
copies thereof) as the Purchaser may from time to time reasonably request,
including, without limitation, any financial information or other information
that will be required in connection with the IPO.
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(b) In order to facilitate the resolution of any claims made against
or incurred by the Seller prior to the Closing, for a period of ten years after
the Closing, the Purchaser shall cause the Company to (i) retain the books and
records of the Company relating to periods prior to the Closing in a manner
reasonably consistent with the prior practice of the Company, and prior to
disposal thereof the Purchaser shall cause the Company to contact the Seller and
offer to provide it with copies of any such books and records subject to
reimbursement of reasonable expenses; and (ii) upon reasonable notice, afford
the officers, employees and authorized agents and representatives of the Seller
reasonable access (including the right to make, at the Seller's expense,
photocopies), during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Purchaser or the Company after the Closing or for any
other reasonable purpose, for a period of ten years following the Closing, the
Seller shall (i) retain the books and records of the Seller which relate to the
Company and its operations for periods prior to the Closing and which shall not
otherwise have been delivered to the Purchaser or the Company; (ii) upon
reasonable notice, afford the officers, employees and authorized agents and
representatives of the Purchaser or the Company reasonable access (including the
right to make photocopies, at the expense of the Purchaser or the Company)
during normal business hours, to such books and records.
SECTION 5.03. Confidentiality. (a) Except to the extent of any
disclosure required (after consultation with the Seller and after seeking
appropriate confidential treatment) to be made in the Purchaser's registration
statement on Form S- 1 (including in any exhibits thereto) filed with the
Securities and Exchange Commission (the "SEC") in connection with the IPO or in
any future filings made with the SEC or other regulatory authorities, and except
as reasonably required by the underwriters in connection with the IPO, the
Parties shall comply with, and shall cause their respective Affiliates,
representatives and agents to comply with all of their respective obligations
under, the Non-Disclosure Agreement, dated as of 18 June 1996, between the
Seller, the Company and the Purchaser (the "Non-Disclosure Agreement"), until
the Closing, at which time such Non-Disclosure Agreement and the obligations of
the Purchaser and the Company thereunder shall terminate. If this Agreement is,
for any reason terminated prior to the Closing, the Non-Disclosure Agreement
shall continue in full force and effect.
(b) The Seller agrees to, and shall cause its agents,
representatives and Affiliates to: (i) treat, hold as confidential and not
exploit for its benefit or the benefit of other relationships with any of its
customers (and not disclose or provide access to any Person to) all information
relating to the Company's products, customers, assets, plans, business, finances
and technological developments and programs, (ii) in
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the event that the Seller or any such agent, representative or Affiliate becomes
legally compelled to disclose any such information, provide the Purchaser with
prompt written notice of such requirement so that the Purchaser or the Company
may seek a protective order or other remedy or waive compliance with this
Section 5.03(b), and (iii) in the event that such protective order or other
remedy is not obtained, or the Purchaser waives compliance with this Section
5.03(b), furnish only that portion of such confidential information which is
legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such information;
provided, however, that this sentence shall not apply to any information that,
at the time of disclosure, is available publicly and was not disclosed in breach
of this Agreement by the Seller, its agents, representatives or Affiliates;
provided further that, with respect to Company Intellectual Property, specific
information shall not be deemed to be within the foregoing exception merely
because it is embraced in general disclosures in the public domain.
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents. (a) Each party shall for itself use all reasonable efforts to obtain
(or, in the case of the Seller, cause the Company to obtain) all authorizations,
consents, orders and approvals of all Governmental Authorities and officials
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully in promptly seeking to obtain all such authorizations, consents, orders
and approvals. Each party hereto agrees for itself to supply as promptly as
practicable to the appropriate Governmental Authorities any additional
information and documentary material that may be requested pursuant to any
applicable Law. Without limiting the generality of the foregoing, each party
hereto will (i) use all reasonable efforts to prevent the entry in a judicial or
administrative proceeding brought under any antitrust law of any preliminary
injunction or other order that would make consummation of the transactions
contemplated hereby unlawful or would prevent or delay such consummation; and
(ii) take promptly, in the event that such an injunction or order has been
issued in such a proceeding, all steps necessary to prosecute an appeal of such
an injunction or order, and diligently prosecute such appeal.
(b) The Seller shall or shall cause the Company to give promptly
such notices to third parties and use all reasonable efforts to obtain such
third party consents and estoppel certificates as the Purchaser may deem
necessary or desirable in connection with the transactions contemplated by this
Agreement.
(c) The Purchaser shall cooperate and use all reasonable efforts to
assist the Seller in giving such notices and obtaining such consents and
estoppel certificates; provided, however, that neither the Purchaser nor the
Seller shall have any obligation to give any guarantee or other consideration of
any nature in connection with any such notice, consent or estoppel certificate
or to consent to any change in the
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terms of any agreement or arrangement which the Purchaser may deem adverse to
the interests of the Purchaser or the Company or their respective businesses.
(d) Neither the Purchaser nor the Seller knows of any reason why all
the consents, approvals and authorizations necessary for the consummation of the
transactions contemplated hereby will not be received.
SECTION 5.05. Notice of Developments. (a) Prior to the Closing, the
Seller shall, and the Seller shall cause the Company to, promptly notify the
Purchaser in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of a
representation or warranty or covenant of the Seller in this Agreement, or could
result in any breach of a covenant of the Seller in this Agreement, or which
could have the effect of making any representation or warranty of the Seller in
this Agreement untrue or incorrect in any material respect.
(b) Prior to the Closing, the Purchaser shall promptly notify the
Seller in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of a
representation or warranty or covenant of the Purchaser in this Agreement or
which could have the effect of making any representation or warranty of the
Purchaser untrue or incorrect in any material respect.
SECTION 5.06. No Solicitation of Employees. The Seller agrees that
it shall not, and shall cause each of its Affiliates not to, during the period
from the date hereof until Closing and, if the Closing occurs, for a period of
two years from the Closing, without the prior written consent of the Purchaser,
directly or indirectly, solicit on a specific or targeted basis for employment
any person who is an employee of the Company, provided that this Section 5.06
shall not prohibit any form of employment advertising or prevent the hiring of
any individual who contacts the Seller or any of its Affiliates.
SECTION 5.07. Use of Intellectual Property. (a) The Seller
acknowledges that from and after the Closing the names "Traviswiss", "Travitel",
"Texass", "OPAL", "Tourbo", "Travi Dynamic", "Travi Access", "Travi Remote",
"Travi to Win", "Travipit", "Traviprinting", "TraviIntern", "Intravinet",
"Extravinet", "Travi-Rainbow", "Travi", "Travidata" and "Travioffice", and all
related names, marks and logos and product names, marks and logos (all of such
names, marks and logos being the "Company Names") shall be owned by the Company,
that (except as provided in Section 5.07(b)) neither the Seller nor any of its
Affiliates shall have any rights in the Company Names, and that neither of the
Seller nor any of its Affiliates will contest the ownership or validity of any
rights of the Purchaser or the Company in or to the Company Names.
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(b) Except as expressly agreed in writing by the Purchaser or
pursuant to any agreements and licenses between the Purchaser and the Seller, or
the Company and the Purchaser or any of its Affiliates, and except for the names
set forth on Exhibit 5.07(b), to which the parties identified thereon shall
continue to have the rights specified on such Exhibit, from and after the
Closing, neither the Seller nor any of its Affiliates shall use any of the
Company Intellectual Property.
(c) To the extent any of the Company Intellectual Property is
obtained from the Seller or one of its Affiliates pursuant to a Company License
or otherwise, effective on the Closing Date, the Seller or such Affiliate hereby
grants to the Company a perpetual, nonexclusive, royalty-free license to use
such Company Intellectual Property for so long as, in the sole discretion of the
Purchaser and the Company, the Company requires such Company Intellectual
Property in the conduct of its business.
SECTION 5.08. Monthly Financial Statements. The Seller agrees that,
between the date hereof and the Closing, promptly following the end of each
calendar month, but in no event later than 15 days following the end of each
calendar month, it will prepare or cause to be prepared, and will promptly
provide to the Purchaser, a balance sheet of the Company as of the end of the
preceding calendar month and statements of income of the Company for the
preceding calendar month. Such monthly financial statements shall be prepared in
accordance with past practice.
SECTION 5.09. Pre-Closing Balance Sheet. No fewer than five Business
Days prior to the Closing Date, the Seller shall cause the Company to prepare an
unaudited balance sheet of the Company in accordance with this Section 5.09 (the
"Pre-Closing Balance Sheet"). In the event that the Closing is scheduled to
occur after the fifteenth day of any particular calendar month, the Pre-Closing
Balance Sheet shall be prepared as of the last day of the immediately preceding
calendar month. If the Closing is scheduled to occur on or prior to the
fifteenth day of any particular calendar month, the Pre-Closing Balance Sheet
shall be prepared as of the last day of the second preceding calendar month. The
Pre-Closing Balance Sheet shall be prepared in accordance with Accounting
Principles applied on a basis consistent with the preparation of the Net Asset
Test Reference Balance Sheet and shall exclude (i) any indebtedness for borrowed
money of the Company, and (ii) any cash or cash equivalents, other than cash in
the amount of any checks outstanding. During the preparation of the Pre-Closing
Balance Sheet and during the period of any review by the Purchaser and its
representatives of the Pre-Closing Balance Sheet, the Seller shall cause the
Company to provide, and shall cause the Company and its officers, employees and
agents to provide, full access to the books, records, facilities and employees
of the Company, in each case to the extent required by the Purchaser and its
representatives in order to monitor the preparation of, and review, the
Pre-Closing Balance Sheet.
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SECTION 5.10. Company Pension Fund. (a) Until such time as the
Purchaser decides to establish its own pension arrangements for the employees of
the Company pursuant to Section 5.10(b), the Seller shall use reasonable efforts
to cause the "Allgemeine Pensionskasse der Swissair (APK)" and the
"Kaderversicherueng der Swissair" (together, the "Seller's Pension Funds") to
provide for pension cover for the active and retired employees of the Company at
substantially the same cover as is provided as of the Closing Date. During such
time, the Purchaser shall cause the Company to pay or make arrangements for
payment of all contributions required under the regulations applicable to the
Seller's Pension Funds.
(b) In the event the Purchaser decides at any time after the Closing
Date to establish its own pension arrangements for the employees of the Company,
the following principles shall apply:
(i) The Purchaser will cause the Company to establish a new
pension fund (or pension funds) or to designate an existing
pension fund, as the case may be (the "New Company Fund"),
which shall cover the then active employees of the Company.
(ii) The main principles of the transfer of assets and liabilities
from the Seller's Pension Funds to the New Company Fund shall
be set out in an agreement between such funds (the "Pension
Transfer Agreement") which shall provide for (A) the transfer
of all liabilities relating to then active Company employees
and (B) a transfer of an adequate and fair portion of the
reserves of the Seller's Pension Funds which shall be
proportional to the liabilities (calculated on an accrued
benefit obligation basis) that the Seller's Pension Funds have
with respect to the employees whose liabilities are
transferred under such Pension Transfer Agreement and all
other employees covered under the Seller's Pension Funds. Such
Pension Transfer Agreement shall moreover provide that the
amount transferred is at least equal to the actuarial
valuation of accrued liabilities calculated on the same
actuarial principles as those used in the past.
(iii) The Pension Transfer Agreement shall thereafter be submitted
for approval to the competent supervising authorities.
(c) The Seller agrees to use reasonable efforts to cause the
Seller's Pension Funds to apply the principles set forth in Sections 5.10(b)(ii)
and (iii).
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SECTION 5.11. Insurance Coverage by the Seller. The Seller shall
continue, at the Company's request, to provide insurance coverage to the Company
as currently provided to the Company until 31 December 1997. The Purchaser will
cause the Company to pay the insurance premium for such coverage at the rates in
effect on the Closing Date.
SECTION 5.12. Certain Services. (a) The Seller shall, or shall cause
atraxis AG, a wholly-owned subsidiary of the Seller ("atraxis"), or aviReal AG,
a wholly-owned subsidiary of the Seller ("aviReal"), to, as the case may be,
continue to provide to the Company the following services, upon the terms, and
at the prices, set forth on Exhibit 5.12(a) hereto, for a period of not less
than nine months following the Closing Date, provided that (x) the Company may
cease to receive any such services upon not less than 90 days' prior written
notice to the Seller or atraxis, as the case may be, and (y) the Seller (or
atraxis or aviReal, as the case may be) may cease to provide any such services
upon not less than 90 days' prior written notice to the Purchaser, but in no
event shall the Seller's notice of termination (or atraxis' or aviReal's notice
of termination, as the case may be) be effective sooner than the date that is
nine months after the Closing Date:
(i) human resources administration (service provider: the Seller);
(ii) payroll services (service provider: the Seller);
(iii) administration of health insurance (service provider: the
Seller);
(iv) mail distribution (service provider: aviReal);
(v) mail service (service provider: aviReal);
(vi) administration of seasonal tickets for public transportation
(service provider: aviReal);
(vii) administration for parking lot access (service provider:
aviReal);
(viii)administration and issuance of company identification cards
(service provider: aviReal);
(ix) medical services (service provider: the Seller);
(x) EDP system services for office material orders (service
provider: Swissair); and
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(xi) "IMS APPLICATIONS" Product - SAP accounting system (service
provider: atraxis); provided, however, that in no event shall
atraxis' notice of termination with regard to the services
described in this Section 5.12(a)(xi) be effective sooner than
the first anniversary of the Closing Date.
(b) The Seller shall cause atraxis to continue to provide to the
Company the following services, upon the terms, and at the prices, set forth on
Exhibit 5.12(b) hereto, for a period of not less than one year following the
Closing Date, provided that the Company may cease to receive, and atraxis may
cease to provide, any such services upon not less than six months' prior written
notice to the other party, but in no event shall the Company cease to receive,
or atraxis cease to provide, any such services sooner than the first anniversary
of the Closing Date:
(i) "STAFF SERVICES" Product - development/consultancy;
(ii) "REMIS" Product - remote equipment maintenance and
installation services;
(iii) "TRAVITEL" Product; and
(iv) "MVS HOST SYSTEM" Product - host services profs,
problem/configuration management, tso, Roscoe, or any
replacement system or application for any of the foregoing.
(c) The Seller shall cause atraxis to continue to provide to the
Company the following services, upon the terms, and at the prices, set forth on
Exhibit 5.12(c) hereto, provided that the Company may cease to receive, and
atraxis may cease to provide, any such services upon not less than six months'
prior written notice to the other party:
(i) "RENTAL/USE OF PREMISES" Product - room rental storage.
(d) The Seller shall cause atraxis to continue to provide to the
Company the following services, upon the terms, and at the prices, set forth on
Exhibit 5.12(d) hereto, provided that the Company may cease to receive, and
atraxis may cease to provide, any such services upon not less than twelve
months' prior written notice to the other party, but in no event shall the
Company cease to receive, or atraxis cease to provide, any such services sooner
than October 21, 1998:
(i) "TELECOMMUNICATION" Product - network support.
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(e) The Seller shall cause atraxis to continue to provide to the
Company the following services, upon the terms, and at the prices, set forth on
Exhibit 5.12(d) hereto, provided that (i) the Company may cease to receive any
such services upon not less than twelve months' prior written notice to atraxis,
but in no event shall the Company cease to receive any such services sooner than
December 31, 1999, unless the Company shall have demonstrated (by providing
reasonably detailed supporting documentation to atraxis including, but not
limited to, documentation regarding the cost of the alternative) that there is a
less costly alternative for the provision of such services, including having the
Company provide such services to itself, and atraxis shall have failed to match
such less costly alternative, and (ii) atraxis may cease to provide any such
services upon not less than twelve months' prior written notice to the Company,
but in no event shall atraxis' notice of termination with regard to OPAL
services be effective sooner than December 31, 2001, and in no event shall
atraxis' notice of termination with regard to Tourbo services be effective
sooner than December 31, 2002:
(i) "TRAVISWISS" Product - national vendor systems, including
OPAL and Tourbo.
(f) So long as the Company is receiving any of the services
described in Sections 5.12(b)(ii) or (iii), Section 5.12(d)(i) or Section
5.12(e)(i), the Seller shall cause atraxis not to cease to provide any of the
services described in Sections 5.12(b)(i) or (iv).
(g) After the Closing Date, the Company shall have no obligation to
purchase any services from the Seller or its Affiliates other than the services
described in Sections 5.12(a), (b), (c), (d) and (e).
SECTION 5.13. Certain Intercompany Payments. (a) The parties agree
that the payment by the Company to the Seller of management charges shall cease
on or prior to the Closing Date.
(b) All amounts owed by the Seller or any of its Affiliates to the
Company prior to the Closing Date shall be paid by the Seller or such Affiliate
to the Company on or prior to the Closing Date.
(c) The Seller shall cause the Company to repay all amounts owed by
the Company to the Purchaser or the Seller, other than amounts due in the
ordinary course of business consistent with past practice, to the Purchaser or
the Seller, as the case may be, prior to the first day of the Measuring Period.
SECTION 5.14. Intercompany Loan. The Seller shall use reasonable
efforts to cause the Company to repay prior to the Closing Date the loan payable
to the
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Seller that is classified on the Company's balance sheet as "DARLEHEN" (the
"Intercompany Loan"). To the extent any amount of principal with regard to the
Intercompany Loan remains unpaid at Closing, the Seller shall assign all rights
to such principal to the Purchaser pursuant to an instrument in writing that is
reasonably satisfactory to the Purchaser. As of the Closing Date, no interest
shall be due or payable to the Seller with respect to the Intercompany Loan.
SECTION 5.15. Right of First Refusal. (a) If, at any time between
the Closing Date and the tenth anniversary thereof, the Purchaser or any
Affiliate thereof (the "Prospective Seller") shall have agreed with a Person
other than the Seller or one of its Affiliates (the "Prospective Buyer") to sell
or otherwise transfer the Shares (or all or substantially all of the assets of
the Company) (the "Company Interest") to the Prospective Buyer, the Prospective
Seller shall deliver a written notice of its intention to sell the Company
Interest (the "Notice of Intention") to the Seller, setting forth the
Prospective Seller's intention to effect such a sale or transfer, the price at
which the Prospective Seller proposes to sell the Company Interest to the
Prospective Buyer (the "First Refusal Price"), and the other material terms of
the Prospective Buyer's offer. A notice of Intention, once given, shall be
irrevocable. The Notice of Intention shall be dated the date it is delivered by
the Prospective Seller to the Seller.
(b) Upon receipt of the Notice of Intention, the Seller shall have
the right to purchase the Company Interest at the First Refusal Price, and
otherwise on the same terms set forth in the Notice of Intention. The right of
the Seller to purchase the Company Interest pursuant to this Section 5.15(b)
shall be exercisable by written notice to the Prospective Seller (the "Notice of
Exercise") within 10 Business Days from the date of the Notice of Intention (the
"Option Period"). The right of the Seller pursuant to this Section 5.15(b) to
give notice of its intention to purchase the Company Interest shall terminate if
it is not exercised within 10 Business Days of the date of the Notice of
Intention. A Notice of Exercise, once given, shall be irrevocable.
(c) If the Seller does not deliver a Notice of Exercise during the
Option Period, or if the sale by the Prospective Seller of the Company Interest
to the Seller is not consummated within 30 Business Days after the delivery by
the Seller to the Prospective Buyer of a Notice of Exercise, then the
Prospective Seller may sell the Company Interest to the Prospective Buyer at a
price no lower than the First Refusal Price and on terms no more favorable to
the Prospective Buyer than those set forth in the Notice of Intention.
SECTION 5.16. Transfer of Certain Company Intellectual Property. (a)
On or prior to the Closing Date, the Seller will transfer to the Company title
to the following items of Company Intellectual Property (the "Transferred
Intellectual Property"), free and clear of any Encumbrances: (i) OPAL; (ii)
Tourbo; (iii) Interface Suivi/SAP R2; and (iv) Travi Printing for WIN 3.11 and
WIN 95/NT. On the Closing
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36
Date, the Company and the Seller shall enter into a license agreement
substantially in the form of Exhibit 5.16(a) (the "Seller Post-Closing License")
pursuant to which the Company will grant to the Seller a perpetual,
nonexclusive, no-cost license (x) use the Transferred Intellectual Property in
conjunction with hosting services provided to any airline affiliate of the
Seller or any airline customer of the Seller (or any Affiliate thereof), and (y)
to sublicense OPAL and Tourbo to any of the parties described in clause (x) of
this sentence, so long as such product is used for internal airline purposes
only.
(b) On the Closing Date, the Company and the Seller shall enter into
a license agreement substantially in the form of Exhibit 5.16(b) (the "Company
Post-Closing License") pursuant to which the Seller will grant to the Company a
perpetual, nonexclusive, no-cost license, with the right to sublicense to the
Purchaser, any of its Affiliates or any of its distributors (in either case,
other than to an airline for its internal purposes), the following items of
Company Intellectual Property: (i) SNA File Transfer; (ii) Host to Host; (iii)
ATB Printing; (iv) SAS/Mona Configurator; (v) SAS/Mona Problem Management
Reporting; and (vi) TPF Terminal File Interface to Mona Configurator.
SECTION 5.17. Further Action. Each of the Parties hereto shall use
all reasonable efforts to take, or cause to be taken, all appropriate action, do
or cause to be done all things necessary, proper or advisable under applicable
Law, and execute and deliver such documents and other papers as may be required
to carry out the provisions of this Agreement and consummate and make effective
the transactions contemplated by this Agreement.
ARTICLE VI
TAX MATTERS
SECTION 6.01. Tax Indemnity. (a) Except to the extent of Ordinary
Course Taxes, the Purchaser and its Affiliates, officers, directors, employees,
agents, successors and assigns (each for purposes of this Article VI an
"Indemnified Party") shall be indemnified and held harmless by the Seller for
any and all Losses arising out of or resulting from:
(i) the breach of any representation or warranty made in Section
3.18; or
(ii) Liabilities of the Company for Taxes with respect to the period
before the Closing Date; provided, however, that such indemnity shall be
reduced by any Tax Benefit to the Company with respect to such Losses or
Liabilities or the items or adjustments resulting in such Losses or
Liabilities;
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37
provided, further, that amounts under clause (i) and clause (ii) shall be
without duplication of the amount provided for under the other clause.
To the extent that any of the Seller's undertakings set forth in this Section
6.01 may be unenforceable, the Seller shall contribute the maximum amount that
it is permitted to contribute under applicable law to the payment and
satisfaction of all Losses and Liabilities incurred by the Indemnified Parties.
For purposes of this Article VI, the Liability of the Company for Taxes either
(y) arising out of or resulting from a breach of any representation or warranty
made in Section 3.18 or (z) described in Section 6.01(a)(ii) shall constitute a
Loss to the Purchaser.
(b) The Seller and the Purchaser agree to treat all payments made
under this Article VI and all indemnification payments made under Article VIII
of this Agreement as adjustments to the Purchase Price for Tax purposes except
to the extent that the laws of a particular jurisdiction provide otherwise.
SECTION 6.02. Apportionment of Taxes. (a) For purposes of Section
6.01, Taxes with respect to the period before the Closing Date shall mean: (i)
Taxes imposed on the Company with respect to taxable periods of such person
ending on or before the Closing Date; and (ii) with respect to taxable periods
beginning before the Closing Date and ending after the Closing Date, Taxes
imposed on the Company which are allocable, pursuant to Section 6.02(b), to the
portion of such period ending on the Closing Date.
(b) In the case of Taxes that are payable with respect to a taxable
period that begins before the Closing Date and ends after the Closing Date, the
portion of any such Tax that is allocable to the portion of the period ending on
the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or related
to income or receipts, or (y) imposed in connection with any sale or other
transfer or assignment of property (real or personal, tangible or
intangible) (other than conveyances pursuant to this Agreement, which are
governed by Section 6.06) or on the supply of services, deemed equal to
the amount which would be payable if the taxable year ended with the
Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis with respect
to the assets of the Company, or otherwise measured by the level of any
item, deemed to be the amount of such Taxes for the entire period (or, in
the case of such Taxes determined on an arrears basis, the amount of such
Taxes for the immediately preceding period) multiplied by a fraction the
numerator of which is the number of calendar days in the period ending on
the Closing Date and the denominator of which is the number of calendar
days in the entire period.
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SECTION 6.03. Returns and Payments. (a) From the date of this
Agreement through the Closing Date, the Seller shall cause the Company to
prepare and file in proper form with the appropriate Tax Authority in a timely
manner all Returns relating to the Company that are due on or before the Closing
Date. The Seller shall cause the Company to pay Taxes prior to the Closing Date
in such amounts and at such times as are consistent with past practices employed
with respect to the Company. In the event that the Closing Date does not occur
prior to the due date (including any extension thereof) for the filing of
Returns in respect of Income Taxes and capital Taxes for the Company's 1996
taxable year, the Seller will cause the Company to provide the Purchaser and its
authorized representative a copy of such completed Returns at least 10 Business
Days prior to the earlier of the due date (including any extension thereof) for
the filing of such Returns or the date of filing. The Purchaser shall cause the
Company to prepare and file in proper form with the appropriate Tax authority in
a timely manner all Returns relating to the Company that are due after the
Closing Date. With respect to Returns, other than Returns in respect of Income
Taxes, capital Taxes and VAT, caused to be filed by the Purchaser for any period
ending on or before the Closing Date, the Purchaser shall cause the Company to
pay the Taxes shown as due and owing on such Returns. With respect to Income
Taxes and capital Taxes with respect to Returns caused to be filed by the
Purchaser for any period ending on or before the Closing Date, the Purchaser
shall cause the Company to pay the Taxes shown as due and owing on such Returns,
and the Seller shall reimburse the Purchaser on the due date for such Taxes. In
the event that the Seller fails to reimburse the Purchaser on the due date, the
Purchaser shall be entitled to interest on the amount caused to be paid by the
Purchaser but in no event shall such failure affect Purchaser's obligation to
cause the Company to timely file any Return. Returns of the Company not yet
filed for any taxable period that ends on or before the Closing Date shall be
prepared in a manner consistent with past practices employed with respect to the
Company (except to the extent counsel for the party preparing the return renders
a legal opinion that there is no reasonable basis in law therefore or determines
that a Return cannot be so prepared and filed without being subject to
penalties).
(b) With respect to Returns, other than Returns in respect of Income
Taxes and capital Taxes or VAT, caused to be filed by the Purchaser for any
period beginning before and ending after the Closing Date, the Purchaser shall
cause the Company to pay the Taxes shown as due and owing on such Returns. With
respect to Income Taxes and capital Taxes, with respect to Returns caused to be
filed by the Purchaser for any period beginning before and ending after the
Closing Date, the Purchaser shall cause the Company to pay the Taxes shown as
due and owing on such Returns and the Seller shall reimburse the Purchaser on
the due date for such Taxes for the amount of such Taxes determined to be
properly apportioned under Section 6.02(b) to the portion of such period ending
on the Closing Date. To the extent that the Seller has caused the Company to pay
such Taxes in an amount greater
<PAGE> 43
39
than that apportioned under Section 6.02(b), the Purchaser shall reimburse the
Seller for the amount of such excess. In the event that the Seller fails to
reimburse the Purchaser on the due date, the Purchaser shall be entitled to
interest on the amount caused to be paid by the Purchaser but in no event shall
such failure affect the Purchaser's obligation to cause the Company to timely
file any Return. The Purchaser will notify or cause the Company to notify the
Seller of any position the Company will take on a Return which would be
inconsistent with that taken by the Seller or the Company on prior Returns. If
the Purchaser and the Seller disagree on the position taken and the position
would in any way alter the balance of Taxes owing or Tax refunds or credits
obtainable with respect to (i) any Tax period of the Company ending on or prior
to the Closing Date or (ii) in the case of Tax refunds or credits, any period up
to and including the Closing Date which is part of a Tax period of the Company
beginning prior to and ending after the Closing Date, then the parties shall
submit the matter to a mutually selected independent nationally recognized
accounting firm, other than KPMG Peat Marwick and its affiliates and Coopers &
Lybrand and its affiliates (the "Independent Firm"), and the Independent Firm
shall resolve the issue based on a standard of maximal fairness to both the
Purchaser and the Seller.
(c) With respect to any Return required to be caused to be filed by
the Purchaser with respect to the Company and as to which an amount of Tax is
allocable to the Seller under Section 6.02(b), the Purchaser shall cause the
Company to provide the Seller and its authorized representatives with a copy of
such completed Return and a statement certifying the amount of Tax shown on such
Return that is allocable to the Seller pursuant to Section 6.02(b), together
with appropriate supporting information and schedules at least 10 Business Days
prior to the due date (including any extension thereof) for the filing of such
Return, in the case of Taxes other than payroll, sales and use and Social
Security Taxes, or five (5) days prior to the date on which such Return is
required to be filed (taking into account any extensions) in the case of
payroll, sales and use and Social Security Taxes, and the Seller and its
authorized representatives shall have the right to review and comment on such
Return and statement prior to the filing of such Return.
(d) With respect to (y) Returns relating to VAT filed by the Company
after the Closing Date for any period ending before the Closing Date and (z)
Returns relating to VAT filed by the Company after the Closing Date for any
period beginning before and ending after the Closing Date (but as to (z), only
for amounts of VAT apportioned pursuant to Section 6.02(b)(i) to the portion of
such period ending on the Closing Date), the Seller shall reimburse the
Purchaser for any amount of VAT shown on such Return and not refunded, including
any amount that is both (i) in respect of self-supplies, as per Article 8 of the
Swiss VAT Ordinance and (ii) a cost factor in the Company's profit and loss
account.
<PAGE> 44
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SECTION 6.04. Contests. (a) After the Closing, the Purchaser shall
promptly notify or cause the Company to notify the Seller in writing of any
written notice of a proposed assessment or claim in an audit or administrative
or judicial proceeding of the Purchaser or of the Company which, if determined
adversely to the taxpayer, would be grounds for indemnification under this
Article VI or could otherwise result in any Tax cost to the Seller; provided,
however, that a failure to give such notice will not affect the Purchaser's
right to indemnification under this Article VI except to the extent such failure
on the part of the Purchaser or the Company prejudices the Seller by preventing
the avoidance of all or a portion of the Tax liability in question.
(b) In the case of an audit or administrative or judicial proceeding
that relates to periods ending on or before the Closing Date, provided that the
Seller acknowledge in writing its indemnification obligation liability under
Article VI of this Agreement with respect to the potential liability of the
Company as a result of such audit or administrative or judicial proceeding, the
Seller shall have the right, at its expense, to participate in and control the
conduct of such audit or proceeding; the Purchaser may also participate in any
such audit or proceeding and, if the Seller does not assume the defense of any
such audit or proceeding, the Purchaser, at its expense, may defend the same in
such manner as it may deem appropriate, including, but not limited to, settling
such audit or proceeding after giving five days' prior written notice to the
Seller setting forth the terms and conditions of settlement. In the event that
issues relating to a potential adjustment for which the Seller has acknowledged
its indemnification obligation are required to be dealt with in the same
proceeding as separate issues relating to a potential adjustment for which the
Purchaser would be liable, the Purchaser shall have the right, at its expense,
to control the audit or proceeding with respect to the latter issues, provided
that the Purchaser provides the Seller with a written acknowledgement of the
Purchaser's liability.
(c) Notwithstanding Section 6.04(b), neither the Purchaser nor the
Seller shall enter into or cause the Company to enter into any compromise or
agree to settle or cause the Company to agree to settle any claim pursuant to
any Tax audit or proceeding which would adversely affect the other party for
such year or any prior or subsequent year without the written consent of the
other party which consent may not be unreasonably withheld. If the Purchaser or
the Seller refuses to provide the respective other party with written consent to
settle any such claim, then the parties shall submit the matter to an
Independent Firm and the Independent Firm shall resolve the issue based on a
standard of maximal fairness to both the Purchaser and the Seller.
(d) The Purchaser and the Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with (i) the
filing of Returns pursuant to Section 6.03 (including such amended Returns for
periods (or portions thereof) ending on or prior to the Closing Date that the
Seller may reasonably
<PAGE> 45
41
request the Purchaser to file or cause the Company to file; provided, however,
that if in the Purchaser's reasonable judgment the filing of the amended return
would be disadvantageous to the Purchaser, the Purchaser may deny the Seller's
request and the parties shall submit the matter to an Independent Firm and the
Independent Firm shall resolve the issue based on a standard of maximal fairness
to both the Purchaser and the Seller and (ii) any audit, litigation or other
proceeding with respect to Taxes.
SECTION 6.05. Survival of Obligations. Notwithstanding any provision
in this Agreement to the contrary, obligations of the Seller to indemnify and
hold harmless the Indemnified Parties pursuant to this Article VI, and the
representations and warranties contained in Section 3.18, shall terminate at the
close of business on the 180th day following the expiration of the applicable
statute of limitations with respect to the Tax liabilities in question (giving
effect to any waiver, mitigation or extension thereof).
SECTION 6.06. Conveyance Taxes. The Seller shall pay (or, if the
Purchaser pays, shall reimburse the Purchaser for) any real property transfer or
gains, sales, use, transfer, stock transfer, and stamp taxes, any transfer,
recording, registration, and other fees, and any similar Taxes (but specifically
not including Taxes on or with respect to income) that become payable in
connection with the transactions contemplated by this Agreement. The Company
shall prepare in a timely manner for the review and approval of the parties and
file such applications and documents as shall permit any such Tax to be assessed
and paid on or prior to the Closing Date in accordance with any available
presale filing procedure. The parties shall execute and deliver all instruments
and certificates necessary to enable the Company to comply with the foregoing.
SECTION 6.07. Tax Refunds, Credits and Other Payments. The Purchaser
shall, within 30 days of receipt of any Tax refund or credit actually received
by or on behalf of the Company or successor thereto (other than a refund or
credit with respect to Taxes paid by the Company or successor thereto on or
after the Closing Date and not previously indemnified by the Seller pursuant to
Section 6.01(a)) (A) for or attributable to any Tax period of the Company ending
at or prior to the Closing Date or (B) for or attributable to any period up to
and including the Closing Date which is part of a Tax period of the Company
beginning prior to and ending after the Closing Date, pay such Tax refund or
credit (a "Returnable Refund or Credit") to the Seller on an After-Tax Basis
(including any interest or addition actually received thereon). If the amount of
any Returnable Refund or Credit is applied against any other liability of any of
the Company or successor thereto for Taxes for any Tax period after the Closing
Date, the Purchaser shall, within 30 days of the date of such application, pay
to the Seller an amount equal to the Returnable Refund or Credit on an After-Tax
Basis (including any interest or addition actually received thereon). The
Purchaser shall deliver with payment to the Seller a copy of any written
explanation of
<PAGE> 46
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the Facts surrounding the Returnable Refund or Credit and a copy of any related
notice or statement received from any Tax authority.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Purchaser contained in this Agreement shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the Closing, with the same force and effect as if
made as of the Closing Date, other than such representations and warranties as
are made as of another date, which shall be true and correct in all material
respects as of such date (provided, however, if any portion of any
representation or warranty is already qualified by materiality, for purposes of
determining whether this Section 7.01(a) has been satisfied with respect to such
portion of such representation or warranty, such portion of such representation
or warranty as so qualified must be true and correct in all respects), and the
covenants and agreements contained in this Agreement to be complied with by the
Purchaser on or before the Closing shall have been complied with in all material
respects, and the Seller shall have received a certificate from the Purchaser to
such effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against the Seller, the Company or the
Purchaser, seeking to restrain or prevent the consummation of the transactions
contemplated by this Agreement; provided, however, that the provisions of this
Section 7.01(b) shall not apply if the Seller, the Company or any Affiliate
thereof have directly or indirectly solicited or encouraged any such Action;
(c) Resolutions. The Seller shall have received a true and complete
copy, certified by the Secretary of the Purchaser, of the resolutions of the
Purchaser's Supervisory Board evidencing its authorization of the consummation
of the transactions contemplated hereby;
(d) Incumbency Certificate. The Seller shall have received a
certificate of the Secretary of the Purchaser certifying the names and
signatures of the officers of the Purchaser authorized to sign this Agreement
and the other documents to be delivered hereunder;
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(e) Escrow Agreement. The Purchaser shall have duly executed and
delivered the Escrow Agreement in substantially the form of Exhibit 2.05(f)
hereto;
(f) Consummation of Transactions Contemplated by Transaction
Agreement. The transactions contemplated by the Transaction Agreement, a form of
which is attached as Exhibit 7.01(f) hereto (the "Transaction Agreement"), shall
have been consummated;
(g) Completion of the IPO. The IPO shall have been consummated; and
(h) Seller Post-Closing License. The Company shall have executed and
delivered the Seller Post-Closing License.
SECTION 7.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Seller contained in this Agreement shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the Closing with the same force and effect as if
made as of the Closing, other than such representations and warranties as are
made as of another date, which shall be true and correct in all material
respects as of such date (provided, however, that the representations and
warranties contained in Section 3.03 will be true and correct in all respects
and that if any portion of any representation or warranty is already qualified
by materiality, for purposes of determining whether this Section 7.02(a) has
been satisfied with respect to such portion of such representation or warranty,
such portion of such representation or warranty as so qualified must be true and
correct in all respects), and the covenants and agreements contained in this
Agreement to be complied with by Seller on or before the Closing shall have been
complied with in all material respects, and the Purchaser shall have received a
certificate from the Seller to such effect signed by a duly authorized officer
thereof;
(b) No Proceeding or Litigation. No Action shall have been commenced
by or before any Governmental Authority against the Seller, the Company or the
Purchaser, seeking to restrain or prevent the consummation of the transactions
contemplated by this Agreement; provided, however, that the provisions of this
Section 7.02(b) shall not apply if the Purchaser has solicited or encouraged any
such Action;
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(c) Resolutions of the Seller. The Purchaser shall have received a
true and complete copy, certified by the Secretary or an Assistant Secretary of
the Seller, of the resolutions duly and validly adopted by the Board of
Directors of the Seller evidencing their authorization of the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby;
(d) Consents and Approvals. The Purchaser, the Seller and the
Company shall have received, each in form and substance satisfactory to the
Purchaser all authorizations, consents, orders and approvals of all Governmental
Authorities and officials and all third party consents and estoppel certificates
set forth on Schedule 7.02(d);
(e) Commercial Register Extract. The Purchaser shall have received
an extract from the Commercial Register issued not more than three Business Days
prior to the Closing Date evidencing that the persons signing this Agreement on
behalf of Seller are authorized to sign on the Seller's behalf;
(f) Financing. The Purchaser shall have obtained financing on terms
acceptable to it, sufficient to enable it to consummate the transactions
contemplated by this Agreement;
(g) Completion of the IPO. The IPO shall have been consummated;
(h) No Material Adverse Effect. No event or events shall have
occurred, or be reasonably likely to occur, which have, or are reasonably likely
to have, a Material Adverse Effect;
(i) No Debt. The Company shall have no indebtedness for borrowed
money as of the Closing Date, other than any amounts owing with respect to the
Intercompany Loan;
(j) Net Asset Test. The Net Assets reflected on the Seasonally
Adjusted Net Asset Test Reference Balance Sheet shall not exceed the Net Assets
reflected on the Pre-Closing Balance Sheet by CHF 150,000 or more;
(k) Consummation of Transactions Contemplated by the Transaction
Agreement. The transactions contemplated by the Transaction Agreement shall have
been consummated.
(l) Certain Resolutions. The Purchaser shall have received a true
and complete copy, certified by the Secretary or an Assistant Secretary of the
Company, of a resolution of the board of directors of the Company evidencing
that the Purchaser will
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be registered as the owner of all the Shares together with a copy of the
shareholders' register evidencing the Purchaser as the new owner of all the
Shares;
(m) Resignation Letters. The Purchaser shall have received a
resignation letter from each of the Company's directors;
(n) Assignment of Intercompany Loan. To the extent any amount of
principal with regard to the Intercompany Loan remains unpaid at Closing, the
Purchaser shall have received from the Seller an instrument in writing that is
reasonably satisfactory to the Purchaser pursuant to which the Seller assigns
all rights to such principal to the Purchaser; and
(o) Transferred Intellectual Property; Company Post-Closing License.
The Purchaser shall have received evidence reasonably satisfactory to it that
the Company owns the Transferred Intellectual Property, free and clear of any
Encumbrances, and the Seller shall have executed and delivered the Company
Post-Closing License.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties. The
representations and warranties of the parties contained in Sections 3.06, 3.11,
3.14, 3.15, 3.16, 3.17 and 3.19, and Article IV (other than Section 4.05), and
the covenants of the parties set forth in Article V (other than Sections 5.02(b)
and (c), 5.03, 5.06, 5.07, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15 and 5.16) shall
terminate at Closing. The representations and warranties of the parties
contained in Sections 3.01, 3.02, 3.03, 3.04, 3.05, 3.07, 3.09, 3.10, 3.12,
3.13, 3.20 and 3.21 and Section 4.05 shall survive the Closing until the second
anniversary of the Closing Date. The representations and warranties dealing with
Tax matters shall survive as provided in Article VI, and the representations and
warranties set forth in Section 3.08 shall survive the Closing until the first
anniversary of the Closing Date. The covenants of the parties set forth in
Sections 5.02(b) and (c), 5.03, 5.06, 5.07, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15
and 5.16 shall survive the Closing, and the other covenants set forth in this
Agreement that expressly survive the Closing shall survive the Closing in
accordance with their respective terms. Notwithstanding the foregoing or
anything to the contrary in this Article VIII, in the event that the Purchaser
has actual knowledge prior to the Closing Date that any of the representations
and warranties of the Seller to survive the Closing in accordance with this
Section 8.01 were not true and correct as of the date hereof or are not true and
correct as of the Closing Date or that the agreements of the Seller contained in
Section 5.03(b) have not been complied with, the sole and exclusive remedy of
the Purchaser with respect to such breaches will be to not consummate the
transactions contemplated by this Agreement if
<PAGE> 50
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any such breach results in the nonsatisfaction of the condition contained in
Section 7.02(a). For purposes of the foregoing sentence, the term "actual
knowledge" means the actual knowledge of an officer of the Purchaser, including,
without limitation, as a result of (A) the delivery to the Purchaser by the
Seller not fewer than three Business Days prior to the Closing (other than in a
case in which an event occurs within such three Business Day period which could
not have been anticipated, in which case written notice of such event must be
provided to the Purchaser promptly after the Seller becomes aware of it) of a
written notice specifically identifying in detail the nature of the breach and
the provisions of this Agreement that have been breached, or (B), without duty
of any other due or specific inquiry, a written survey of (i) employees of the
Purchaser who are reasonably likely, because of their substantive and
significant contacts with the Company, to have knowledge as to the truth and
correctness of the representations and warranties of the Seller to survive the
Closing or whether the Seller has complied with Section 5.03(b), (ii) the
accountants at KPMG Peat Marwick LLP, (iii) the investment bankers at JP Morgan
and (iv) the attorneys at Shearman & Sterling, Davis Polk & Wardwell and Bar &
Karrer, who, in the case of (ii), (iii) and (iv), actually participated in the
Purchaser's due diligence investigation of the Company. Subject to the
foregoing, neither the period of survival nor the liability of the parties
hereto with respect to their representations and warranties and covenants shall
be reduced by any investigation made at any time by or on behalf of any such
party. If written notice of a claim has been given prior to the expiration of
the applicable representations and warranties and covenants by the parties
hereto, then the relevant representations and warranties and covenants shall
survive as to such claim until such claim has been finally resolved. The
applicability of (i) Article 201 of the Swiss Code of Obligations with respect
to the Purchaser's obligation of immediate investigation and immediate
notification and (ii) Article 210 of the Swiss Code of Obligations with respect
to the Purchaser's duty to commence proceedings during the survival period of
representations and warranties is hereby waived.
SECTION 8.02. Indemnification by the Seller. (a) The Purchaser, its
Affiliates, including the Company, and their successors and assigns, and the
officers, directors, employees and agents of the Purchaser, its Affiliates and
their successors and assigns (each a "Purchaser Indemnified Party") shall be
indemnified and held harmless, as and to the extent set forth in this Section
8.02, by the Seller for any and all Liabilities, losses, damages, claims, costs
and expenses, interest, awards, judgments and penalties (including, without
limitation, attorneys' and consultants' fees and expenses) actually suffered or
incurred by them (including, without limitation, any Action brought or otherwise
initiated by any of them) on an After-Tax Basis (hereinafter a "Loss"), arising
out of or resulting from:
(i) the breach of any representation or warranty made by the Seller
contained in any of Sections 3.01, 3.02, 3.03, 3.04, 3.05, 3.07, 3.09,
3.10, 3.12, 3.13, 3.18, 3.20 or 3.21 of this Agreement; or
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(ii) the breach of any covenant or agreement by the Seller contained
in Section 5.03(b) of this Agreement; or
(iii) Liabilities of the Company, whether arising before or after
the Closing Date, arising from or relating to any of [specified items
listed in the Seller's Disclosure Schedule]; or
(iv) any shortfall in the Cash of the Company that is not covered by
the amount held by the Escrow Agent, together with interest thereon, as
determined by the parties in accordance with Section 2.05(f)(iii).
(b) The obligation of the Seller to indemnify a Purchaser
Indemnified Party shall be subject to the limitation set forth in the fifth
sentence of Section 8.01 and to the following limitations: (i) no
indemnification by the Seller (other than an indemnification pursuant to Section
8.02(a)(iv)) shall be made unless the aggregate amount of Losses relating to
breaches or otherwise subject to indemnification hereunder exceeds US$150,000,
and then indemnification shall be made solely in the amount of such excess; (ii)
in no event shall the aggregate obligation of the Seller to indemnify the
Purchaser Indemnified Parties (other than an indemnification pursuant to Section
8.02(a)(iv)) exceed US$4,000,000, except for a breach of the representations and
warranties contained in Section 3.03 in which case the obligation to indemnify
the Purchaser Indemnified Parties shall not exceed an amount equal to
US$8,000,000 plus the Purchase Price Adjustment Amount; (iii) any recovery of a
Loss due to breach of one representation will preclude recovery of such Loss due
to breach of any other representation, and all indemnification shall be without
duplication of any other recovery; (iv) a Purchaser Indemnified Party shall not
be entitled to be indemnified for breach of the representations and warranties
set forth in Section 3.08 or Section 3.12 unless it establishes that (A) a
reasonably prudent business person would have concluded, based on the
information available to such person at the time of taking the action that
caused such breach or, in the case of Section 3.12, at the time of entering into
the contract that caused such breach, that the Losses associated with such
action or such contract, as the case may be, would exceed the benefits
associated therewith, and (B) in the case of Sections 3.12(a)(vi) and (a)(viii)
only, that such breach has had a materially negative effect on the Company; (v)
a Purchaser Indemnified Party shall not be entitled to be indemnified for any
breach of the representations and warranties set forth in Section 3.10 if and to
the extent such breach also constitutes a breach of any of the representations
and warranties set forth in Sections 3.11, 3.16 or 3.17; and (vi) for purposes
of determining whether a Purchaser Indemnified Party is entitled to be
indemnified for any breach of the representations and warranties contained in
Section 3.12, the term "Material Contracts" shall be deemed to refer solely to
(A) any contracts or agreements under which the Company can be reasonably
expected to pay or be paid at least CHF 250,000 over any five year period during
the life of the contract following the Closing Date, (B) any contracts or
agreements that limit or purport to limit
<PAGE> 52
48
the ability of the Company to compete in any line of business or with any Person
or in any geographic area or during any period of time, or (C) any contracts the
presence or absence of which would have a Material Adverse Effect.
(c) Each Purchaser Indemnified Party shall use its reasonable
efforts to mitigate any Losses for which it seeks indemnification hereunder.
(d) To the extent that the Seller's undertakings set forth in this
Section 8.02 may be unenforceable, the Seller shall contribute (in the same
proportion as it would otherwise have indemnified the Purchaser Indemnified
Party in accordance with Section 8.02(b)(iii)) the maximum amount that it is
permitted to contribute under applicable law to the payment and satisfaction of
all Losses incurred by the Purchaser and the Company.
SECTION 8.03. Tax Matters. Anything in this Article VIII to the
contrary notwithstanding, the rights and obligations of the parties with respect
to indemnification for any and all Tax matters shall be governed solely by
Article VI.
SECTION 8.04. Indemnification by the Purchaser. (a) The Seller, its
Affiliates and their successors and assigns, and the officers, directors,
employees and agents of the Seller, their Affiliates and their successors and
assigns (each a "Seller Indemnified Party") shall be indemnified and held
harmless, as and to the extent set forth in this Section 8.04, by the Purchaser
for any and all Losses on an After-Tax Basis arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in Section 4.05 of this Agreement;
(ii) Liabilities of the Company, other than any Liabilities for
which the Purchaser is entitled to be indemnified pursuant to Section
8.02; or
(iii) any Cash that the Purchaser is required to pay to the Seller,
together with interest thereon, as determined by the parties in accordance
with Section 2.05(f)(iii).
(b) Each Seller Indemnified Party shall use its reasonable efforts
to mitigate any Losses for which it seeks indemnification hereunder.
(c) To the extent that the Purchaser's undertakings set forth in
this Section 8.04 may be unenforceable, the Purchaser shall contribute the
maximum amount that it is permitted to contribute under applicable law to the
payment and satisfaction of all Losses incurred by the Seller.
<PAGE> 53
49
SECTION 8.05. Indemnification Procedures. A Purchaser Indemnified
Party or a Seller Indemnified Party, as the case may be (in each case, for
purposes of this Article VIII, the "Indemnified Party"), shall give the Seller,
or the Purchaser, as the case may be (in each case, the "Indemnifying Party"),
notice of any matter which an Indemnified Party has determined has given or
could give rise to a right of indemnification under this Agreement, within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises. The obligations and Liabilities of an Indemnifying Party under this
Article VIII with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in this Article VIII (a "Third
Party Claim") shall be governed by and contingent upon the following additional
terms and conditions: if an Indemnified Party shall receive notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice of
such Third Party Claim within 30 days of the receipt by the Indemnified Party of
such notice; provided, however, that the failure to provide such notice shall
not release the Indemnifying Party from any of its obligations under this
Article VIII except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article VIII. If the Indemnifying Party acknowledges
in writing its obligations to indemnify the Indemnified Party hereunder against
any Losses (subject to the limitations set forth in Section 8.02(b)) that may
result from such Third Party Claim, then such Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within five Business Days of the receipt of such
notice from the Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the Indemnified Party for the same
counsel to represent both the Indemnified Party and the Indemnifying Party, then
the Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is required to
participate in such defense, at the expense of the Indemnifying Party. In the
event the Indemnifying Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party, subject to reimbursement of
reasonable out-of-pocket expenses. Similarly, in the event the Indemnified Party
is, directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such
defense and make available to the Indemnified Party all such witnesses, records,
materials and information in the Indemnifying Party's possession or under the
Indemnifying Party's control relating
<PAGE> 54
50
thereto as is reasonably required by the Indemnified Party, subject to
reimbursement of reasonable out-of-pocket expenses. No such Third Party Claim
may be settled by the Indemnifying Party without the prior written consent of
the Indemnified Party.
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the Seller and the Purchaser;
(b) by either the Seller or the Purchaser if the Closing shall not
have occurred by 31 December 1997;
(c) by either the Purchaser or the Seller in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable;
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) there shall have been a breach of any material
representation or warranty of the Seller contained in this Agreement; (ii) the
Seller shall not have complied with any material covenant or agreement to be
complied with by it and contained in this Agreement; or (iii) the Seller or the
Company make a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against the Seller or the Company seeking
to adjudicate either of them bankrupt or insolvent, or seeking liquidation,
winding up or reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy, insolvency or
reorganization; or
(e) by the Seller if, between the date hereof and the time scheduled
for the Closing: (i) there shall have been a breach of any material
representation or warranty of the Purchaser contained in this Agreement; (ii)
the Purchaser shall not have complied with any material covenant or agreement to
be complied with by it and contained in this Agreement; or (iii) the Purchaser
makes a general assignment for the benefit of creditors, or any proceeding shall
be instituted by or against the Purchaser seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up or reorganization, arrangement,
adjustment, protection, relief or composition of its debts under any Law
relating to bankruptcy, insolvency or reorganization.
<PAGE> 55
51
SECTION 9.02. Effect of Termination. (a) In the event of termination
of this Agreement as provided in Section 9.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
except that the provisions of Sections 5.03(a), 9.02(a), 9.02(b), 10.01, 10.02,
10.03, 10.06, 10.08, 10.10, 10.12 and 10.14 shall survive any such termination.
(b) Notwithstanding the foregoing, if the Closing does not occur
because of a breach by a party, such party will reimburse the other parties (as
their sole and exclusive remedy hereunder) for their out-of-pocket costs and
expenses, including, without limitation, fees and disbursements of counsel,
financing sources (other than bank commitment fees paid by the Purchaser prior
to 15 June 1997 or paid by the Purchaser after 15 June 1997 without consulting
the Seller) and accountants, and disbursements (but not fees) of financial
advisors, incurred in connection with the preparation, negotiation and
performance of this Agreement and the transactions contemplated hereby.
SECTION 9.03. Waiver. Either party to this Agreement may (a) extend
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 10.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid. return receipt requested) to
the parties at the following
<PAGE> 56
52
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10.02):
(a) If to the Purchaser:
Galileo International Partnership
9700 West Higgins Road
Rosemont, Illinois 60018, USA
Attention: General Counsel
Telecopy: (847) 518-4915
with a copy to:
Bar & Karrer
Seefeldstrasse 19
8024 Zurich
Switzerland
Attention: Dr. Rolf Watter, Esq.
Telecopy: 01 251 30 25
and to:
The Galileo Company
Galileo Centre Europe
Windmill Hill
Swindon
Wilts SN5 6PH, United Kingdom
Attention: Company Secretary
Telecopy: 44 (0) 1793 886190
and to:
Shearman & Sterling
599 Lexington Avenue
New York, New York USA
Attention: Clare O'Brien, Esq.
Facsimile: (212) 848-7179
(b) If to the Seller:
SAirGroup
CH-8058
Zurich Airport
<PAGE> 57
53
Switzerland
Attention: ___________
Telecopy: ___________
with a copy to:
__________________
__________________
__________________
__________________
SECTION 10.03. Public Announcements. Except as may be required by
Law, neither party to this Agreement shall make, or cause to be made any press
release or public announcement in respect of this Agreement or the transactions
contemplated hereby or the existence of discussion or negotiations between the
parties or otherwise communicate with any news media without the prior consent
of the other party, and the parties shall cooperate as to the form, timing and
contents of any such press release or public announcement.
SECTION 10.04. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 10.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 10.06. Entire Agreement. This Agreement (including the
Exhibits and the Seller's Disclosure Schedule which are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein) and
the Non-Disclosure Agreement constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, between the Seller and
the Purchaser with respect to the subject matter hereof and thereof.
<PAGE> 58
54
SECTION 10.07. Assignment. This Agreement may not be assigned by
operation of law or otherwise without the express written consent of the Seller
and the Purchaser (which consent may be granted or withheld by the Seller or the
Purchaser); provided, however, that the Purchaser may assign all or any portion
of its rights and obligations under this Agreement to one or more Affiliates of
the Purchaser without the consent of the Seller; provided further that in the
event of such assignment, Purchaser will remain liable for any obligations
hereunder not performed by such assignee or assignees.
SECTION 10.08. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the Parties and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 10.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Seller and the Purchaser or (b) by a waiver in accordance with Section 9.03.
SECTION 10.10. Arbitration. (a) Subject to the final sentence of
this Section 10.10, any dispute arising between the Parties hereto involving the
subject matters covered by this Agreement shall be submitted to arbitration
under this Section 10.10. A Party asserting a breach of this Agreement by the
other Party shall notify the other Party of such alleged breach (a "Dispute
Notice") and the Parties shall attempt to resolve such dispute amicably and if
they shall fail to resolve it within thirty (30) days of the date of the Dispute
Notice, either Party may notify the other Party that it wishes to commence an
arbitration proceeding under this Section 10.10 (an "Arbitration Request"). In
any arbitration proceeding the Party commencing the arbitration (the
"Petitioner") shall include in the Arbitration Request (a) a statement of the
facts constituting the alleged breach or dispute, (b) a written statement of
position ("Statement") regarding the dispute and (c) the name of an elector
designated by it. The Statement shall state the facts and arguments in support
of the position taken by the Party submitting such Statement and shall detail
that Party's proposed solution and relief sought (if any). Copies of any
Arbitration Request shall be furnished at the same time to the other Party
hereto. The Party with whom the Petitioner has its dispute (the "Respondent")
shall within five (5) Business Days after the date of the Arbitration Request
designate a second elector by notice to the Petitioner (copies of which shall be
furnished to the other Party), but if it shall fail to do so within such period
the Petitioner may designate an elector on Respondent's behalf. The electors
chosen by the Petitioner and the Respondent shall attempt to agree upon an
arbitrator (the "Arbitrator"), but if they are unable to do so within twenty
(20) Business Days after the designation of the second elector, then either
elector thereafter may apply to the American Arbitration Association (the
"Association") for the selection of the Arbitrator in accordance with the
<PAGE> 59
55
Commercial Arbitration Rules of such Association. The Arbitrator so selected
shall have full power to decide any dispute referred to in this Section 10.10.
The arbitration proceedings shall be conducted in the English language, and the
place of arbitration and the making of the Award (as defined below) shall be
Paris, France. The UNCITRAL rules of commercial arbitration shall apply to any
arbitration commenced pursuant to this Section 10.10, as modified by the
following procedure:
(i) Within five (5) Business Days of the selection of the Arbitrator
(the "Commencement Date"), the Respondent shall deliver its Statement
regarding the dispute to the Arbitrator and to the Petitioner.
(ii) Within fifteen (15) Business Days from the Commencement Date,
each of the Petitioner and Respondent shall deliver to the Arbitrator and
to the other Party, a response ("Response") to the other Party's Statement
setting forth opposing facts and arguments and limited in length to ten
(10) typed, single spaced pages (excluding any evidentiary exhibits
included therein).
(iii) Within twenty (20) Business Days from the Commencement Date,
each of the Petitioner and the Respondent may deliver to the Arbitrator
and to the other Party, a reply to the Response limited to setting forth
facts and arguments in rebuttal to the Statement and Response of the other
Party and limited in length to five (5) typed, single spaced pages
(excluding any evidentiary exhibits included therein).
(iv) Within twenty-five (25) Business Days from the Commencement
Date, each of the Petitioner and Respondent shall present an oral
summation of its position to the Arbitrator in the presence of the other
Party in accordance with such rules of procedure including, without
limitation, length of presentation and right of cross-examination, as the
Arbitrator shall determine in writing and deliver to the Parties not less
than three (3) Business Days prior to such hearing; provided, however,
that such hearing shall not exceed eight (8) hours in total and may not be
adjourned except for extraordinary circumstances beyond the control of the
Parties.
(v) The Arbitrator shall either issue his or her decision and award
("Award") or request a further meeting of the Parties within fifteen (15)
days of the hearing.
(vi) Any such further meeting of the Parties shall take place within
five (5) Business Days of the request therefor and shall be conducted as
determined by the Arbitrator. The Arbitrator shall issue his or her Award
no later than fifteen (15) days after any such further meeting of the
Parties.
<PAGE> 60
56
(vii) The Award shall be in writing and shall be limited to a
decision either completely in favor of Petitioner's request for relief or
completely in favor of Respondent's. The Award shall be final and binding
upon the Parties hereto and judgment may be entered thereon in any court
of competent jurisdiction and the costs and expenses of such arbitration
(and of enforcing any Award), including attorneys' fees, shall be borne by
the Party losing such arbitration.
(b) This Section 10.10 shall in no way affect the right of any Party
to seek such interim relief, and only such relief, as may be required to
maintain the status quo in aid of the arbitration in any court of competent
jurisdiction.
SECTION 10.11. Seller's Disclosure Schedule. From time to time after
the date hereof and not later than three Business Days (other than in a case in
which an event occurs within such three Business Day period which could not have
been anticipated, in which case written notice of such event must be provided to
the Purchaser promptly after the Seller becomes aware of it) prior to the
Closing Date, the Seller may amend or supplement the Seller's Disclosure
Schedule in writing in accordance with Section 10.02 with respect to any matter
coming to its attention or arising which, if known by it or existing prior to
the date of this Agreement would have been required to be set forth or described
in the Seller's Disclosure Schedule or which is necessary or desirable to
complete or correct any information in the Seller's Disclosure Schedule or in
any representation or warranty of the Seller which has been rendered inaccurate
thereby. For purposes of determining the satisfaction of the Purchaser's
condition to close as set forth in Section 7.02(a), the Seller's Disclosure
Schedule shall be deemed not to have been amended or supplemented from that
attached hereto on the date hereof.
SECTION 10.12. Governing Law. This Agreement shall be governed by
the laws of Switzerland (disregarding conflict of law rules and the Vienna
(United Nations) Convention on the International Sale of Goods).
SECTION 10.13. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 10.14. Specific Performance. The Parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the Parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy at Law or equity.
<PAGE> 61
57
IN WITNESS WHEREOF, the Purchaser and the Seller have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
GALILEO INTERNATIONAL
PARTNERSHIP
By:____________________________
Name:
Title:
SAIRGROUP
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
<PAGE> 1
Exhibit 2.3
GENERAL SHARE PURCHASE AGREEMENT
AMONG
KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V.
(KLM ROYAL DUTCH AIRLINES),
GALILEO NEDERLAND BV,
AND
GALILEO INTERNATIONAL PARTNERSHIP
DATED AS OF _______________, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Certain Defined Terms.......................................................... 1
SECTION 1.02. Other Defined Terms............................................................ 6
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares................................................ 7
SECTION 2.02. Purchase Price................................................................. 7
SECTION 2.03. Closing........................................................................ 7
SECTION 2.04. Closing Deliveries............................................................. 7
SECTION 2.05. Cash Mechanism. .............................................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.01. Organization, Authority and Qualification of the
Seller............................................................. 11
SECTION 3.02. Organization, Authority and Qualification of the
Company. ......................................................... 11
SECTION 3.03. Shares......................................................................... 12
SECTION 3.04. No Conflict.................................................................... 13
SECTION 3.05. Consents and Approvals......................................................... 14
SECTION 3.06. Financial Information and Books and Records.................................... 14
SECTION 3.07. No Undisclosed Liabilities..................................................... 15
SECTION 3.08. Conduct in the Ordinary Course, Absence of Certain
Changes, Events and Conditions..................................... 15
SECTION 3.09. Violations and Litigation...................................................... 17
SECTION 3.10. Compliance with Laws........................................................... 17
SECTION 3.11. Environmental and Other Permits and Licenses;
Related Matters.................................................... 18
SECTION 3.12. Material Contracts............................................................. 18
SECTION 3.13. Intellectual Property.......................................................... 20
SECTION 3.14. Real Property and Leases....................................................... 21
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.15. Assets......................................................................... 21
SECTION 3.16. Labor Matters.................................................................. 22
SECTION 3.17. Taxes.......................................................................... 23
SECTION 3.18. Insurance...................................................................... 24
SECTION 3.19. Brokers........................................................................ 25
SECTION 3.20. Year 2000 Compliance........................................................... 25
SECTION 3.21. Network Services. ............................................................. 26
SECTION 3.22. Capital Contributions.......................................................... 26
SECTION 3.23. Relationship With Ogilvy & Mather.............................................. 26
SECTION 3.24. Certain Arrangements........................................................... 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization, Authority and Qualification of the
Purchaser. ....................................................... 27
SECTION 4.02. No Conflict.................................................................... 27
SECTION 4.03. Governmental Consents and Approvals............................................ 27
SECTION 4.04. Investment Purpose............................................................. 28
SECTION 4.05. Brokers........................................................................ 28
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing....................................... 28
SECTION 5.02. Access to Information.......................................................... 29
SECTION 5.03. Confidentiality................................................................ 30
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents........................................................... 31
SECTION 5.05. Notice of Developments......................................................... 31
SECTION 5.06. No Solicitation of Employees................................................... 32
SECTION 5.07. Use of Intellectual Property................................................... 32
SECTION 5.08. Monthly Financial Statements................................................... 33
SECTION 5.09. Audit of Net Asset Test Reference Balance Sheet................................ 33
SECTION 5.10. Pre-Closing Balance Sheet...................................................... 33
SECTION 5.11. Company Pension Fund........................................................... 34
SECTION 5.12. Certain Services............................................................... 35
SECTION 5.13. Certain Intercompany Payments.................................................. 35
SECTION 5.14. Further Action................................................................. 36
SECTION 5.15. Seconded Employees............................................................. 36
</TABLE>
<PAGE> 4
iii
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.16. Business Plan.................................................................. 37
ARTICLE VI
TAX MATTERS
SECTION 6.01. Tax Indemnity.................................................................. 37
SECTION 6.02. Apportionment of Taxes......................................................... 38
SECTION 6.03. Returns and Payments........................................................... 39
SECTION 6.04. Contests....................................................................... 40
SECTION 6.05. Survival of Obligations........................................................ 42
SECTION 6.06. Conveyance Taxes............................................................... 42
SECTION 6.07. Tax Refunds, Credits and Other Payments........................................ 42
SECTION 6.08. Performance of Acts............................................................ 43
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller and the
Company............................................................ 43
SECTION 7.02 Conditions to Obligations of the Purchaser...................................... 44
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties..................................... 46
SECTION 8.02. Indemnification by the Seller.................................................. 47
SECTION 8.03. Tax Matters.................................................................... 49
SECTION 8.04. Indemnification by the Purchaser............................................... 49
SECTION 8.05. Indemnification Procedures..................................................... 50
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.01. Termination.................................................................... 51
SECTION 9.02. Effect of Termination.......................................................... 52
SECTION 9.03. Waiver......................................................................... 52
</TABLE>
<PAGE> 5
iv
ARTICLE X
GENERAL PROVISIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.01. Expenses...................................................................... 53
SECTION 10.02. Notices. ..................................................................... 53
SECTION 10.03. Public Announcements.......................................................... 55
SECTION 10.04. Headings...................................................................... 55
SECTION 10.05. Severability.................................................................. 55
SECTION 10.06. Entire Agreement.............................................................. 55
SECTION 10.07. Assignment.................................................................... 56
SECTION 10.08. No Third Party Beneficiaries.................................................. 56
SECTION 10.09. Amendment..................................................................... 56
SECTION 10.10. Arbitration................................................................... 56
SECTION 10.11. Governing Law................................................................. 58
SECTION 10.12. Counterparts.................................................................. 58
SECTION 10.13. Specific Performance.......................................................... 58
SECTION 10.14. No rescission................................................................. 58
</TABLE>
<PAGE> 6
SCHEDULE 1.01(a)
[TO COME]
<PAGE> 7
SCHEDULE 1.01(b)
[TO COME]
<PAGE> 8
GENERAL SHARE PURCHASE AGREEMENT (this "Agreement"), dated as
of ________, 1997, among KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V. (KLM Royal
Dutch Airlines), a public company incorporated in The Netherlands (the
"Seller"), GALILEO NEDERLAND BV, a Dutch private company with limited liability
(the "Company"), and GALILEO INTERNATIONAL PARTNERSHIP, a Delaware general
partnership, and any successor in interest thereto, including, without
limitation, the corporation or limited liability company formed in connection
with the IPO (the "Purchaser").
WHEREAS, the Seller has full right and title to 40 issued and
outstanding shares, nominal value NLG 1,000 per share, in the share capital of
the Company with numbers 1 through 40 (the "Shares"), which constitute all of
the issued and outstanding shares in the share capital of the Company; and
WHEREAS, the Seller desires to sell, and the Purchaser desires
to acquire, the Shares upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Accounting Principles" means the requirements of all relevant
laws and accounting principles generally accepted in The Netherlands with
respect to the preparation of financial statements and monthly accounts.
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"After-Tax Basis" means, (i) with respect to any Loss that is
required to be indemnified pursuant to Article VI or Article VIII on an
After-Tax Basis, that the indemnification payment will be calculated so as to
take into account both the deductibility or creditability by the indemnitee or
the Company for Tax purposes of the Loss being
<PAGE> 9
2
indemnified and the taxability to the indemnitee of the indemnifying payment
(including taxability of any payments made to gross up for the taxability of the
indemnifying payment), and (ii) with respect to any refund or credit that is
required to be paid on an After-Tax Basis pursuant to Section 6.07, that the
refund or credit payable by the Purchaser to the Seller will be calculated so as
to take into account both the deductibility by the Company for Tax purposes of
the payment of such refund or credit to the Seller and (a) the taxability to the
Company of the receipt of the refund or credit and (b) any tax to the Company or
the Purchaser (or any Affiliate thereof) in connection with any distribution of
the credit or refund (or any portion thereof) to the Purchaser (or any Affiliate
thereof).
"Agreement" or "this Agreement" means this Share Purchase
Agreement, dated as of , 1997, among the parties listed in the preamble
(including the Exhibits hereto and the Seller's Disclosure Schedule) and all
amendments hereto made in accordance with the provisions of Section 10.09.
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law or by the
applicable collective labour agreement ("CAO") to be closed in The Netherlands.
"Company Intellectual Property" means all trademarks,
trademark rights, trade names, trade name rights, patents, patent rights,
industrial models, inventions, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information used or held for use in connection with the
business of the Company as currently conducted or as contemplated (by existing
Company management) to be conducted, together with all applications currently
pending for any of the foregoing.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, attachment, usufruct, preferential arrangement or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.
<PAGE> 10
3
"Environment" means surface waters, groundwaters, surface
water sediment, soil, subsurface strata and ambient air.
"Environmental Claims" means any and all actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
notices of liability or potential liability, investigations, proceedings,
consent orders or consent agreements relating in any way to any Environmental
Law, any Environmental Permit or any Hazardous Material or arising from any
alleged injury or threat of injury to health, safety or the Environment.
"Environmental Law" means any Law, now or hereafter in effect
and as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to pollution or protection of the Environment, health or safety or to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required to operate the
business of the Company under any applicable Environmental Law.
"Governmental Authority" means any Dutch or foreign federal,
state or local government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority, other than any rules and regulations (whether
promulgated by order or otherwise) which apply generally to the computer
reservations system industry.
"Hazardous Materials" means (a) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls and (b) any other
chemicals, materials or substances regulated as toxic or hazardous or as
pollutant, contaminant or waste under any applicable Environmental Law.
"Income Taxes" means corporate income Taxes as defined in the
Dutch Corporate Income Tax Act of 1969 or any successor provisions or similar
non-Dutch levies.
"Independent Accounting Firm" means any one of the "big six"
accounting firms other than the Purchaser's accountants and the Seller's
accountants.
<PAGE> 11
4
"Law" means any federal, state, national, provincial,
municipal, local or foreign statute, law, ordinance, regulation, rule, code,
order, other requirement or rule of law.
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law (including without limitation, any Environmental Law),
Action or Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Material Adverse Effect" means any change in or effect on the
business of the Company that, when taken individually or together with all other
adverse changes and effects, is or is reasonably likely to be materially adverse
to the business, operations, properties, condition (financial or otherwise),
assets or Liabilities of the Company or prevents consummation of the
transactions contemplated hereby.
"Net Asset Test Reference Balance Sheet" means the balance
sheet (including the related notes and schedules thereto) of the Company, dated
as of March 31, 1997, prepared by the Seller, excluding (i) any indebtedness for
borrowed money of the Company and (ii) any Cash other than cash in the amount of
any checks outstanding, a copy of which is set forth in Section 3.06(a) of the
Seller's Disclosure Schedule.
"Net Assets" means the excess of total assets over total
liabilities of the Company shown on the Net Asset Test Reference Balance Sheet,
the Audited Net Asset Test Reference Balance Sheet, the Pre-Closing Balance
Sheet or the Seasonally Adjusted Net Asset Test Reference Balance Sheet, as
applicable.
"Ordinary Course Taxes" means Taxes, other than Income Taxes
or VAT, relating to periods (or portions thereof) prior to the Closing Date and
paid by the Company after the Closing Date in the ordinary course of business
and not as a result of an audit or examination by a government or Tax authority
or an administrative or judicial proceeding or a settlement or compromise
thereof in connection with a Tax previously paid or a Return previously filed.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for Taxes, assessments and governmental
charges or levies not yet due and payable; (b) Encumbrances imposed by law, such
as materialmen's, mechanics', carriers', workmen's and repairmen's liens and
other similar liens arising in the ordinary course of business securing
obligations; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations; and (d) minor survey exceptions, reciprocal easement agreements and
other customary
<PAGE> 12
5
encumbrances on title to real property that (i) were not incurred in connection
with any indebtedness for borrowed money of the Company, (ii) do not render
title to the property encumbered thereby unmarketable and (iii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity.
"Purchaser's Accountants" means KPMG Peat Marwick LLP,
independent accountants of the Purchaser.
"Real Property" means the real property leased or owned by the
Company.
"Return" means any return, report or form relating to a Tax or
Taxes.
"Seasonally Adjusted Net Asset Test Reference Balance Sheet"
means the Net Asset Test Reference Balance Sheet adjusted to multiply current
assets reflected thereon by the appropriate seasonal adjustment factors set
forth on Schedule 1.01(a) hereto and current liabilities by the appropriate
seasonal adjustment factors set forth on Schedule 1.01(b) hereto.
"Tax" or "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts, and other similar charges (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority (whether federal,
state, local, foreign or otherwise), including, without limitation: Income
Taxes, VAT, gift taxes, environmental levies, other community charges, any other
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll
(including, without limitation, wage Taxes), employment, social security
(including, without limitation, premiums), workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs duties, tariffs, and similar
charges.
"Tax Benefit" means the value, when actually received, of any
deduction, loss, credit or refund to the Purchaser, the Company or the Seller,
as the case may be.
"VAT" means Value Added Tax as defined in the Dutch Value
Added Tax Act of 1968 or any successor provisions or similar non-Dutch levies.
<PAGE> 13
6
SECTION 1.02. Other Defined Terms. Each of the following terms
is defined in the Section set forth opposite such term:
<TABLE>
<CAPTION>
Terms Section
----- -------
<S> <C> <C>
Agreement ..................................................................................Preamble
Arbitration Panel.........................................................................10.10(iii)
Arbitration Request.........................................................................10.10(i)
Assets.......................................................................................3.15(a)
Audited Net Asset Test Reference Balance Sheet..................................................5.09
Average Cash Amount..........................................................................2.05(b)
Award......................................................................................10.10(iv)
Business Plan...................................................................................5.16
Cash.........................................................................................2.05(b)
Cash Payment Amount..........................................................................2.05(b)
Claimant..................................................................................10.10(iii)
Closing.........................................................................................2.03
Closing Cash Amount..........................................................................2.05(e)
Closing Date....................................................................................2.03
Company.....................................................................................Preamble
Company Accrued Benefits.....................................................................5.11(c)
Company Charter Documents....................................................................3.02(a)
Company Licenses................................................................................3.13
Company Names................................................................................5.07(a)
Demand of Arbitration.......................................................................10.10(i)
Dispute Notice..............................................................................10.10(i)
Employee.....................................................................................5.15(a)
Employment Offer.............................................................................5.15(b)
Escrow Agent..............................................................................2.05(f)(i)
Financial Statements.........................................................................3.06(a)
Indemnified Party...............................................................................8.05
Indemnifying Party..............................................................................8.05
Independent Accounting Firm..............................................................2.04(b)(ii)
IPO.............................................................................................2.03
Loss.........................................................................................8.02(a)
Material Contracts...........................................................................3.12(a)
Measuring Period.............................................................................2.05(b)
New Pension Plan.............................................................................5.11(a)
Non-Disclosure Agreement.....................................................................5.03(a)
Old Pension Plan.............................................................................5.11(b)
Pre-Closing Balance Sheet.......................................................................5.10
Purchase Price..................................................................................2.02
</TABLE>
<PAGE> 14
7
<TABLE>
<CAPTION>
<S> <C> <C>
Purchaser...................................................................................Preamble
Purchaser Indemnified Party..................................................................8.02(a)
Respondent................................................................................10.10(iii)
SEC..........................................................................................5.03(a)
Seller......................................................................................Preamble
Seller's Disclosure Schedule.................................................................3.02(a)
Seller Indemnified Party.....................................................................8.04(a)
Shares......................................................................................Recitals
SITA.........................................................................................3.21(c)
Third Party Claim...............................................................................8.05
Transaction Agreement........................................................................7.01(f)
</TABLE>
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Shares. Upon the terms
and subject to the conditions of this Agreement, the Seller hereby agrees to
sell to the Purchaser at the Closing, and the Purchaser hereby agrees to
purchase from the Seller at the Closing, the Shares.
SECTION 2.02. Purchase Price. The purchase price for the
Shares shall be US$2,000,000 in cash (the "Purchase Price").
SECTION 2.03. Closing. Upon the terms and subject to the
conditions of this Agreement, the sale and purchase of the Shares shall take
place at a closing (the "Closing") to be held at the offices of [Shearman &
Sterling, 599 Lexington Avenue, New York, New York] at 10:00 a.m. New York time
on the day of the consummation of the proposed initial public offering by the
Purchaser (the "IPO"), or at such other place or at such other time or on such
other date as the Seller and the Purchaser may mutually agree upon in writing
(the day on which the Closing takes place being the "Closing Date").
SECTION 2.04. Closing Deliveries. (a) At the Closing and upon
payment of the Purchase Price, (i) the Seller and the Company shall deliver to
the Purchaser any documents required to be delivered by the Seller and the
Company pursuant to Section 7.02, (ii) the Seller shall transfer the Shares to
the Purchaser through the signing by the parties of a deed of transfer, which
will be passed by any civil law notary of Nauta Dutilh, and (iii) the Company
shall acknowledge the transfer of the Shares and shall enter such transfer in
its register of shareholders.
<PAGE> 15
8
(b) At the Closing and upon receipt of the documents described
in Section 2.04(a), the Purchaser shall deliver to the Seller (i) any documents
required to be delivered by the Purchaser pursuant to Section 7.01, and (ii) the
Purchase Price.
SECTION 2.05. Cash Mechanism. (a) Subject to the provisions of
this Section 2.05, at or immediately following the Closing, the Company will pay
to the Seller the Cash Payment Amount.
(b) For purposes of this Section 2.05, (i) the "Average Cash
Amount" means, subject to adjustment as set forth in Section 2.05(c), the amount
of cash that is equal to the simple average daily balance of cash, time
deposits, certificates of deposit, marketable securities and other short term
investments and cash equivalents, including the "current account" balance
between the Company and the Seller (whether positive or negative) ("Cash") of
the Company at the close of business on each Business Day during the Measuring
Period, (ii) "Measuring Period" means the period commencing at 12:01 a.m. on the
date of the month immediately preceding the month in which the Closing Date
occurs that is the same date of the month as the Closing Date (or if such date
is not a calendar date, the date that corresponds most closely to the date that
is the Closing Date) and ending at 11:59 p.m. on the day immediately preceding
the Closing Date, and (iii) "Cash Payment Amount" means the Average Cash Amount
less the checks issued by the Company that have not cleared on the Closing Date.
(c) The Average Cash Amount will be adjusted in the event the
Company makes any Cash distribution (in respect of the Shares) to the Seller
during the Measuring Period by subtracting the amount of any such distribution
from the daily amount of Cash in each of the days during the Measuring Period
immediately preceding the date of such distribution.
(d) During the Measuring Period, each of the Purchaser and the
Company will make all payments that are to be made to each other under existing
contractual arrangements or agreements in the ordinary course of business
consistent with past practice. In addition, during the Measuring Period, the
Company will conduct its business in the ordinary course consistent with past
practice, including, without limitation, not shortening or lengthening the
customary payment time for any of its payables or receivables and continuing its
purchasing and capital purchasing practices in accordance with past practice. To
facilitate the foregoing, (i) the Seller shall circulate to the relevant
personnel of the Company at least thirty days prior to the expected commencement
of the Measuring Period written instructions to such effect, (ii) the Company
will provide representatives of the Purchaser with access, at reasonable times,
to all offices, personnel, books and records of the Company that the Purchaser
may reasonably request for purposes of monitoring the compliance by the
<PAGE> 16
9
Company with this Section 2.05(d) and the calculation by the Company of the
Average Cash Amount, the Cash Payment Amount and the Closing Cash Amount in
accordance with this Section 2.05, and (iii) the parties will agree on mutually
agreeable procedures for implementing the cash transfers described in Section
2.05(e). During the period from 11:59 p.m. on the day immediately preceding the
Closing Date through the Closing, the Company will make no payments of cash
except pursuant to normal banking transactions, including check clearing or
deposits, that are not under the control of the Company, or pursuant to
contractual obligations with third parties that were previously disclosed to the
Purchaser or that were entered into in the ordinary course of business
consistent with past practice.
(e) On the Closing Date, the Company will inform each of the
Seller and the Purchaser of the (i) Average Cash Amount, as well as the
calculations resulting therein, (ii) the aggregate amount with respect to which
checks of the Company have been issued but not cleared on the Closing Date, and
(iii) the amount of Cash of the Company as of 12:01 a.m. on the Closing Date
(the "Closing Cash Amount"). If the Closing Cash Amount is less than the Cash
Payment Amount, then the Purchaser will make available to the Company such
difference and, subject to the provisions of Section 2.05(f), the Cash Payment
Amount will be paid to the Seller as set forth in Section 2.05(a). If the
Closing Cash Amount is greater than the Cash Payment Amount, then, subject to
the provisions of Section 2.05(f), the Cash Payment Amount will be paid to the
Seller as set forth in Section 2.05(a), and the difference between the Closing
Cash Amount and the Cash Payment Amount will be retained by the Company.
(f) (i) Prior to the Closing, the Purchaser and the Seller
shall enter into an Escrow Agreement, in substantially the form attached hereto
as Exhibit 2.05(f), with a third party selected by the Purchaser and reasonably
acceptable to the Seller (the "Escrow Agent"). In accordance with the terms of
the Escrow Agreement, the Seller will, on the Closing Date, deposit the sum of
NLG 500,000 with the Escrow Agent, which will hold such amount in an interest
bearing account until the day that is 90 days following the Closing Date, to be
managed and paid out in accordance with the Escrow Agreement and this Section
2.05.
(ii) Not later than 90 days after the Closing Date, the
Purchaser will deliver to the Seller its calculation of the Average Cash Amount
and the aggregate amount with respect to which checks of the Company had been
issued but not cleared on the Closing Date, including a correction of any
manifest errors set forth in the Company's calculation of such amounts pursuant
to Section 2.05(e). In the event the Purchaser determines, within such 90 day
period following the Closing Date, that the agreements of the Company contained
in Section 2.05(d) were not complied with and, as a result of such
non-compliance, the Average Cash Amount was either greater or
<PAGE> 17
10
lesser than the average amount of Cash that the Company would have had during
the Measuring Period had such provisions been complied with, the Purchaser will
provide written notice to the Seller to such effect, specifying the amount of
the difference and its reasons for such determination. In the absence of any
written notice of dispute delivered by the Seller to the Purchaser and the
Escrow Agent within 10 days after receipt of the Purchaser's written notice as
to such determination and the amount of such difference, (x) in the event the
Average Cash Amount is greater than it would have been, the Purchaser will
receive from the Escrow Agent and the Seller, if appropriate, a cash payment
equal to the amount of such difference, together with interest thereon, as set
forth in clause (iii) below, and (y) in the event the Average Cash Amount is
less than it would have been, the Seller will receive from the Company or the
Purchaser a cash payment equal to the amount of such difference, together with
interest thereon, as set forth in clause (iii) below. In the event the Seller
delivers such a written notice disputing such determination or the amount of
such difference, such dispute will be submitted for resolution to the
Independent Accounting Firm, which will resolve such dispute within 30 days of
the date of such submission and whose decision will be final and binding on the
Seller and the Purchaser. The fees and expenses of the Independent Accounting
Firm will be allocated between the Purchaser, on the one hand, and the Seller,
on the other hand, in the same proportion that the aggregate amount of the
difference so submitted to the Independent Accounting Firm that is
unsuccessfully disputed by the Seller, on the one hand, or the Purchaser, on the
other hand, bears to the total amount of the difference so submitted.
(iii) In the event any payment is to be made to the Purchaser
pursuant to clause (ii) above, the Escrow Agent will pay such amount to the
Purchaser, together with the appropriate amount of interest thereon, and if such
payment is less than the amount of such difference, the Purchaser will recover
such excess amount from the Seller, together with interest thereon from the
Closing Date to and including the date of payment by the Seller to the Purchaser
at the Interest Rate (as such term is defined in the Escrow Agreement), pursuant
to the provisions of Section 8.02 (except that the provisions of Section
8.02(b)(i) and (ii) will not apply). In the event any payment is to be made to
the Seller pursuant to clause (ii) above, the Company or the Purchaser will pay
such amount to the Seller, together with interest thereon from the Closing Date
to and including the date of payment by the Company or Purchaser to the Seller
at the Interest Rate, pursuant to the provisions of Section 8.04. In the event
any amount remains in the Escrow Fund (as such term is defined in the Escrow
Agreement) on the later of (A) the 90th day following the Closing Date or (B)
the date on which any dispute pursuant to Section 2.5(f)(ii) has been resolved,
all amounts held by the Escrow Agent on such day, after giving effect to any
payments to be made to the Purchaser hereunder, will be paid to the Seller,
including all interest accrued on the remaining principal amount.
<PAGE> 18
11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, the Seller hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01. Organization, Authority and Qualification of the
Seller. The Seller is a corporation duly organized and validly existing under
the laws of the Netherlands and has all necessary power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by the Seller, the performance by the Seller of its obligations
hereunder and the consummation by the Seller of the transactions contemplated
hereby have been duly authorized by all requisite action on the part of the
Seller. This Agreement has been duly executed and delivered by the Seller and
(assuming due authorization, execution and delivery by the Purchaser) this
Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity.
SECTION 3.02. Organization, Authority and Qualification of the
Company. (a) The Company is a private company with limited liability ("besloten
vennootschap met beperkte aansprakelijkheid ") duly incorporated and validly
existing under the laws of The Netherlands with B.V. number 34074914 and (except
in those jurisdictions set forth in Section 3.02(a) of the disclosure schedule
which has been delivered by the Seller to the Purchaser prior to the date hereof
and which is attached hereto (the "Seller's Disclosure Schedule")) is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary. The Company has
all the necessary power and authority to own, operate or lease the properties
and assets owned, operated or leased by it and to carry on its business as it
has been and is currently conducted by the Company. All material actions taken
by the Company have been duly authorized, and the Company has not taken any
material action that in any respect conflicts with or results in a violation of
any provision of the Company's organizational documents (the "Company Charter
Documents"). A true and correct copy of the Company Charter Documents, as in
effect on the date hereof, has been delivered by the Seller to the Purchaser.
The execution and delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all requisite
action on
<PAGE> 19
12
the part of the Company. This Agreement has been duly executed and delivered by
the Company, and (assuming due authorization, execution and delivery by the
Purchaser) this Agreement constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
(b) There has been no proposal made or resolution adopted (by
the competent corporate bodies) for the dissolution or liquidation of the
Company, nor, to the best of the Seller's and the Company's knowledge, do any
circumstances exist which may result in the dissolution or liquidation of the
Company, and no proposal has been made or resolution adopted for the statutory
merger ("juridische fusie") of the Company with any other entity.
(c) The Company has neither been declared bankrupt nor been
granted a moratorium of payments ("surceance van betaling"), nor has it applied
for a declaration of bankruptcy or a moratorium of payments.
(d) No resolution has been passed or adopted by any corporate
body of the Company which has not been fully executed or implemented.
(e) The Company is registered in the Trade Register at
[_________] (number [ ]). The extract dated ____________ attached hereto as
Exhibit 3.02(e) is correct and complete as of the date thereof and the
information contained therein has not been modified by any later filing.
(f) The Company has no managing directors ("statutair
directeuren"), supervisory directors ("commissarissen") or proxyholders
("procuratiehouders") other than the persons named in the extract(s) referred to
in Section 3.02(e).
(g) There are no other corporations, partnerships or limited
liability companies in which the Company owns, of record or beneficially, any
direct or other interest or any right (contingent or otherwise) to acquire the
same. The Company is not, directly or indirectly, a participant in any joint
venture.
SECTION 3.03. Shares. The authorized share capital of the
Company consists of 200 ordinary shares with a nominal value of NLG 1,000 each,
of which 40 shares have been validly issued and, of the issued shares, no shares
have been repurchased and redeemed by the Company. There are no grounds on the
basis whereof any issue of the shares may be invalidated. As of the date hereof,
the Seller has full right and title to the Shares. None of the Shares was issued
in violation of
<PAGE> 20
13
any preemptive rights. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any character relating
to the Shares or any other equity interests of the Company or obligations of the
Seller to issue or sell any shares of capital stock of the Company or any other
interest in the Company. There are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any equity interests of or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person. The Shares constitute all the
issued and outstanding equity interests in the Company, are fully paid up and
are free and clear of all Encumbrances. Upon consummation of the transactions
contemplated by Article II, the Purchaser will own 100% of all the issued and
outstanding shares of the Company's capital stock, free and clear of all
Encumbrances (other than Encumbrances created by the Purchaser). There are no
voting trusts, proxies or other agreements or understandings in effect with
respect to the voting or transfer of any of the Shares. No depository receipts
of shares in the Company's capital stock have been issued with the cooperation
of the Company. Other than a dividend to be paid in respect of the fiscal year
ending on March 31, 1997, since March 31, 1997, no (interim) dividend or other
distribution has been declared on the Shares or has been paid or agreed to be
paid from the general reserves of the Company.
SECTION 3.04. No Conflict. The execution and delivery of this
Agreement by the Seller and the Company does not, and the performance of this
Agreement by the Seller and the Company will not as of the Closing Date, (a)
violate, conflict with or result in the breach of any provision of the articles
of association ("statuten") of the Seller or the Company as in effect on the
date hereof or as of the Closing Date, as applicable, (b) conflict with or
violate (or cause an event which could have a Material Adverse Effect as a
result of) any Law or Governmental Order applicable to the Seller or the
Company, or any of their respective assets, properties or businesses, as in
effect on the date hereof or as of the Closing Date, as applicable, or (c)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Shares or on any of the assets or
properties of the Company pursuant to, any note, bond, mortgage or indenture, or
material contract, agreement, lease, sublease, license, sublicense, permit,
franchise or other instrument or arrangement to which the Seller or the Company
is a party or by which any of the Shares or any of the Company's assets or
properties is bound or affected; provided, however, that any breach of this
clause (c) that results directly from any act or omission of the Purchaser or
one of its Affiliates after the Closing Date shall not be deemed a breach of
this clause (c) for purposes of this Agreement.
<PAGE> 21
14
SECTION 3.05. Consents and Approvals. The execution, delivery
and performance of this Agreement by the Seller and the Company do not and will
not require any consent, approval, authorization or other order of, action by,
filing with or notification to any Governmental Authority or any other Person,
except for the consents, approvals and authorizations set forth in Section 3.05
of the Seller's Disclosure Schedule.
SECTION 3.06. Financial Information and Books and Records. (a)
True and complete copies of the balance sheet of the Company for each of the
three fiscal years ended as of March 31, 1995, March 31, 1996 and March 31,
1997, and the related statements of income, together with all related notes and
schedules thereto, accompanied by the reports thereon of the Seller's internal
auditors (collectively referred to herein as the "Financial Statements") have
been delivered by the Seller to the Purchaser. The Financial Statements and the
Net Asset Test Reference Balance Sheet (i) were prepared in accordance with the
books of account and other financial records of the Company, (ii) present fairly
the financial condition and results of operations of the Company as of the dates
thereof or for the periods covered thereby, (iii) have been prepared in
accordance with the Accounting Principles applied on a consistent basis, (iv)
include all adjustments (consisting only of normal adjustments) that are
necessary for a fair presentation of the financial condition of the Company and
the results of the operations of the Company as of the dates thereof or for the
periods covered thereby, except in the case of the Net Asset Test Reference
Balance Sheet (a copy of which is set forth in Section 3.06(a) of the Seller's
Disclosure Schedule), which excludes (A) any indebtedness for borrowed money of
the Company and (B) any Cash other than cash in the amount of any checks
outstanding, and (v) are not materially distorted by items of an unusual or
non-recurring nature nor are they materially affected by the results of
transactions with Persons directly or indirectly related to the Company or the
Seller (except as expressly disclosed in the explanatory notes thereto).
(b) The books of account and other financial records of the
Company: (i) reflect all items of income and expense and all assets and
Liabilities required to be reflected therein in accordance with the Accounting
Principles and (ii) are in all material respects complete and correct, and do
not contain or reflect any material inaccuracies or discrepancies.
(c) Except as set forth in Section 3.06(c) of the Seller's
Disclosure Schedule, the minute books of the Company contain accurate records of
all meetings and accurately reflect all other actions taken by the Company or by
the Seller as sole stockholder thereof. Complete and accurate copies of all such
minute books have been provided to the Purchaser.
<PAGE> 22
15
SECTION 3.07. No Undisclosed Liabilities. There are no
Liabilities of the Company, other than Liabilities (i) reflected or reserved
against on the Net Asset Test Reference Balance Sheet, (ii) incurred since March
31, 1997 in the ordinary course of the business, consistent with the past
practice, of the Company or (iii) disclosed in this Agreement or in the Seller's
Disclosure Schedule and which do not and could not have a Material Adverse
Effect.
SECTION 3.08. Conduct in the Ordinary Course, Absence of
Certain Changes, Events and Conditions. Except as disclosed in Section 3.08 of
the Seller's Disclosure Schedule, since March 31, 1997, the business of the
Company has been conducted in the ordinary course and consistent with past
practice. As amplification and not limitation of the foregoing, since March 31,
1997, except as disclosed in Section 3.08 of the Seller's Disclosure Schedule,
the Company has not:
(i) permitted or allowed any of its assets or properties
(whether tangible or intangible) to be subjected to any Encumbrance,
other than Permitted Encumbrances;
(ii) except in the ordinary course of business consistent with
past practice, discharged or otherwise obtained the release of any
Encumbrance or paid or otherwise discharged any Liability, other than
current liabilities reflected on the Net Asset Test Reference Balance
Sheet and current liabilities incurred in the ordinary course of
business consistent with past practice since March 31, 1997;
(iii) made any loan to, guaranteed any indebtedness of or
otherwise incurred any indebtedness on behalf of any Person;
(iv) redeemed any of the Shares;
(v) except as specifically requested by the Purchaser or as
required to accommodate changes in the Purchaser's business practices,
made any material changes in the customary methods of operations of the
Company including, without limitation, practices and policies relating
to marketing, selling and pricing;
(vi) merged with, entered into a consolidation with or
acquired any interest in any Person or acquired a substantial portion
of the assets or business of any Person or any division or line of
business thereof, or otherwise acquired any material assets;
<PAGE> 23
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(vii) made any capital expenditure or commitment for any
capital expenditure in excess of the capital expenditures contemplated
by the planned budget, a true and complete copy of which has been
provided to the Purchaser;
(viii) sold, transferred, leased, subleased, licensed or
otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible
assets) with an individual value in excess of NLG 25,000;
(ix) issued or sold any Shares or other equity interest or any
option, warrant or other right to acquire the same of, or any other
interest in, the Company, except as contemplated by this Agreement;
(x) except for agreements, arrangements or transactions with
the Purchaser or having an individual value of less than NLG 25,000,
entered into any agreement, arrangement or transaction with any of its
managing directors, supervisory directors, any employees of the Seller
who are seconded to the Company, or any of its stockholders (or with
any relative, beneficiary, spouse or Affiliate of such Person):
(xi) (A) granted any increase, or announced any increase, in
the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by the Company to any of its employees,
including, without limitation any increase or change pursuant to any
Plan, or (B) established or increased or promised to increase any
benefits under any Plan, in either case except for ordinary increases
consistent with the past practices of the Company:
(xii) revalued any assets of the Company other than in
accordance with Applicable Accounting Principles;
(xiii) amended, terminated, canceled or compromised any
material claims of the Company or waived any other rights of material
value to the Company;
(xiv) made any material change in any method of accounting or
accounting practice or policy used by the Company;
(xv) amended or restated the organizational documents of the
Company;
<PAGE> 24
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(xvi) made any express or deemed election or settled or
compromised any liability that is the subject of a dispute with any
government or taxing authority, with respect to (A) Taxes of the
Company or (B) Taxes, insofar as Company items are involved, of the
Seller;
(xvii) suffered any casualty loss or damage with respect to
any of the Assets which individually has a replacement cost of more
than NLG 25,000, which loss or damage shall not have been covered by
insurance;
(xviii) suffered any Material Adverse Effect; or
(xix) agreed, whether in writing or otherwise, to take any of
the actions specified in this Section 3.08 or granted any options to
purchase, rights of first refusal, rights of first offer or any other
similar rights or commitments with respect to any of the actions
specified in this Section 3.08.
SECTION 3.09. Violations and Litigation. (a) Except as set
forth in Section 3.09 of the Seller's Disclosure Schedule, there are no Actions
by or against the Company (or by or against the Seller or any Affiliate thereof
and relating to the Company or its business) or affecting any of the Assets,
pending or threatened before any Governmental Authority. Neither the Company,
any of the Assets nor the Seller is subject to any Governmental Order, nor are
there any such Governmental Orders threatened to be imposed by any Governmental
Authority) which has or could reasonably be expected to have a Material Adverse
Effect.
(b) The Company is not a party to any agreement or arrangement
which contravenes the Act on Economic Competition ("Wet Economische
Mededinging") or which is or should have been registered under the
aforementioned Act or was or should have been notified to the European
Commission under Article 85 of the EC Treaty.
(c) The Company has received no notice, summons or official
request of any kind from the European Commission or from the authorities in the
Netherlands or in any other country, competent in anti-trust matters, with
respect to any aspect of the Company's activities.
SECTION 3.10. Compliance with Laws. (a) The Company has
conducted and continues to conduct its business in accordance with all Laws and
Governmental Orders applicable to the Company or any of the Assets or such
business, and the Company is not in violation of any such Law or Governmental
Order.
<PAGE> 25
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(b) Section 3.10 of the Seller's Disclosure Schedule sets
forth a brief description of each Governmental Order applicable to the Company
or any of the Assets or its business and no such Governmental Order has or could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.11. Environmental and Other Permits and Licenses;
Related Matters. (a) (i) Neither the Seller nor the Company has received notice
of any violation of any Environmental Laws; (ii) the Company has obtained all
Environmental Permits and is and has been in material compliance with their
requirements; (iii) except as disclosed in Section 3.11(a)(iii) of the Seller's
Disclosure Schedule, or as permitted by or as would not result in any material
liability under applicable Environmental Laws, there are no underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been treated, stored
or disposed on any of the owned, or leased properties or, with respect to the
period of the Company's ownership, tenancy or operation of such property, on any
real property formerly owned, leased or occupied by the Company; (iv) there is
no asbestos or asbestos-containing material on any of the owned or leased
properties, except as permitted by or as would not result in any material
liability under applicable Environmental Laws; (v) the Company has not released,
discharged or disposed of an amount of Hazardous Materials on any of the owned
or leased properties or on any real property formerly owned, leased or occupied
by the Company in any manner or quantity which would have a material effect on
the Company; (vi) the Company is not undertaking, has not completed, and is not
required to conduct, any investigation or assessment or remedial or response
action relating to any release, discharge or disposal of or contamination with
an amount of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law which would have a material effect on the
Company; and (vii) there are no past, pending or threatened in writing
Environmental Claims against the Company, or any of its properties, and there
are no facts which can form the basis of any such Environmental Claim.
(b) Except as disclosed in Section 3.11(b) of the Seller's
Disclosure, Schedule, there are no environmental audit reports, studies or
analyses in the possession of the Seller or the Company or under their control
relating to the owned or leased properties or the operations of the Company.
SECTION 3.12. Material Contracts. (a) Section 3.12(a) of the
Seller's Disclosure Schedule lists each of the following contracts and
agreements (including, without limitation, oral contracts and agreements) of the
Company (such contracts and agreements being "Material Contracts"):
<PAGE> 26
19
(i) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Company is a party under which the Company can reasonably be
expected to pay or be paid at least NLG 50,000 during the course of the
twelve months following the date hereof;
(ii) all management contracts and contracts with independent
contractors or consultants (or similar arrangements) to which the
Company is a party, which are not cancelable without penalty or further
payment and without more than 30 days' notice, and under which the
Company can be reasonably expected to pay or be paid at least NLG
25,000 during the course of the twelve months following the date
hereof;
(iii) all contracts and agreements relating to Indebtedness of
the Company;
(iv) any agreements that are material to the business of the
Company and that are currently in effect with subscribers that have
generated annual booking fees of US$250,000 or more per annum over the
course of any of the last three fiscal years;
(v) all contracts and agreements with any Governmental
Authority to which the Company is a party, and under which the Company
can be reasonably expected to pay or be paid at least NLG 25,000 during
the course of the twelve months following the date hereof;
(vi) all contracts and agreements that limit or purport to
limit the ability of the Company to compete in any line of business or
with any Person or in any geographic area or during any period of time;
(vii) all contracts and agreements between or among the
Company and the Seller or an Affiliate of the Seller; and
(viii ) all other contracts and agreements whether or not made
in the ordinary course of business, which are material to the Company
or the conduct of its businesses or the absence of which would have a
Material Adverse Effect.
(b) Each Material Contract: (i) is valid and binding on the
respective parties thereto and is in full force and effect and (ii) upon
consummation of the transactions contemplated by this Agreement, except to the
extent that any consents set forth in Section 3.05 of the Seller's Disclosure
Schedule are not obtained,
<PAGE> 27
20
shall continue in full force and effect without penalty or other adverse
consequence. The Company is not in breach of, or default under, any Material
Contract. The Seller has furnished the Purchaser with true and complete copies
of all Material Contracts.
(c) To the best knowledge of the Seller and the Company, no
other party to any Material Contract is in breach thereof or default thereunder
(d) There is no contract, agreement or other arrangement
granting any Person any preferential right to purchase, other than in the
ordinary course of business consistent with past practice, any of the properties
or assets of the Company.
(e) Attached as Exhibit 3.12(e) hereto are complete and
correct copies of any contracts between the Company and Getronics relating to
services to be provided by Vitel.
SECTION 3.13. Intellectual Property. The Company owns or
possesses adequate licenses or other valid rights to use all of the Company
Intellectual Property, including, without limitation, Galileo View, which is
material to the conduct of the business of the Company, including a right to
sublicense Galileo View, and there is no assertion or claim challenging the
validity of such Company Intellectual Property. There are no infringements of
any Company Intellectual Property. There are no pending or threatened
interferences, reexaminations, oppositions or nullities involving any patents,
patent rights or applications therefor of the Company which are material to the
conduct of the business of the Company. Section 3.13 of the Seller's Disclosure
Schedule lists each material license or other agreement pursuant to which the
Company has the right to use Company Intellectual Property utilized in
connection with any services provided by the Company (the "Company Licenses").
There is no breach or violation of any Company License by the Company or by any
third party or threatened or actual loss of rights accruing to the Company under
any Company License. Each Company License is a legal, valid and binding
agreement of the Company and, to the best knowledge of the Seller and the
Company, each Company License is a legal, valid and binding agreement of the
other parties thereto. The consummation of the transactions contemplated by this
Agreement will not result in the termination of, or any modification to, any
Company License, except where the foregoing would not have a material effect on
the conduct of the business of the Partnership. The Company has taken reasonable
measures to maintain the confidentiality of the know-how of the Company, the
value of which to the Company is dependent upon the maintenance of the
confidentiality thereof. The Company has not licensed or otherwise permitted the
use by any third party of any proprietary information on terms or in a manner
that is reasonably likely to have a Material Adverse Effect. The conduct of the
business of the Company as currently
<PAGE> 28
21
conducted or as currently contemplated (by existing Company management) to be
conducted does not and, to the best knowledge of the Seller and the Company,
will not infringe upon or conflict with, in any way, any license, trademark,
trademark right, trade name, trade name right, patent, patent right, industrial
model, invention, service mark or copyright of any third party that is
reasonably likely to be material to the Company's operations.
SECTION 3.14. Real Property and Leases. (a) Set forth on
Section 3.14(a) of the Seller's Disclosure Schedule is a list of all Real
Property.
(b) The Company has sufficient title or leasehold interests to
all its Real Property to conduct its business as currently conducted or as
contemplated (by existing Company management) to be conducted.
(c) All leases of real property leased for the use or benefit
of the Company to which the Company is a party which are material, individually
or in the aggregate, to the business of the Company, and all amendments and
modifications thereto are in full force and effect and have not been modified or
amended, and there exists no default under any such lease by the Company, nor
any event which with notice or lapse of time or both would constitute a default
thereunder by the Company, which would permit any such lease to be terminated by
the other party thereto.
(d) To the extent that any of the Real Property has been
leased with value added tax, such tax has been applied in the manner prescribed
by Law and within the statutory periods.
SECTION 3.15. Assets. (a) The Company owns, leases or has the
legal right to use all material properties and assets, including, without
limitation, the Company Intellectual Property, used or intended to be used in
the conduct of its business or otherwise owned, leased or used by the Company
and, with respect to contract rights, is a party to and enjoys the right to the
benefits of all material contracts, agreements and other arrangements used or
intended to be used by the Company or in, or relating to the conduct of its
business (all such properties, assets and contract rights being the "Assets").
Set forth on Section 3.15(a) of the Seller's Disclosure Schedule is a list of
all of the Assets as of the date hereof. The Company has good and marketable
title to, or, in the case of leased or subleased Assets, valid and subsisting
leasehold interests in, all the Assets, free and clear of all Encumbrances,
except for Permitted Encumbrances.
(b) The Assets constitute all the material properties, assets
and rights forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of, the business
(as currently
<PAGE> 29
22
conducted by existing Company management) of the Company. At all times since
March 31, 1997, the Company has caused the Assets to be maintained in accordance
with good business practice, and the Assets are generally in good operating
condition and repair and are suitable for the purposes for which they are used
and intended, except for ordinary wear commemorate with the age and depreciated
value of such Assets.
(c) Following the consummation of the transactions
contemplated by this Agreement, the Company will continue to own, pursuant to
good and marketable title, or lease, under valid and subsisting leases, or
otherwise retain its interest in the Assets without incurring any penalty or
other adverse consequence, including, without limitation, any increase in
rentals, royalties, or licenses or other fees imposed as a result of, or arising
from, the consummation of the transactions contemplated by this Agreement
(except, with respect to contractual arrangements to the extent that any
consents set forth in Section 3.05 of the Seller's Disclosure Schedule are not
obtained). Immediately following the Closing, (i) in the case of books and
records other than Tax-related books and records, the Company shall own or
possess all documents, books, records, agreements and financial data of any sort
used by the Company which is material to the conduct of its business, and (ii)
in the case of Tax-related books and records (including all information
(including copies of Returns, original work papers, and source documents (or
copies thereof)) relating to any and all Tax filings of the Company), the
Company shall own or possess all of such books and records.
SECTION 3.16. Labor Matters. (a) On the Closing Date, no
person will have, or will at any time have had, a (full-time or part time)
employment agreement with the Company.
(b) There is no dispute pending (or threatened) with respect
to any of the Employees. There have been no collective labor disputes at the
Company since January 1, 1992.
(c) The Company has at all times complied, and continues to
comply, in all material respects with applicable labor laws and regulations and
no non-compliance with such laws has had or could reasonably be expected to have
a Material Adverse Effect.
(d) The Company has at all times complied, and continues to
comply, with all European Union, national, provincial and municipal laws,
provisions, regulations and orders in respect of employment and employment
practices, including, without limitation, in respect of labor circumstances,
work place protection, hygiene, health and safety protection.
<PAGE> 30
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(e) There have been no serious industrial accidents at the
Company since January 1, 1992, and no industrial accident at the Company may
reasonably be expected to lead to a claim against the Company which would not be
fully covered by insurance for the continued benefit of the Company after the
Closing Date. No Employee or former seconded employee of the Company has
experienced any employment-related illnesses.
(f) Since January 1, 1997, the Seller has not granted or
promised to grant to any Employee any salary increase, bonus or other emolument,
other than those required by law or made pursuant to collective bargaining
agreements.
(g) The Seller has obtained all licenses required for the
secondment of the Employees.
SECTION 3.17. Taxes. Except as set forth in Section 3.17 of
the Seller's Disclosure Schedule, (a) (i) all returns and reports in respect of
Taxes required to be filed with respect to the Company with respect to Taxes of
the Company for all periods ending on or before the Closing Date have been
timely filed (or will be timely filed) by the Company or any other entity which
by law is required to do such filing for the Company; (ii) all Taxes required to
be shown on such returns and reports or otherwise due have been or will be
timely paid; (iii) all returns and reports relating to Income Taxes are true,
correct and complete and all Returns, if any, and reports of the Company or any
other entity which by law is required to file such returns and reports for the
Company relating to Taxes other than Income Taxes are true, correct and complete
in all material respects; (iv) no adjustment relating to such returns has been
proposed in writing formally or informally by any Tax authority and no basis
exists for any such adjustment; (v) there are no pending or, to the best
knowledge of the Seller after due inquiry, threatened actions or proceedings for
the assessment or collection of Taxes against the Company or any other entity
for which the Company can be held liable by law; (vi) there are no Tax liens on
any assets of the Company except liens for Taxes not yet due and payable; (vii)
the Company has not been at any time a member of any partnership or joint
venture or the holder of a beneficial interest in any trust for any period for
which the statute of limitations for any Tax has not expired; (viii) there are
no outstanding waivers or agreements extending the statute of limitations for
any period with respect to any Tax to which the Company may be subject; (ix) the
Company does not have any income reportable for a period ending after the
Closing Date but attributable to the sale of property or the provision of
services (e.g., an installment sale) occurring in or a change in accounting
method made for a period ending on or prior to the Closing Date which resulted
in a deferred reporting of income from which economically accrued in a period
ending on or before the Closing Date from such transaction or from such change
in accounting method; (x) there are no requests by any Tax authority for
<PAGE> 31
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information currently outstanding with respect to Taxes concerning the Company;
(xi) there are no proposed reassessments of any property owned by the Company or
other taxpayer specific proposals that could increase the amount of any Tax to
which the Company would be subject, (xii) no power of attorney that is currently
in force has been granted with respect to any matter relating to Taxes of the
Company, and (xiii) the Company is not doing business or engaged in a trade or
business in any jurisdiction in which it has not filed all required Returns
including Returns relating to Income Taxes and VAT.
(b) For purposes of the Seller's indemnification of the
Purchaser pursuant to Section 6.01, the representations in Section 3.17(a) shall
be deemed to have been made with no exception for items disclosed in Section
3.17 of the Disclosure Schedule or otherwise.
(c) (i) Section 3.17 of the Seller's Disclosure Schedule lists
all Returns filed by or on behalf of the Company for taxable periods ended on or
after January 28, 1988, indicates for which jurisdictions Returns relating to
the Company have been filed on the basis of fiscal unity or on the basis of a
consolidated, combined or unitary group, indicates the most recent Return for
each relevant jurisdiction and type of Tax for which an audit has been completed
or the statute of limitations has lapsed and indicates all Returns that
currently are the subject of audit; (ii) the Seller has made available to the
Purchaser correct and complete copies of all Returns, if any, examination
reports, preliminary and final corporate income tax assessments, accounts and
statements of deficiencies assessed against or agreed to by the Company since
January 28, 1988; and (iii) the Seller has delivered to the Purchaser a true and
complete copy of any tax-sharing or allocation agreement or arrangement to which
the Company is a party and a true and complete description of any such unwritten
or informal agreement or arrangement.
SECTION 3.18. Insurance. (a) Section 3.18 of the Seller's
Disclosure Schedule sets forth a complete list of all material policies of
insurance (including without limitation, errors and omissions insurance) that
the Company has in effect.
(b) With respect to each such insurance policy: (i) the policy
is legal, valid, binding and enforceable in accordance with its terms and,
except for policies that have expired under their terms in the ordinary course,
is in full force and effect; (ii) the Company is not in breach or default
(including any breach or default with respect to the payment of premiums or the
giving of notice), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default or permit termination or
modification, under the policy; (iii) no party to the policy has repudiated or
given notice of an intent to repudiate, any provision thereof;
<PAGE> 32
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and (iv) to the best knowledge of the Seller and the Company after due inquiry,
no insurer on the policy has been declared insolvent or placed in receivership,
conservatorship or liquidation.
(c) Section 3.18(c) of the Seller's Disclosure Schedule sets
forth a general description of all risks of a nature generally insured against
which the Company is self-insured or which are covered under any risk retention
program in which the Company participates.
(d) All material assets, properties and risks of the Company
are covered by valid and, except for policies that have expired under their
terms in the ordinary course, currently effective insurance policies or binders
of insurance (including, without limitation, general liability insurance,
property insurance and workers' compensation insurance) issued in favor of the
Seller, in each case with responsible insurance companies, in such types and
amounts and covering such risks as are consistent with customary practices and
standards of companies engaged in businesses and operations similar to those of
the Seller.
SECTION 3.19. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Seller or the Company. Any amounts owing for
services provided to the Company by any Person in connection with the
transactions contemplated by this Agreement or any other transaction involving
the Company (including, without limitation, any other sale of the Company or
public offering of the Company) will be settled by the Company prior to the
Closing Date or by the Seller.
SECTION 3.20. Year 2000 Compliance. As evidenced by the
letters set forth in Section 3.20 of the Seller's Disclosure Schedule, and
pursuant to reasonable follow-up efforts following the delivery of such letters,
the Seller and the Company have used their best efforts to obtain from
Microsoft, EXACT, CSC and Support Magic a warranty that all software licensed
from such Persons is Year 2000 compliant or will be Year 2000 compliant, in each
case at no cost to the Company or the Purchaser, in sufficient time to avoid any
disruption to the Company's business. Year 2000 compliance is not relevant to
any other software owned by the Company or licensed by the Company pursuant to a
Company License (other than any software licensed from the Purchaser), nor is it
relevant to any other products used by the Company in connection with its
business (other than any product obtained from the Purchaser). For purposes of
this Section 3.20, such software and such other products shall be deemed to be
Year 2000 compliant to the extent they can manage and manipulate data involving
the transition of dates from 1999 to 2000 without functional or data abnormality
and without inaccurate results related to such dates.
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SECTION 3.21. Network Services. (a) A complete and correct
summary of the categories of network services the Seller provides to the
Company, together with the terms on which the Seller provides such network
services to the Company, is set forth in Section 3.21(a) of the Seller's
Disclosure Schedule.
(b) Neither the Seller nor any of its Affiliates (other than
the Company) is a party to the agreement between the Company and Societe
Internationale de Telecommunications Aeronautiques ("SITA") pursuant to which
SITA provides network services to the Company, and the Company is the only party
that is billed for any services provided by SITA thereunder.
(c) The Company does not have any liability to the Seller for
breakage fees (or any other liabilities or costs) relating to the provision of
network services by the Seller to the Company.
SECTION 3.22. Capital Contributions. Any Taxes relating to, or
arising out of, any capital contributions made to the Company by the Seller are
and will be for the account of the Seller.
SECTION 3.23. Relationship With Ogilvy & Mather. A complete
and correct summary of the categories of services the Company provides to Ogilvy
& Mather, together with the terms on which the Company provides such services,
is set forth in Section 3.23 of the Seller's Disclosure Schedule.
SECTION 3.24. Certain Arrangements. (a) A complete and correct
summary of the terms and conditions on which the Company provides support
payments to multinational travel providers is set forth in Section 3.24(a) of
the Seller's Disclosure Schedule.
(b) A complete and correct summary of the terms and conditions
of any warranty or indemnification obligation provided by the Company to the
lessor of any Real Property formerly occupied by the Company with respect to
environmental liabilities is set forth in Section 3.24(b) of the Seller's
Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller and the Company to enter into
this Agreement, the Purchaser hereby represents and warrants to the Seller and
the Company as follows:
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SECTION 4.01. Organization, Authority and Qualification of the
Purchaser. The Purchaser is a general partnership, and on or prior to the
Closing will be a corporation or a limited liability company, duly organized and
validly existing under the laws of the State of Delaware and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified would not adversely affect the ability of the
Purchaser to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement. The Purchaser has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on its part. This Agreement has been duly executed and delivered by the
Purchaser and (assuming due authorization, execution and delivery by the Seller)
this Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity.
SECTION 4.02. No Conflict. Except as may result from any facts
or circumstances relating solely to the Seller or the Company, the execution,
delivery and performance of this Agreement by the Purchaser do not and will not
(a) violate, conflict with or result in the breach of any provision of the
Purchaser's Partnership Agreement, (b) conflict with or violate any Law or
Governmental Order applicable to the Purchaser or [(c) except for the Credit
Agreement dated as of July 3, 1996, among the Purchaser, the banks parties
thereto, the letter of credit issuing banks named therein and Morgan Guaranty
Trust Company of New York as agent,] conflict with or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation, or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of the Purchaser pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which the Purchaser is a party
or by which any of such assets or properties are bound or affected which would
have a material adverse effect on the ability of the Purchaser to consummate the
transactions contemplated by this Agreement.
SECTION 4.03. Governmental Consents and Approvals. The
execution, delivery and performance of this Agreement by the Purchaser do not
and
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will not require any consent, approval, authorization or other order of, action
by, filing with, or notification to, any Governmental Authority[, except as
described in a writing given to the Seller by the Purchaser on or prior to the
date of this Agreement].
SECTION 4.04. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.05. Brokers. Except for J.P. Morgan, the fees and
expenses of which will be paid for by the Purchaser, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a)
The Seller covenants and agrees that, except as described in Section 5.01(a) of
the Seller's Disclosure Schedule, between the date hereof and the time of the
Closing, the Company shall conduct its business in the ordinary course and
consistent with the Company's prior practice. Without limiting the generality of
the foregoing, except as described in Section 5.01(a) of the Seller's Disclosure
Schedule, as requested by the Purchaser, or as required to accommodate changes
in the Purchaser's business practices, the Company shall (i) continue its
advertising and promotional activities, and pricing and purchasing policies,
including capital purchasing, in accordance with past practice; (ii) not shorten
or lengthen the customary payment cycles for any of its payables or receivables;
(iii) use all reasonable efforts to (A) preserve intact its business
organization,(B) cause the employees of the Seller which on the date of this
Agreement are seconded to the Company to be employees of the Company as of the
Closing Date or such other date to be agreed upon among the Seller, the
Purchaser and the Company and (C) preserve its current relationships with its
customers, suppliers and other persons with which it has significant business
relationships; (iv) exercise, but only after notice to the Purchaser and receipt
of the Purchaser's prior written approval, any rights of renewal pursuant to the
terms of any of the material leases or subleases which by their terms would
otherwise expire: and (v) not engage in any practice, take any action, fail to
take any action or enter into any transaction which could cause any
representation or warranty of the Seller to be untrue or result in a breach of
any covenant made by the Seller in this Agreement.
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(b) Except as described in Section 5.01(b) of the Seller's
Disclosure Schedule, the Seller covenants and agrees that, prior to the Closing,
without the prior written consent of the Purchaser, the Company will not do any
of the things enumerated in the second sentence of Section 3.08 (including,
without limitation, clauses (i) through (xix) thereof); provided, however, that
if the Company desires to take any of the actions enumerated in Section 3.08(v)
in response to general industry conditions, the Company shall provide written
notice of the proposed actions to the Purchaser and the Purchaser shall respond
to such written notice not more than two Business Days after the receipt
thereof.
SECTION 5.02. Access to Information. (a) From the date hereof
until the Closing, upon reasonable notice, the Company shall, and the Company
shall cause each of the Company's officers, directors, employees, agents,
representatives, accountants and counsel to: (i) afford the officers, employees
and authorized agents, accountants, counsel, underwriters, financing sources and
representatives of the Purchaser reasonable access, during normal business
hours, to the offices, properties, plants, other facilities, books and records
of the Company (including access to the Company's 1996 financial audit work
papers) and to those officers, directors, employees, agents, accountants and
counsel of the Company who have any knowledge relating to the Company or its
business and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel, underwriters, financing sources and representatives of the
Purchaser such additional financial and operating data and other information
regarding the assets, properties and goodwill of the Company (excluding any
Returns or other Tax information of the Seller) and its business (or legible
copies thereof) as the Purchaser may from time to time reasonably request,
including, without limitation, any financial information or other information
that will be required in connection with the IPO.
(b) In order to facilitate the resolution of any claims made
against or incurred by the Seller prior to the Closing, for a period of seven
years after the Closing, the Purchaser shall (i) retain the books and records of
the Company relating to periods prior to the Closing in a manner reasonably
consistent with the prior practice of the Company; provided, however, that any
Tax-related books and records shall be maintained for a period of ten years
after the Closing Date, and prior to disposal thereof the Purchaser shall
contact the Seller and offer to provide it with copies of any such books and
records subject to reimbursement of reasonable expenses; and (ii) upon
reasonable notice, afford the officers, employees and authorized agents and
representatives of the Seller reasonable access (including the right to make, at
the Seller's expense, photocopies), during normal business hours, to such books
and records.
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(c) In order to facilitate the resolution of any claims made
by or against or incurred by the Purchaser or the Company after the Closing or
for any other reasonable purpose, for a period of seven years following the
Closing, the Seller shall (i) retain the books and records of the Seller which
relate to the Company and its operations for periods prior to the Closing and
which shall not otherwise have been delivered to the Purchaser or the Company;
(ii) upon reasonable notice, afford the officers, employees and authorized
agents and representatives of the Purchaser or the Company reasonable access
(including the right to make photocopies, at the expense of the Purchaser or the
Company) during normal business hours, to such books and records.
SECTION 5.03. Confidentiality. (a) Except to the extent of any
disclosure required (after consultation with the Seller and after seeking
appropriate confidential treatment) to be made in the Purchaser's registration
statement on Form S-1 (including in any exhibits thereto) filed with the
Securities and Exchange Commission (the "SEC") in connection with the IPO or in
any future filings made with the SEC or other regulatory authorities, and except
as reasonably required by the underwriters in connection with the IPO, the
Parties shall comply with, and shall cause their respective representatives and
agents to comply with all of their respective obligations under the
Non-Disclosure Agreement, dated as of June 4, 1996, between the Company and the
Purchaser (the "Non-Disclosure Agreement"), until the Closing, at which time
such Non-Disclosure Agreement and the obligations of the Purchaser and the
Company thereunder shall terminate. If this Agreement is, for any reason,
terminated prior to the Closing, the Non-Disclosure Agreement shall continue in
full force and effect.
(b) The Seller agrees to, and shall cause its agents,
representatives and Affiliates to: (i) treat, hold as confidential and (in the
case of the Seller) not exploit for its benefit or the benefit of other
relationships with any of its customers (and not disclose or provide access to
any Person to) all information relating to the Company's products, customers,
assets, plans, business, finances and technological developments and programs,
(ii) in the event that the Seller or any such agent, representative or Affiliate
becomes legally compelled to disclose any such information, provide the
Purchaser with prompt written notice of such requirement so that the Purchaser
or the Company may seek a protective order or other remedy or waive compliance
with this Section 5.03(b), and (iii) in the event that such protective order or
other remedy is not obtained, or the Purchaser waives compliance with this
Section 5.03(b), furnish only that portion of such confidential information
which is legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such information,
provided, however, that this sentence shall not apply to any information that,
at the time of disclosure, is available publicly and was not disclosed in breach
of this Agreement by the Seller, its agents,
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representatives or Affiliates; provided further that, with respect to Company
Intellectual Property, specific information shall not be deemed to be within the
foregoing exception merely because it is embraced in general disclosures in the
public domain.
SECTION 5.04. Regulatory and Other Authorizations; Notices and
Consents. (a) Each party shall for itself use all reasonable efforts to obtain
(or, in the case of the Seller, cause the Company to obtain) all authorizations,
consents, orders and approvals of all Governmental Authorities and officials
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully in promptly seeking to obtain all such authorizations, consents, orders
and approvals. Each party hereto agrees for itself to supply as promptly as
practicable to the appropriate Governmental Authorities any additional
information and documentary material that may be requested pursuant to any
applicable Law. Without limiting the generality of the foregoing, each party
hereto will (i) use all reasonable efforts to prevent the entry in a judicial or
administrative proceeding brought under any antitrust law of any preliminary
injunction or other order that would make consummation of the transactions
contemplated hereby unlawful or would prevent or delay such consummation; and
(ii) take promptly, in the event that such an injunction or order has been
issued in such a proceeding, all steps necessary to prosecute an appeal of such
an injunction or order, and diligently prosecute such appeal.
(b) The Seller shall or shall cause the Company to give
promptly such notices to third parties and use all reasonable efforts to obtain
such third party consents as the Purchaser may deem necessary or desirable in
connection with the transactions contemplated by this Agreement.
(c) The Purchaser shall cooperate and use all reasonable
efforts to assist the Seller in giving such notices and obtaining such consents;
provided, however, that neither the Purchaser nor the Seller shall have any
obligation to give any guarantee or other consideration of any nature in
connection with any such notice or consent or to consent to any change in the
terms of any agreement or arrangement which the Purchaser may deem adverse to
the interests of the Purchaser or the Company or their respective businesses.
(d) Neither the Purchaser nor the Seller knows of any reason
why all the consents, approvals and authorizations necessary for the
consummation of the transactions contemplated hereby will not be received.
SECTION 5.05. Notice of Developments. (a) Prior to the
Closing, the Seller and the Company shall promptly notify the Purchaser in
writing of all
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events, circumstances, facts and occurrences arising subsequent to the date of
this Agreement which could result in any breach of a representation or warranty
or covenant of the Seller in this Agreement, or could result in any breach of a
covenant of the Company in this Agreement, or which could have the effect of
making any representation or warranty of the Seller in this Agreement untrue or
incorrect in any material respect.
(b) Prior to the Closing, the Purchaser shall promptly notify
the Seller in writing of all events, circumstances, facts and occurrences
arising subsequent to the date of this Agreement which could result in any
breach of a representation or warranty or covenant of the Purchaser in this
Agreement or which could have the effect of making any representation or
warranty of the Purchaser untrue or incorrect in any material respect.
SECTION 5.06. No Solicitation of Employees. Except as
expressly contemplated by Section 5.15, the Seller agrees that it shall not, and
shall cause each of its Affiliates not to, during the period from the date
hereof until Closing and, if the Closing occurs, for a period of two years from
the Closing, without the prior written consent of the Purchaser, directly or
indirectly, solicit on a specific or targeted basis for employment any person
who is or has agreed to become an employee of the Company, provided that this
Section 5.06 shall not prohibit any form of employment advertising or prevent
the hiring of any individual who contacts the Seller or any of its Affiliates.
SECTION 5.07. Use of Intellectual Property. (a) The Seller
acknowledges that as of the Closing the name "Galileo Nederland" and all similar
or related names, marks and logos and product names, marks and logos (all of
such names, marks and logos being the "Company Names") shall be owned by the
Company, that (except as provided in Section 5.07(b)) from and after the Closing
Date neither the Seller nor any of its Affiliates shall have any rights in the
Company Names, and that neither of the Seller nor any of its Affiliates will
contest the ownership or validity of any rights of the Purchaser or the Company
in or to the Company Names.
(b) Except as expressly agreed in writing by the Purchaser or
pursuant to any agreements and licenses between the Purchaser and the Seller, or
the Company and the Purchaser or any of its Affiliates, from and after the
Closing, neither the Seller nor any of its Affiliates shall use any of the
Company Intellectual Property.
(c) To the extent any of the Company Intellectual Property is
obtained from the Seller or one of its Affiliates pursuant to a Company License
or
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otherwise, effective on the Closing Date, the Seller or such Affiliate hereby
grants to the Company a perpetual, nonexclusive, royalty-free license to use
such Company Intellectual Property for so long as, in the sole discretion of the
Purchaser or the Company, the Company requires such Company Intellectual
Property in the conduct of its business.
SECTION 5.08. Monthly Financial Statements. The Seller agrees
that, between the date hereof and the Closing, promptly following the end of
each calendar month, but in no event later than 15 days following the end of
each calendar month, it will prepare or cause to be prepared, and will promptly
provide to the Purchaser, a balance sheet of the Company as of the end of the
preceding calendar month and statements of income of the Company for the
preceding calendar month. Such monthly financial statements shall be prepared in
accordance with the Accounting Principles and past practice.
SECTION 5.09. Audit of Net Asset Test Reference Balance Sheet.
No fewer than five Business Days prior to the Closing Date, the Purchaser shall
cause the Purchaser's Accountants to prepare and deliver to the Purchaser a
report on the Net Asset Test Reference Balance Sheet (the "Audited Net Asset
Test Reference Balance Sheet"). The Audited Net Asset Test Reference Balance
Sheet shall be prepared in accordance with the Accounting Principles and shall
exclude (i) any indebtedness for borrowed money of the Company and (ii) any Cash
other than cash in the amount of any checks outstanding. During the preparation
of the Audited Net Asset Test Reference Balance Sheet, the Company shall
provide, and the Seller shall cause the Company and its officers, employees and
agents to provide, full access to the books, records, facilities and employees
of the Company, in each case to the extent required by the Purchaser and its
representatives in order to prepare the Audited Net Asset Test Reference Balance
Sheet.
SECTION 5.10. Pre-Closing Balance Sheet. No fewer than five
Business Days prior to the Closing Date, the Company shall prepare an unaudited
consolidated balance sheet of the Company in accordance with this Section 5.10
(the "Pre-Closing Balance Sheet"). In the event that the Closing is scheduled to
occur after the fifteenth day of any particular calendar month, the Pre-Closing
Balance Sheet shall be prepared as of the last day of the immediately preceding
calendar month. If the Closing is scheduled to occur on or prior to the
fifteenth day of any particular calendar month, the Pre-Closing Balance Sheet
shall be prepared as of the last day of the second preceding calendar month. The
Pre-Closing Balance Sheet shall be prepared in accordance with Accounting
Principles applied on a basis consistent with the preparation of the Audited Net
Asset Test Reference Balance Sheet and shall exclude (i) any indebtedness for
borrowed money of the Company, and (ii) any Cash other than cash in the amount
of any checks outstanding. During the preparation of
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the Pre-Closing Balance Sheet and during the period of any review by the
Purchaser and its representatives of the Pre-Closing Balance Sheet, the Company
shall provide, and the Seller shall cause the Company and its officers,
employees and agents to provide, full access to the books, records, facilities
and employees of the Company, in each case to the extent required by the
Purchaser and its representatives in order to monitor the preparation of, and
review, the Pre-Closing Balance Sheet.
SECTION 5.11. Company Pension Fund. [TO COME.]
SECTION 5.12. Certain Services. (a) The Seller or one of its
Affiliates, as the case may be, will continue to provide to the Company the
network services described in Section 3.21(a) of the Seller's Disclosure
Schedule, upon the terms, and at the prices, set forth on Exhibit 5.12(a)
hereto; provided that the Company may terminate such services upon six months'
written notice to the Seller.
(b) After the Closing Date, the Company shall have no
obligation to purchase any services from the Seller or its Affiliates other than
the services described in Section 5.12(a).
SECTION 5.13. Certain Intercompany Payments. (a) All amounts,
other than amounts due in the ordinary course of business consistent with past
practice, owed by the Seller or any of its Affiliates to the Company prior to
the Closing Date shall be paid by the Seller or such Affiliate to the Company on
or prior to the Closing Date.
(b) All amounts, other than amounts due in the ordinary course
of business consistent with past practice, owed by the Purchaser or any of its
Affiliates to the Company prior to the Closing Date shall be paid by the
Purchaser or such Affiliate to the Company on or prior to the Closing Date.
(c) All amounts, other than amounts due in the ordinary course
of business consistent with past practice, owed by the Company to the Purchaser
(including the current account, to the extent it is negative) or the Seller
shall be paid by the Company to the Purchaser or the Seller, as the case may be,
prior to the first day of the Measuring Period.
SECTION 5.14. Further Action. Each of the Parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated by this Agreement.
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SECTION 5.15. Seconded Employees. (a) Section 5.15(a) of the
Seller's Disclosure Schedule lists all employees of the Seller who on the date
hereof are seconded to the Company (each an "Employee" and collectively the
"Employees"). As promptly as practicable after the Closing Date, the Company
will offer employment to each Employee at the monthly salary specified for such
Employee in Section 5.15(a) of the Seller's Disclosure Schedule and upon the
further terms and conditions set forth in the agreement dated ______, 19__,
between the Company and [the labor unions ______, ______ and ______], a copy of
which agreement is set forth in Section 5.15(a) of the Seller's Disclosure
Schedule. The Seller will offer to each Employee the benefits of the "Transition
Package", the terms and conditions of which are described in Section 5.15(a) of
the Sellers's Disclosure Schedule.
(b) The employment offer described in Section 5.15(a) (the
"Employment Offer") will be valid with respect to each Employee until the
occurrence of the earlier of (i) the date on which such Employee accepts the
Employment Offer, (ii) the date on which such Employee accepts an offer by the
Seller to be relocated within the Seller's organization, and (iii) the date that
is _____ months after the Closing Date.
(c) Set forth as Exhibit 5.15(c) is a copy of the secondment
agreement between the Seller and the Company relating to the secondment of
employees by the Seller to the Company and the terms related thereto. The Seller
will second to the Company those Employees with respect to whom an Employment
Offer remains outstanding. Upon the expiration of an Employment Offer with
respect to an Employee pursuant to Section 5.15(b), the secondment of such
Employee will continue to be in effect up to and including the last day of the
month in which the expiration of such Employee's Employment Offer occurred. The
Company will reimburse the Seller in accordance with the terms set forth in
Exhibit 5.15(c) with respect to each employee seconded by the Seller to the
Company for the period of his or her secondment to the Company; provided,
however, that the Company will not be under any obligation to reimburse the
Seller for any other costs (including, without limitation, any wage taxes or
social security premiums).
(d) During the secondment of Employees to the Company pursuant
to Section 5.15(c), (i) the Seller will not grant or promise to grant to any
Employee any salary increase, bonus or other emolument, other than those
required by law or collective bargaining agreements, and (ii) the Seller will
maintain in full force and effect all licenses required for the secondment of
such Employees.
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SECTION 5.16. Business Plan. The Purchaser agrees to conduct
the business of the Company in a manner broadly consistent with the Company's
business plan attached hereto as Exhibit 5.16 (the "Business Plan") until March
31, 1998.
ARTICLE VI
TAX MATTERS
SECTION 6.01. Tax Indemnity. (a) Except to the extent of
Ordinary Course Taxes, the Purchaser and its Affiliates, officers, directors,
employees, agents, successors and assigns (each an "Indemnified Party") shall be
indemnified and held harmless by Seller for any and all Losses arising out of or
resulting from:
(i) the breach of any representation or warranty made in
Section 3.17; or
(ii) Liabilities of the Company for Taxes or Liability claims
or settlement of tax debt by Dutch Internal Revenue pursuant to Article
24 of the Tax Collection Act of 1990 or similar regulations (including
any Liability resulting from joint liability for Taxes reported on a
consolidated, combined or unitary basis) with respect to the period
before the Closing Date; provided, however, that such indemnity shall
be reduced by any Tax Benefit to the Company with respect to such
Losses or Liabilities or the items or adjustments resulting in such
Losses or Liabilities; provided, further, that amounts under clause (i)
and clause (ii) shall be without duplication of the amount provided for
under the other clause.
To the extent that any of the Seller's undertakings set forth in this Section
6.01 may be unenforceable, the Seller shall contribute the maximum amount that
it is permitted to contribute under applicable law to the payment and
satisfaction of all Losses and Liabilities incurred by the Indemnified Parties.
For purposes of this Article VI, the Liability of the Company for Taxes either
(y) arising out of or resulting from a breach of any representation or warranty
made in Section 3.18 or (z) described in Section 6.01(a)(ii) shall constitute a
Loss to the Purchaser.
(b) The Seller and the Purchaser agree to treat all payments
made under this Article VI and all indemnification payments made under Article
VIII of this Agreement as adjustments to the Purchase Price for Tax purposes
except to the extent that the laws of a particular jurisdiction provide
otherwise.
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SECTION 6.02. Apportionment of Taxes. (a) For purposes of
Section 6.01, Taxes with respect to the period before the Closing Date shall
mean: (i) Taxes imposed relating to the Company with respect to taxable periods
ending on or before the Closing Date; and (ii) with respect to taxable periods
beginning before the Closing Date and ending after the Closing Date, Taxes
imposed relating to the Company which are allocable, pursuant to Section
6.02(b), to the portion of such period ending on the Closing Date.
(b) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of any such Tax that is allocable to the portion of the period
ending on the Closing Date shall be:
(i) in the case of Taxes that are either (x) based upon or
related to income or receipts or turnover (including VAT), or (y)
imposed in connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible) (other than
conveyances pursuant to this Agreement, which are governed by Section
6.07), deemed equal to the amount which would be payable if the taxable
year ended with the Closing Date; and
(ii) in the case of Taxes imposed on a periodic basis other
than in (i) above with respect to the Company, deemed to be the amount
of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the period ending on the
Closing Date and the denominator of which is the number of calendar
days in the entire period.
SECTION 6.03. Returns and Payments. (a) From the date of this
Agreement through the Closing Date, the Seller shall cause the Company to
prepare and file in proper form with the appropriate Tax Authority in a timely
manner all Returns relating to the Company that are due on or before the Closing
Date. The Seller shall cause the Company to pay Taxes prior to the Closing Date
in such amounts and at such times as are consistent with past practices employed
with respect to the Company. In the event that the Closing Date does not occur
prior to the due date (including any extension thereof) for the filing of the
corporate income tax Returns relating to the Company's taxable year ended March
31, 1997, the Seller will cause the Company to provide the Purchaser and its
authorized representative a copy of the Company's related tax books and records
pertaining to such Returns at least 10 Business Days prior to the earlier of the
due date (including any extension thereof) for the filing of such returns or the
date of filing. The Purchaser shall cause the Company to prepare and file in
proper form with the appropriate Tax authority in a
<PAGE> 45
38
timely manner all Returns relating to the Company that are due after the Closing
Date. With respect to Returns, other than Returns in respect of Income Taxes and
VAT, caused to be filed by the Purchaser for any period ending on or before the
Closing Date, the Purchaser shall cause the Company to pay the Taxes shown as
due and owing on such Returns. With respect to Income Taxes and VAT, with
respect to Returns caused to be filed by the Purchaser for any period ending on
or before the Closing Date, the Purchaser shall cause the Company to pay the
Taxes shown as due and owing on such Returns, and the Seller shall reimburse the
Purchaser on the due date for such Taxes. In the event that the Seller fails to
reimburse the Purchaser on the due date, the Purchaser shall be entitled to
interest on the amount paid by the Purchaser but in no event shall such failure
affect Purchaser's obligation to cause the Company to timely file any Return.
Returns of the Company not yet filed for any taxable period that ends on or
before the Closing Date shall be prepared in a manner consistent with past
practices employed with respect to the Company (except to the extent counsel for
the party preparing the return renders a legal opinion that there is no
reasonable basis in law therefore or determines that a Return cannot be so
prepared and filed without being subject to penalties).
(b) With respect to Returns, other than Returns in respect of
Income Taxes and VAT, caused to be filed by the Purchaser for any period
beginning before and ending after the Closing Date, the Purchaser shall cause
the Company to pay the Taxes shown as due and owing on such Returns. With
respect to Income Taxes and VAT, with respect to Returns caused to be filed by
the Purchaser for any period beginning before and ending after the Closing Date,
the Purchaser shall cause the Company to pay the Taxes shown as due and owing on
such Returns and Seller shall reimburse the Purchaser on the due date for such
Taxes for the amount of such Taxes determined to be properly apportioned under
Section 6.02(b) to the portion of such period ending on the Closing Date. In the
event that the Seller fails to reimburse the Purchaser on the due date, the
Purchaser shall be entitled to interest on the amount paid by the Purchaser but
in no event shall such failure affect the Purchaser's obligation to cause the
Company to timely file any Return. The Purchaser will notify or cause the
Company to notify the Seller of any position the Company will take on a Return
which would be inconsistent with that taken by the Seller on prior Returns. If
the Purchaser and the Seller disagree on the position taken and the position
would in any way alter the balance of Taxes owing or Tax refunds or credits
obtainable with respect to (i) any Tax period of the Company ending on or prior
to the Closing Date or (ii) in the case of Tax refunds or credits, any period up
to and including the Closing Date which is part of a Tax period of the Company
beginning prior to and ending after the Closing Date, then the parties shall
submit the matter to a mutually selected independent nationally recognized
accounting firm, other than KPMG Peat Marwick and its affiliates (the
"Independent Firm"), and the Independent Firm shall
<PAGE> 46
39
resolve the issue based on a standard of maximal fairness to both the Purchaser
and the Seller.
(c) With respect to any Return required to be caused to be
filed by the Purchaser with respect to the Company and as to which an amount of
Tax is allocable to the Seller under Section 6.02(b), the Purchaser shall cause
the Company to provide the Seller and its authorized representatives with a copy
of such completed Return and a statement certifying the amount of Tax shown on
such Return that is allocable to the Seller pursuant to Section 6.02(b),
together with appropriate supporting information and schedules at least 10
Business Days prior to the due date (including any extension thereof) for the
filing of such Return, in the case of Taxes other than wage Taxes, social
security premiums, and VAT, or five (5) days prior to the date on which such
Return is required to be filed (taking into account any extensions) in the case
of wage Taxes, social security premiums, and VAT, and the Seller and its
authorized representatives shall have the right to review and comment on such
Return and statement prior to the filing of such Return.
SECTION 6.04. Contests. (a) After the Closing, the Purchaser
shall promptly notify or cause the Company to notify the Seller in writing of
any written notice of a proposed assessment or claim in an audit or
administrative or judicial proceeding of the Purchaser or of the Company which,
if determined adversely to the taxpayer, would be grounds for indemnification
under this Article VI or could otherwise result in any Tax cost to the Seller;
provided, however, that a failure to give such notice will not affect the
Purchaser's right to indemnification under this Article VI except to the extent
such failure on the part of the Company prejudices the Seller by preventing the
avoidance of all or a portion of the Tax liability in question.
(b) In the case of an audit or administrative or judicial
proceeding that relates to periods ending on or before the Closing Date,
provided that the Seller acknowledge in writing its indemnification obligation
liability under Article VI of this Agreement with respect to the potential
liability of the Company as a result of such audit or administrative or judicial
proceeding, the Seller shall have the right, at its expense, to participate in
and control the conduct of such audit or proceeding; the Purchaser may also
participate in any such audit or proceeding and, if the Seller does not assume
the defense of any such audit or proceeding, the Purchaser, at its expense, may
defend the same in such manner as it may deem appropriate, including, but not
limited to, settling such audit or proceeding after giving five days' prior
written notice to the Seller setting forth the terms and conditions of
settlement. In the event that issues relating to a potential adjustment for
which the Seller has acknowledged its indemnification obligation are required to
be dealt with in the same proceeding as separate issues relating to a potential
adjustment for which the Purchaser would be liable, the Purchaser shall have the
right, at its expense, to control the audit or
<PAGE> 47
40
proceeding with respect to the latter issues, provided that the Purchaser
provides the Seller with a written acknowledgement of the Purchaser's liability.
(c) Notwithstanding Section 6.04(b), neither the Purchaser nor
the Seller shall enter into or cause the Company to enter into any compromise or
agree to settle or cause the Company to agree to settle any claim pursuant to
any Tax audit or proceeding, which would adversely affect the other party for
such year or any prior or subsequent year without the written consent of the
other party which consent may not be unreasonably withheld. If the Purchaser or
the Seller refuses to provide the respective other party with written consent to
settle any such claim, then the parties shall submit the matter to an
Independent Firm and the Independent Firm shall resolve the issue based on a
standard of maximal fairness to both the Purchaser and the Seller.
(d) The Purchaser and the Seller shall cooperate fully, as and
to the extent reasonably requested by the other party, in connection with (i)
the filing of Returns pursuant to Section 6.03 (including such amended Returns
for periods (or portions thereof) ending on or prior to the Closing Date that
the Seller may reasonably request the Purchaser to file; provided, however, that
if in the Purchaser's reasonable judgment the filing of the amended return would
be disadvantageous to the Purchaser, the Purchaser may deny the Seller's request
and the parties shall submit the matter to an Independent Firm and the
Independent Firm shall resolve the issue based on a standard of maximal fairness
to both the Purchaser and the Seller and (ii) any audit, litigation or other
proceeding with respect to Taxes.
SECTION 6.05. Survival of Obligations. Notwithstanding any
provision in this Agreement to the contrary, obligations of the Seller to
indemnify and hold harmless the Indemnified Parties pursuant to this Article VI,
and the representations and warranties contained in Section 3.17, shall
terminate at the close of business on the 180th day following the expiration of
the applicable statute of limitations with respect to the Tax liabilities in
question (giving effect to any waiver, mitigation or extension thereof).
SECTION 6.06. Conveyance Taxes. The Purchaser shall pay (or,
if the Seller pays, shall reimburse the Seller for) any real property transfer
or gains, sales, use, transfer, value added, stock transfer, and stamp taxes,
any transfer, recording, registration, and other fees, and any similar Taxes
(but specifically not including Taxes on or with respect to income) that become
payable in connection with the transactions contemplated by this Agreement. The
Company shall prepare in a timely manner for the review and approval of the
parties and file such applications and documents as shall permit any such Tax to
be assessed and paid on or prior to the Closing Date in accordance with any
available presale filing procedure. The parties
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shall execute and deliver all instruments and certificates necessary to enable
the Company to comply with the foregoing.
SECTION 6.07. Tax Refunds, Credits and Other Payments. (a) The
Company shall, within 10 days of receipt of any Tax refund or credit actually
received by or on behalf of the Company or successor thereto (other than a
refund or credit with respect to Taxes paid by the Company or successor thereto
on or after the Closing Date and not previously indemnified by the Seller
pursuant to Section 6.01(a)) (A) for or attributable to any Tax period of the
Company ending at or prior to the Closing Date or (B) for or attributable to any
period up to and including the Closing Date which is part of a Tax period of the
Company beginning prior to and ending after the Closing Date, pay such Tax
refund or credit (a "Returnable Refund or Credit") on an After-Tax Basis
(including any interest or addition actually received thereon). If the amount of
any Returnable Refund or Credit is applied against any other liability of any of
the Company or successor thereto for Taxes for any Tax period after the Closing
Date, the Purchaser shall, within 10 days of the date of such application, pay
to the Seller an amount equal to the Returnable Refund or Credit on an After-Tax
Basis (including any interest or addition actually received thereon). The
Purchaser shall deliver with payment to the Seller a copy of any written
explanation of the facts surrounding the Returnable Refund or Credit and a copy
of any related notice or statement received from any Tax authority.
(b) Without duplication of any amounts paid to the Purchaser
pursuant to Section 6.01, to the extent the Seller receives a Tax Benefit that
is attributable to an adjustment of any income, gain, loss, deduction, credit,
refund or other Tax item made with respect to any Tax period of the Company
ending on or before the Closing Date or any period ending on or before the
Closing Date which is part of a Tax period of the Company beginning before and
ending after the Closing Date and in connection therewith the Purchaser or any
Affiliate or successor thereto suffers a Loss, the Seller will, within 10 days
of the receipt of such Tax Benefit by the Seller, pay to the Purchaser an amount
equal to the lesser of the amount of the Tax Benefit or the Loss.
SECTION 6.08. Performance of Acts. In any instance in this
Article VI in which a Party is required to perform an act, such requirement will
include, in the alternative and where applicable, such Party causing the Company
(or any other entity, if such entity is required by law to perform such act and
the Party has the power to so cause) to perform such act.
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ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of the Seller and the
Company. The obligations of the Seller and the Company to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment,
at or prior to the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Purchaser contained in this Agreement
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Closing, with the same force
and effect as if made as of the Closing Date, other than such representations
and warranties as are made as of another date, which shall be true and correct
in all material respects as of such date (provided, however, if any portion of
any representation or warranty is already qualified by materiality, for purposes
of determining whether this Section 7.01(a) has been satisfied with respect to
such portion of such representation or warranty, such portion of such
representation or warranty as so qualified must be true and correct in all
respects), and the covenants and agreements contained in this Agreement to be
complied with by the Purchaser on or before the Closing shall have been complied
with in all material respects, and the Seller shall have received a certificate
from the Purchaser to such effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against the Seller, the
Company or the Purchaser, seeking to restrain or prevent the consummation of the
transactions contemplated by this Agreement; provided, however, that the
provisions of this Section 7.01(b) shall not apply if the Seller, the Company or
any Affiliate thereof have directly or indirectly solicited or encouraged any
such Action;
(c) Resolutions. The Seller shall have received a true and
complete copy, certified by the Secretary of the Purchaser, of the resolutions
of the Purchaser's Supervisory Board evidencing its authorization of the
consummation of the transactions contemplated hereby;
(d) Incumbency Certificate. The Seller shall have received a
certificate of the Secretary of the Purchaser certifying the names and
signatures of the officers of the Purchaser authorized to sign this Agreement
and the other documents to be delivered hereunder;
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43
(e) Escrow Agreement. The Purchaser shall have duly executed
and delivered the Escrow Agreement in substantially the form of Exhibit 2.05(f)
hereto;
(f) Works Council Approval. The Works Council of the Seller
shall have given its unqualified positive advice concerning the Seller's
decision to enter into this Agreement and to consummate the transactions
contemplated hereby;
(g) Consummation of Transactions Contemplated by Transaction
Agreement. The transactions contemplated by the Transaction Agreement, a form of
which is attached as Exhibit 7.01(f) hereto (the "Transaction Agreement"), shall
have been consummated; and
(h) Completion of the IPO. The IPO shall have been
consummated.
SECTION 7.02 Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Seller contained in this Agreement shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing with the same force and
effect as if made as of the Closing, other than such representations and
warranties as are made as of another date, which shall be true and correct in
all material respects as of such date (provided, however, that the
representations and warranties contained in Section 3.03 will be true and
correct in all respects and that if any portion of any representation or
warranty is already qualified by materiality, for purposes of determining
whether this Section 7.02(a) has been satisfied with respect to such portion of
such representation or warranty, such portion of such representation or warranty
as so qualified must be true and correct in all respects), and the covenants and
agreements contained in this Agreement to be complied with by Seller and the
Company on or before the Closing shall have been complied with in all material
respects, and the Purchaser shall have received a certificate from the Seller
and the Company to such effect signed by a duly authorized officer thereof;
(b) No Proceeding or Litigation. No Action shall have been
commenced by or before any Governmental Authority against the Seller or the
Purchaser, seeking to restrain or prevent the consummation of the transactions
contemplated by this Agreement; provided, however, that the provisions of this
<PAGE> 51
44
Section 7.02(b) shall not apply if the Purchaser has solicited or encouraged any
such Action;
(c) Consents and Approvals. The Purchaser, the Seller and the
Company shall have received, each in form and substance satisfactory to the
Purchaser all authorizations, consents, orders and approvals of all Governmental
Authorities and officials and all third party consents set forth on Schedule
7.02(c);
(d) Financing. The Purchaser shall have obtained financing on
terms acceptable to it, sufficient to enable it to consummate the transactions
contemplated by this Agreement;
(e) Completion of the IPO. The IPO shall have been
consummated;
(f) No Material Adverse Effect. No event or events shall have
occurred, or be reasonably likely to occur, which have, or are reasonably likely
to have, a Material Adverse Effect;
(g) No Debt. The Company shall have no indebtedness for
borrowed money as of the Closing Date;
(h) Net Asset Tests. (A) The Net Assets reflected on the Net
Asset Test Reference Balance Sheet shall not exceed the Net Assets reflected on
the Audited Net Asset Test Reference Balance Sheet by NLG500,000 or more, and
(B) the Net Assets reflected on the Seasonally Adjusted Net Asset Test Reference
Balance Sheet shall not exceed the Net Assets reflected on the Pre-Closing
Balance Sheet by NLG500,000 or more;
(i) Consummation of Transactions Contemplated by the
Transaction Agreement. The transactions contemplated by the Transaction
Agreement shall have been consummated.
(j) Certain Resolutions. The Purchaser shall have received a
true and complete copy, certified by the managing director of the Company, of
the shareholders' register evidencing the Purchaser as the new owner of all the
Shares; and
(k) Resignation Letters. The Purchaser shall have received a
resignation letter from each member of the Company's Board of Supervisory
Directors.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations and Warranties. The
representations and warranties of the parties contained in Sections 3.11, 3.14,
3.15, 3.16 and 3.18, and Article IV (other than Section 4.05), and the covenants
of the parties set forth in Article V (other than Sections 5.02(b) and (c),
5.03, 5.06, 5.07, 5.11, 5.12, 5.13 and 5.14) shall terminate at Closing. The
representations and warranties of the parties contained in Sections 3.01, 3.02,
3.03, 3.04, 3.05, 3.06, 3.07, 3.09, 3.10, 3.12, 3.13, 3.19, 3.20, 3.21, 3.22,
3.23 and 3.24 and Section 4.05 shall survive the Closing until the second
anniversary of the Closing Date. The representations and warranties dealing with
Tax matters shall survive as provided in Article VI, and the representations and
warranties set forth in Section 3.08 shall survive the Closing until the first
anniversary of the Closing Date. The covenants of the parties set forth in
Sections 5.02(b) and (c), 5.03, 5.06, 5.07, 5.11, 5.12, 5.13 and 5.14 shall
survive the Closing, and the other covenants set forth in this Agreement that
expressly survive the Closing shall survive the Closing in accordance with their
respective terms. Notwithstanding the foregoing or anything to the contrary in
this Article VIII, in the event that the Purchaser has actual knowledge prior to
the Closing Date that any of the representations and warranties of the Seller to
survive the Closing in accordance with this Section 8.01 were not true and
correct as of the date hereof or are not true and correct as of the Closing Date
or that the agreements of the Seller contained in Section 5.03(b) have not been
complied with, the sole and exclusive remedy of the Purchaser with respect to
such breaches will be to not consummate the transactions contemplated by this
Agreement if any such breach results in the nonsatisfaction of the condition
contained in Section 7.02(a). For purposes of the foregoing sentence, the term
"actual knowledge" means the actual knowledge of an officer of the Purchaser,
including, without limitation, as a result of (A) the delivery to the Purchaser
by the Seller not fewer than three Business Days prior to the Closing (other
than in a case in which an event occurs within such three Business Day period
which could not have been anticipated, in which case written notice of such
event must be provided to the Purchaser promptly after the Seller becomes aware
of it) of a written notice specifically identifying in detail the nature of the
breach and the provisions of this Agreement that have been breached; (B),
without duty of any other due or specific inquiry, a written survey of (i)
employees of the Purchaser who are reasonably likely, because of their
substantive and significant contacts with the Company, to have knowledge as to
the truth and correctness of the representations and warranties of the Seller to
survive the Closing or whether the Seller has complied with Section 5.03(b),
(ii) the accountants at KPMG Peat Marwick LLP, (iii) the investment bankers at
JP Morgan and (iv) the attorneys at Shearman & Sterling, Nauta Dutilh and Davis
Polk & Wardwell, who, in the case of (ii), (iii) and
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46
(iv), actually participated in the Purchaser's due diligence investigation of
the Company; (C) the Seller's Disclosure Schedule; (D) the Seller's written
responses to the Purchaser's request for certain due diligence information,
copies of which responses are set forth on Schedule 8.01 hereto (which written
responses shall not be deemed to be a part of the Seller's Disclosure Schedule
for purposes of this Agreement); (E) the Audited Net Asset Test Reference
Balance Sheet; and (F) the Pre-Closing Balance Sheet. Subject to the foregoing,
neither the period of survival nor the liability of the parties hereto with
respect to their representations and warranties and covenants shall be reduced
by any investigation made at any time by or on behalf of any such party. If
written notice of a claim has been given prior to the expiration of the
applicable representations and warranties and covenants by the parties hereto,
then the relevant representations and warranties and covenants shall survive as
to such claim until such claim has been finally resolved.
SECTION 8.02. Indemnification by the Seller. (a) The
Purchaser, its Affiliates, including the Company, and their successors and
assigns, and the officers, directors, employees and agents of the Purchaser, its
Affiliates and their successors and assigns (each a "Purchaser Indemnified
Party") shall be indemnified and held harmless, as and to the extent set forth
in this Section 8.02, by the Seller for any and all Liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, attorneys' and consultants' fees and expenses)
actually suffered or incurred by them (including, without limitation, any Action
brought or otherwise initiated by any of them) on an After-Tax Basis
(hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Seller contained in any of Sections 3.01, 3.02, 3.03, 3.04, 3.05, 3.06,
3.07, 3.09, 3.10, 3.12, 3.13, 3.19, 3.20, 3.21, 3.22, 3.23 or 3.24 of
this Agreement; or
(ii) the breach of any covenant or agreement by the Seller
contained in Section 5.03(b) of this Agreement;
(iii) Liabilities of the Company, whether arising before or
after the Closing Date, arising from or relating to any of [specified
items listed in the Seller's Disclosure Schedule];]
(iv) any shortfall in the Cash of the Company that is not
covered by the amount held by the Escrow Agent, together with interest
thereon, as determined by the parties in accordance with Section
2.05(f)(iii); or
(v) any claim brought by any employee or Employee, as the case
may be, seconded to the Company, relating to such employee's or
Employee's
<PAGE> 54
47
employment by the Seller, including such employee's or Employee's
secondment by the Seller to the Company, whether prior to or after the
Closing Date.
(b) The obligation of the Seller to indemnify a Purchaser
Indemnified Party shall be subject to the limitation set forth in the fifth
sentence of Section 8.01 and to the following limitations: (i) no
indemnification by the Seller (other than an indemnification pursuant to Section
8.02(a)(iv) or (v)) shall be made unless the aggregate amount of Losses relating
to breaches or otherwise subject to indemnification hereunder exceeds US$75,000,
and then indemnification shall be made solely in the amount of such excess; (ii)
in no event shall the aggregate obligation of all the Seller to indemnify the
Purchaser Indemnified Parties (other than an indemnification pursuant to Section
8.02(a)(iv) or (v)) exceed US$1,000,000, except for a breach of the
representations and warranties contained in Section 3.03 in which case the
obligation to indemnify the Purchaser Indemnified Parties shall not exceed
US$2,000,000; (iii) any recovery of a Loss due to breach of one representation
will preclude recovery of such Loss due to breach of any other representation,
and all indemnification shall be without duplication of any other recovery; (iv)
a Purchaser Indemnified Party shall not be entitled to be indemnified for breach
of the representations and warranties set forth in Section 3.08 or Section 3.12
unless it establishes that (A) a reasonably prudent business person would have
concluded, based on the information available to such person at the time of
taking the action that caused such breach or, in the case of Section 3.12, at
the time of entering into the contract that caused such breach, that the Losses
associated with such action or such contract, as the case may be, would exceed
the benefits associated therewith, and (B) in the case of Sections 3.12(a)(vi)
and (a)(viii) only, that such breach has had a materially negative effect on the
Company; (v) a Purchaser Indemnified Party shall not be entitled to be
indemnified for any breach of the representations and warranties set forth in
Section 3.10 if and to the extent such breach also constitutes a breach of any
of the representations and warranties set forth in Sections 3.11 or 3.16; and
(vi) for purposes of determining whether a Purchaser Indemnified Party is
entitled to be indemnified for any breach of the representations and warranties
contained in Section 3.12, the term "Material Contracts" shall be deemed to
refer solely to (A) any contracts or agreements under which the Company can be
reasonably expected to pay or be paid at least NLG 25,000 over any five year
period during the life of the contract following the Closing Date, (B) any
contracts or agreements that limit or purport to limit the ability of the
Company to compete in any line of business or with any Person or in any
geographic area or during any period of time, or (C) any contracts the presence
or absence of which would have a Material Adverse Effect.
(c) Each Purchaser Indemnified Party shall use its reasonable
efforts to mitigate any Losses for which it seeks indemnification hereunder.
<PAGE> 55
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(d) To the extent that the Seller's undertakings set forth in
this Section 8.02 may be unenforceable, the Seller shall contribute (in the same
proportion as it would otherwise have indemnified the Purchaser Indemnified
Party in accordance with Section 8.02(b)(iii)) the maximum amount that it is
permitted to contribute under applicable law to the payment and satisfaction of
all Losses incurred by the Purchaser and the Company.
SECTION 8.03. Tax Matters. Anything in this Article VIII to
the contrary notwithstanding, the rights and obligations of the parties with
respect to indemnification for any and all Tax matters shall be governed solely
by Article VI.
SECTION 8.04. Indemnification by the Purchaser. (a) The
Seller, its Affiliates and their successors and assigns, and the officers,
directors, employees and agents of the Seller, their Affiliates and their
successors and assigns (each a "Seller Indemnified Party") shall be indemnified
and held harmless, as and to the extent set forth in this Section 8.04, by the
Purchaser for any and all Losses on an After-Tax Basis arising out of or
resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in Section 4.05 of this Agreement;
(ii) Liabilities of the Company, other than any Liabilities
for which the Purchaser is entitled to be indemnified pursuant to
Section 8.02; or
(iii) any Cash that the Purchaser is required to pay to the
Seller, together with interest thereon, as determined by the parties in
accordance with Section 2.05(f)(iii).
(b) Each Seller Indemnified Party shall use its reasonable
efforts to mitigate any Losses for which it seeks indemnification hereunder.
(c) To the extent that the Purchaser's undertakings set forth
in this Section 8.04 may be unenforceable, the Purchaser shall contribute the
maximum amount that it is permitted to contribute under applicable law to the
payment and satisfaction of all Losses incurred by the Parent Entities.
SECTION 8.05. Indemnification Procedures. A Purchaser
Indemnified Party or a Seller Indemnified Party, as the case may be (in each
case, the "Indemnified Party"), shall give the Seller, or the Purchaser, as the
case may be (in each case, the "Indemnifying Party"), notice of any matter which
an Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, within 60 days of such determination,
stating the amount of the Loss,
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if known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises. The obligations and Liabilities of an Indemnifying Party
under this Article VIII with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Article VIII
(a "Third Party Claim") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnified Party shall receive notice of
any Third Party Claim, the Indemnified Party shall give the Indemnifying Party
notice of such Third Party Claim within 30 days of the receipt by the
Indemnified Party of such notice; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Article VIII except to the extent the Indemnifying Party is
materially prejudiced by such failure and shall not relieve the Indemnifying
Party from any other obligation or Liability that it may have to any Indemnified
Party otherwise than under this Article VIII. If the Indemnifying Party
acknowledges in writing its obligations to indemnify the Indemnified Party
hereunder against any Losses (subject to the limitations set forth in Section
8.02(b)) that may result from such Third Party Claim, then such Indemnifying
Party shall be entitled to assume and control the defense of such Third Party
Claim at its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within five Business Days of the
receipt of such notice from the Indemnified Party; provided, however, that if
there exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the Indemnified Party for
the same counsel to represent both the Indemnified Party and the Indemnifying
Party, then the Indemnified Party shall be entitled to retain its own counsel,
in each jurisdiction for which the Indemnified Party determines counsel is
required to participate in such defense, at the expense of the Indemnifying
Party. In the event the Indemnifying Party exercises the right to undertake any
such defense against any such Third Party Claim as provided above, the
Indemnified Party shall cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the Indemnifying Party's
expense, all witnesses, pertinent records, materials and information in the
Indemnified Party's possession or under the Indemnified Party's control relating
thereto as is reasonably required by the Indemnifying Party, subject to
reimbursement of reasonable out-of-pocket expenses. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party
all such witnesses, records, materials and information in the Indemnifying
Party's possession or under the Indemnifying Party's control relating thereto as
is reasonably required by the Indemnified Party, subject to reimbursement of
reasonable out-of-pocket expenses. No such Third Party Claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party.
<PAGE> 57
50
ARTICLE IX
TERMINATION AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of the Seller and the
Purchaser;
(b) by either the Seller or the Purchaser if the Closing shall
not have occurred by December 31, 1997;
(c) by either the Purchaser or the Seller in the event that
any Governmental Authority shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable;
(d) by the Purchaser if, between the date hereof and the time
scheduled for the Closing: (i) there shall have been a breach of any material
representation or warranty of the Seller contained in this Agreement; (ii) the
Seller shall not have complied with any material covenant or agreement to be
complied with by it and contained in this Agreement; or (iii) the Seller or the
Company make a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against the Seller or the Company seeking
to adjudicate either of them bankrupt or insolvent, or seeking liquidation,
winding up or reorganization, arrangement, adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy, insolvency or
reorganization; or
(e) by the Seller if, between the date hereof and the time
scheduled for the Closing: (i) there shall have been a breach of any material
representation or warranty of the Purchaser contained in this Agreement; (ii)
the Purchaser shall not have complied with any material covenant or agreement to
be complied with by it and contained in this Agreement; or (iii) the Purchaser
makes a general assignment for the benefit of creditors, or any proceeding shall
be instituted by or against the Purchaser seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up or reorganization, arrangement,
adjustment, protection, relief or composition of its debts under any Law
relating to bankruptcy, insolvency or reorganization.
SECTION 9.02. Effect of Termination. (a) In the event of
termination of this Agreement as provided in Section 9.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto
<PAGE> 58
51
except that the provisions of Sections 5.03(a), 9.02(a), 9.02(b), 10.0l, 10.02,
10.03, 10.06, 10.08, 10.10, 10.11, 10.12, 10.13 and 10.14 shall survive any such
termination.
(b) Notwithstanding the foregoing, if the Closing does not
occur because of a breach by a party, such party will reimburse the other
parties (as their sole and exclusive remedy hereunder) for their out-of-pocket
costs and expenses, including, without limitation, fees and disbursements of
counsel, financing sources (other than bank commitment fees paid by the
Purchaser prior to June 15, 1997 or paid by the Purchaser after June 15, 1997
without consulting the Seller) and accountants, and disbursements (but not fees)
of financial advisors, incurred in connection with the preparation, negotiation
and performance of this Agreement and the transactions contemplated hereby.
SECTION 9.03. Waiver. A party to this Agreement may (a) extend
the time for the performance of any of the obligations or other acts of the
other parties, (b) waive any inaccuracies in the representations and warranties
of the other parties contained herein or in any document delivered by the other
parties pursuant hereto or (c) waive compliance with any of the agreements or
conditions of the other parties contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 10.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or
<PAGE> 59
52
certified mail (postage prepaid. return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02):
(a) If to the Purchaser:
Galileo International Partnership
9700 West Higgins Road
Rosemont, Illinois 60018, USA
Attention: General Counsel
Telecopy: (847) 518 4915
<PAGE> 60
53
with a copy to:
Nauta Dutilh
Postbus 7113
1007 JC Amsterdam
Prinses Irenestraat 59
1077 WV Amsterdam
Attention: Gerlof J.S. Postma, Esq.
Telecopy: +31 (20) 661 2827
a copy to:
The Galileo Company
Galileo Centre Europe
Windmill Hill
Swindon
Wilts SN5 6PH, UK
Attention: Company Secretary
Telecopy: +44 (0)1793 886190
and a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York USA
Attention: Clare O'Brien, Esq.
Telecopy: (212) 848-7179
(b) If to the Seller:
__________________
__________________
__________________
Attention: ___________
Telecopy: ___________
with a copy to:
__________________
__________________
__________________
__________________
<PAGE> 61
54
(c) If to the Company:
__________________
__________________
__________________
Attention: ___________
Telecopy: ___________
with a copy to:
__________________
__________________
__________________
__________________
SECTION 10.03. Public Announcements. Except as may be required
by Law, no party to this Agreement shall make, or cause to be made any press
release or public announcement in respect of this Agreement or the transactions
contemplated hereby or the existence of discussion or negotiations between the
parties or otherwise communicate with any news media without the prior consent
of the other parties, and the parties shall cooperate as to the form, timing and
contents of any such press release or public announcement.
SECTION 10.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 10.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 10.06. Entire Agreement. This Agreement (including the
Exhibits and the Seller's Disclosure Schedule which are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein) and
the
<PAGE> 62
55
Non-Disclosure Agreement constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, between the Seller and the
Purchaser with respect to the subject matter hereof and thereof.
SECTION 10.07. Assignment. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Seller and the Purchaser (which consent may be granted or withheld by the Seller
or the Purchaser); provided, however, that the Purchaser may assign all or any
portion of its rights and obligations under this Agreement to one or more
Affiliates of the Purchaser without the consent of the Seller; provided further
that in the event of such assignment, Purchaser will remain liable for any
obligations hereunder not performed by such assignee or assignees.
SECTION 10.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the Parties and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 10.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Seller and the Purchaser or (b) by a waiver in accordance with Section 9.03.
SECTION 10.10. Arbitration. (a) Subject to Section 10.10(b),
any dispute arising between the Parties hereto involving the subject matters
covered by this Agreement shall be submitted to arbitration under this Section
10.10. A Party asserting a breach of this Agreement by the other Party shall
notify the other Party of such alleged breach (a "Dispute Notice") and the
Parties shall attempt to resolve such dispute amicably and if they shall fail to
resolve it within thirty (30) days of the date of the Dispute Notice, either
Party may notify the other Party that it wishes to commence an arbitration
proceeding under this Section 10.10 (an "Arbitration Request"). In any
arbitration proceeding the Party commencing the arbitration (the "Petitioner")
shall include in the Arbitration Request (a) a statement of the facts
constituting the alleged breach or dispute, (b) a written statement of position
("Statement") regarding the dispute and (c) the name of an elector designated by
it. The Statement shall state the facts and arguments in support of the position
taken by the Party submitting such Statement and shall detail that Party's
proposed solution and relief sought (if any). Copies of any Arbitration Request
shall be furnished at the same time to the other Party hereto. The Party with
whom the Petitioner has its dispute (the "Respondent") shall within five (5)
Business Days after the date of the Arbitration Request designate a second
elector by notice to the Petitioner (copies of
<PAGE> 63
56
which shall be furnished to the other Party), but if it shall fail to do so
within such period the Petitioner may designate an elector on Respondent's
behalf. The electors chosen by the Petitioner and the Respondent shall attempt
to agree upon an arbitrator (the "Arbitrator"), but if they are unable to do so
within twenty (20) Business Days after the designation of the second elector,
then either elector thereafter may apply to the American Arbitration Association
(the "Association") for the selection of the Arbitrator in accordance with the
Commercial Arbitration Rules of such Association. The Arbitrator so selected
shall have full power to decide any dispute referred to in this Section 10.10.
The arbitration proceedings shall be conducted in the English language, and the
place of arbitration and the making of the Award (as defined below) shall be
Paris, France. The UNCITRAL rules of commercial arbitration shall apply to any
arbitration commenced pursuant to this Section 10.10, as modified by the
following procedure:
(i) Within five (5) Business Days of the selection of the
Arbitrator (the "Commencement Date"), the Respondent shall deliver its
Statement regarding the dispute to the Arbitrator and to the
Petitioner.
(ii) Within fifteen (15) Business Days from the Commencement
Date, each of the Petitioner and Respondent shall deliver to the
Arbitrator and to the other Party, a response ("Response") to the other
Party's Statement setting forth opposing facts and arguments and
limited in length to ten (10) typed, single spaced pages (excluding any
evidentiary exhibits included therein).
(iii) Within twenty (20) Business Days from the Commencement
Date, each of the Petitioner and the Respondent may deliver to the
Arbitrator and to the other Party, a reply to the Response limited to
setting forth facts and arguments in rebuttal to the Statement and
Response of the other Party and limited in length to five (5) typed,
single spaced pages (excluding any evidentiary exhibits included
therein).
(iv) Within twenty-five (25) Business Days from the
Commencement Date, each of the Petitioner and Respondent shall present
an oral summation of its position to the Arbitrator in the presence of
the other Party in accordance with such rules of procedure including,
without limitation, length of presentation and right of
cross-examination, as the Arbitrator shall determine in writing and
deliver to the Parties not less than three (3) Business Days prior to
such hearing; provided, however, that such hearing shall not exceed
eight (8) hours in total and may not be adjourned except for
extraordinary circumstances beyond the control of the Parties.
<PAGE> 64
57
(v) The Arbitrator shall either issue his or her decision and
award ("Award") or request a further meeting of the Parties within
fifteen (15) days of the hearing.
(vi) Any such further meeting of the Parties shall take place
within five (5) Business Days of the request therefor and shall be
conducted as determined by the Arbitrator. The Arbitrator shall issue
his or her Award no later than fifteen (15) days after any such further
meeting of the Parties.
(vii) The Award shall be in writing and shall be limited to a
decision either completely in favor of Petitioner's request for relief
or completely in favor of Respondent's. The Award shall be final and
binding upon the Parties hereto and judgment may be entered thereon in
any court of competent jurisdiction and the costs and expenses of such
arbitration (and of enforcing any Award) shall be borne by the Party
losing such arbitration.
(b) This Section 10.10 shall in no way affect the right of any
Party to seek such interim relief, and only such relief, as may be required to
maintain the status quo in aid of the arbitration in any court of competent
jurisdiction.
SECTION 10.11. Governing Law. This Agreement shall be
construed in accordance with and be governed by the laws of The Netherlands,
excluding (to the greatest extent permissible by law) any rule of law that would
cause the application of the laws of any jurisdiction other than The
Netherlands. To the greatest extent possible, all terms used in this Agreement
shall be construed to have the meaning ascribed to such terms under the laws of
The Netherlands.
SECTION 10.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement. This
Agreement is drawn up in the English language and may be translated into any
language other than English provided however that the English text shall
prevail.
SECTION 10.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 10.14. No rescission. The Parties hereto waive their
rights under Sections 6:265 et seq of the Netherlands Civil Code to claim
rescission
<PAGE> 65
58
("ontbinding") of this Agreement; provided, however, that nothing in this
Section 10.14 shall prevent any party from exercising its right to terminate
this Agreement in accordance with the provisions of Section 9.01.
IN WITNESS WHEREOF, the Purchaser, the Seller and the Company
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
GALILEO INTERNATIONAL
PARTNERSHIP
By:___________________________
Name:
Title:
KONINKLIJKE LUCHTVAART
MAATSCHAPPIJ N.V.
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
GALILEO NEDERLAND BV
By:___________________________
Name:
Title:
<PAGE> 1
Exhibit 10.1
STOCKHOLDERS' AGREEMENT
Among
GALILEO INTERNATIONAL, INC.
certain of its
STOCKHOLDERS
and certain
RELATED PARTIES OF SUCH STOCKHOLDERS
Dated as of _______________, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms........................................................................... 1
1.02. Other Defined Terms............................................................................. 4
ARTICLE II
BOARD REPRESENTATION; COMMITTEES
2.01. Size of the Board............................................................................... 6
2.02. Nomination of Directors......................................................................... 6
2.03. Vacancies....................................................................................... 7
2.04. Removal......................................................................................... 9
2.05. Classification of Directors..................................................................... 9
2.06. Committee....................................................................................... 10
2.07. Air Vendor Consultation Group................................................................... 10
ARTICLE III
RESTRICTIONS ON TRANSFER
3.01. General Restriction............................................................................. 11
3.02. Legends......................................................................................... 11
3.03. Restrictions on Certain Transfers of Shares..................................................... 12
3.04. Right of First Refusal.......................................................................... 12
3.05. Affiliate Transferees to Execute Agreement...................................................... 14
3.06. Sale to a Third Party........................................................................... 14
3.07. Restrictions on Certain Transfers of Shares of Preferred Stock.................................. 15
3.08. Improper Sale................................................................................... 15
3.09. Limitation on Dispositions...................................................................... 16
ARTICLE IV
CERTAIN AGREEMENTS
4.01. Certain Agreements.............................................................................. 17
4.02. No Solicitation................................................................................. 18
4.03. Issuances of Shares of Capital Stock............................................................ 18
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE V
MISCELLANEOUS
5.01. Further Action.................................................................................. 18
5.02. Representations................................................................................. 18
5.03. Specific Performance............................................................................ 18
5.04. Amendments and Waivers.......................................................................... 19
5.05. Notices......................................................................................... 19
5.06. Benefit; Successors and Assigns................................................................. 24
5.07. Arbitration..................................................................................... 24
5.08. Changes to Non-Competition Agreement............................................................ 26
5.09. Termination..................................................................................... 27
5.10. Miscellaneous................................................................................... 27
5.11. Tax Treatment................................................................................... 27
5.12. Tax Opinion..................................................................................... 27
</TABLE>
ii
<PAGE> 4
STOCKHOLDERS' AGREEMENT, dated as of ___________, 1997, among
GALILEO INTERNATIONAL, INC., a Delaware corporation (the "Company"), each of the
stockholders of the Company listed on Schedule A hereto and, with respect to
Articles IV and V only, each of the Persons listed on Schedule B hereto.
WHEREAS, the Original Owners (as defined below) immediately
prior to the consummation of the IPO (as defined below) collectively own 100% of
the shares of common stock, par value $0.01 per share, of the Company (the
"Common Stock");
WHEREAS, upon the consummation of the IPO, the Original Owners
will collectively own shares of Common Stock representing at least [__]% of the
outstanding shares of Common Stock;
WHEREAS, certain Original Owners own shares of Special Voting
Preferred Stock, par value $0.01 per share, of the Company, in Series A through
G (the "Preferred Stock"), which series of Preferred Stock are entitled to elect
a certain number of Original Owner Directors on the terms and conditions set
forth in the Restated Certificate of Incorporation (as such terms are defined
below);
WHEREAS, the parties hereto desire to set forth in writing
their understanding and agreement for the voting of shares of Common Stock held
by the Original Owners on certain matters, and for certain other courses of
conduct; and
WHEREAS, it is a condition precedent to the consummation of
the IPO that the parties enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any specified Person, any
other Person, other than the Company or any subsidiary of the Company, that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such specified Person. Without
limiting the foregoing, the parties acknowledge that the respective Persons
listed on Schedule B hereto are Affiliates of the respective Persons they are
identified as having a controlling interest in on Schedule A hereto.
<PAGE> 5
2
"Affiliated Person" means, with respect to any specified
Person, such Person's Affiliates, such Person's officers, directors and
employees, and the officers, directors and employees of such Affiliates.
"Agreement" or "this Agreement" means this Stockholders'
Agreement, dated as of _____, 1997, among the Company and each of the other
parties signatory hereto, and all amendments hereto made in accordance with the
provisions of Section 5.04.
"beneficial owner" or "beneficially own" has the meaning given
such term in Rule 13d-3 under the Exchange Act.
"Board" means the Board of Directors of the Company.
"Commission" means the Securities and Exchange Commission, and
any successor commission or agency having similar powers.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Director" means a director of the Company
"Distributor" means a Person which has entered into, or enters
into, a Distributor Agreement with the Company.
"Distributor Agreement" means any distributor agreement
entered into between the Company and any Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Interest" means (i) with respect to an Original Owner that
owned, prior to the IPO, more than 2% of the Partnership's outstanding general
partnership interests, 1% or more of the outstanding shares of Common Stock, and
(ii) with respect to an Original Owner that owned, prior to the IPO, 2% or less
of the Partnership's outstanding general partnership interests, the number of
shares of Common Stock owned by such Original Owner on the closing of the IPO,
provided that such amount is at least 0.005% of the Common Stock outstanding
immediately following the IPO; provided, however, that if, at any time after the
IPO, the Company issues additional shares of Common Stock and, as a result of
such
<PAGE> 6
3
issuance, the number of shares of Common Stock owned by an Original Owner falls
below the percentage interest required by clause (i) or clause (ii) above, such
issuance shall be excluded from the determination of the Interest of such
Original Owner.
"IPO" means the underwritten initial public offering of shares
of Common Stock of the Company pursuant to an effective Registration Statement
on Form S-1 (File No.
333-27495) under the Securities Act.
"Merger" means the transaction or transactions whereby Galileo
International Partnership, a Delaware partnership, has merged with and into a
wholly-owned limited liability company subsidiary of the Company.
"Nonaffiliated Person" means, with respect to any specified
Person, any Person other than an Affiliated Person.
"Non-Competition Agreement" means a non-competition agreement
with the Company in the form attached hereto as Exhibit A, as such agreement may
be amended from time to time in accordance with its terms and pursuant to
Section 5.08 of this Agreement.
"Original Owners" means (i) the stockholders listed on
Schedule A hereto, (ii) any Affiliate of an Original Owner that is deemed to be
an Original Owner pursuant to Section 3.05 and (iii) any Permitted Preferred
Stock Transferee that is deemed to be an Original Owner pursuant to Section
3.06.
"Original Owner Director" means any Director elected pursuant
to the Restated Certificate of Incorporation by an Original Owner that owns one
or more shares of Preferred Stock.
"Parent Entities" means the Persons listed on Schedule B
hereto.
"Person" means any individual, partnership, firm, corporation,
association, trust, estate, unincorporated organization or other entity, as well
as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"Pro Rata Number" means, with respect to a First Refusal
Original Owner or Prospective Buyer, as the case may be, a number of Shares
equal to the product of (a) the number of the Offered Shares and (b) a fraction
the numerator of which shall be the total number of the Shares owned
(immediately prior to the Sale of the Offered Shares) by such First Refusal
Original Owner or Prospective Buyer, as the case may be, and the denominator of
which shall be the total number of the Shares owned (immediately prior to the
Sale of the Offered Shares) by the First Refusal Original Owners and Prospective
Buyer.
<PAGE> 7
4
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of ________ __, 1997 (as the same may be amended from time
to time), among the Company and each of the stockholders of the Company listed
on Schedule A hereto.
"Restated Certificate of Incorporation" means the Restated
Certificate of Incorporation of the Company, as amended from time to time.
"Restricted Shares" means all Shares other than (a) Shares
that have been registered under a registration statement pursuant to the
Securities Act, (b) Shares with respect to which a Sale has been made in
reliance on and in accordance with Rule 144 or (c) Shares with respect to which
the holder thereof shall have delivered to the Company either (i) an opinion, in
form and substance satisfactory to the Company, of counsel, who shall be
satisfactory to the Company, or (ii) a "no action" letter from the staff of the
Commission, to the effect that subsequent transfers of such Shares may be
effected without registration under the Securities Act.
"Sale" means any sale, assignment, transfer, distribution or
other disposition of Shares or of shares of Preferred Stock, as applicable, or
of a participation therein, whether voluntarily or by operation of law.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Share" means any share of Common Stock (i) beneficially owned
by an Original Owner immediately after the consummation of the IPO (excluding
any shares of Common Stock acquired in the IPO), (ii) acquired by an Original
Owner from any other Original Owner in accordance with Section 3.04, (iii)
acquired by a Prospective Affiliate Transferee in accordance with Section 3.05;
(iv) acquired by a Permitted Preferred Stock Transferee in accordance with the
first sentence of Section 3.06, or as contemplated by clause (y) of Section
3.07, or held by a Permitted Preferred Stock Transferee at the time of the
transfer to such Person of Shares in accordance with clause (x) of Section 3.07,
provided that, to the extent the shares of Common Stock held by such Permitted
Preferred Stock Transferee at the time of such transfer, when added to the
Shares transferred to such Person in accordance with clause (x) of Section 3.07,
represent more than 5% of the then outstanding shares of Common Stock, then only
such number of shares of Common Stock held by such Person at the time of such
transfer which, when added to the Shares transferred to such Person in
accordance with clause (x) of Section 3.07, represent 5% of the then outstanding
shares of Common Stock shall constitute "Shares"; (v) acquired by an Original
Owner that owns one or more shares of Preferred Stock for the purpose of
preserving its ability to elect one or more Original Owner Directors pursuant to
the terms of Section 4.3(d) of the Restated Certificate of Incorporation; (vi)
issued by way of a stock split of the Common Stock; or (vii) issued as (or
issuable upon the conversion or exercise of any warrant, rights, option or other
convertible security which is issued as) a dividend or other
<PAGE> 8
5
distribution with respect to, or in exchange for, or in replacement of, the
Common Stock referred to in clauses (i) through (vi) above.
"Third Party" means, with respect to any Original Owner, any
non-Affiliated Person (other than the Company or another Original Owner or any
Affiliate thereof), and "Third Parties" shall have a correlative meaning.
"Voting Securities" means, at any time, shares of any class
of capital stock of the Company that are then entitled to vote generally in the
election of Directors (other than shares of Preferred Stock); provided that for
purposes of this definition any securities which at such time are convertible or
exchangeable into or exercisable for shares of Common Stock shall be deemed to
have been so converted, exchanged or exercised.
SECTION 1.02. Other Defined Terms. The following terms shall
have the meanings defined for such terms in the sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Acquiring Owner 4.01(b)
Aer Lingus Schedule B
Air Canada Schedule B
Air Vendor Consultation Group 2.07
Alitalia Schedule B
Arbitration Request 5.07
Arbitrator 5.07
Association 5.07
Austrian Airlines Schedule B
Award 5.07(v)
British Airways Schedule B
Code 2.06(c)
Commencement Date 5.07(i)
Common Stock Recitals
Company Preamble
Coporga Schedule A
Covia Schedule A
Dispute Notice 5.07
DSI Schedule A
elector 5.07
First Refusal Original Owners 3.04
First Refusal Price 3.04
Independent Director 2.02(iii)
Investment Bank 4.01(b)
KLM Schedule B
</TABLE>
<PAGE> 9
6
<TABLE>
<S> <C>
Management Directors 2.02(ii)
Notice of Exercise 3.04(b)
Notice of Intention 3.04(a)
Offer 4.01(b)
Offered Shares 3.04(a)
Olympic Schedule B
Olynet Schedule A
Option Period 3.04(b)
Partnership 5.11
Permitted Preferred Stock Transferee 3.07
Petitioner 5.07
Proposal 4.01(b)
Prospective Affiliate Transferee 3.05
Prospective Buyer 3.04(a)
Racom Schedule A
Replacement Original Owner Director 2.03(a)
Resnet Schedule A
Respondent 5.07
Response 5.07(ii)
Retford Schedule A
Roscor Schedule A
Selling Original Owner 3.04
Significant Transaction 2.01
Statement 5.07
SwissAir Schedule B
TAP Schedule B
Third Party Transferee 3.06
TIS Schedule A
Travidata Schedule A
United Schedule B
USAM Schedule A
USAW Schedule B
</TABLE>
ARTICLE II
BOARD REPRESENTATION; COMMITTEES
SECTION 2.01. Size of the Board. The Company shall take such
actions as are necessary, and each of the Original Owners shall vote its Shares
and shall take such other actions as are necessary, to cause the Board at all
times from and after the consummation of the IPO until the tenth anniversary of
the date hereof to consist of 13 members unless the
<PAGE> 10
7
Company and the Original Owners then party to this Agreement who hold shares of
one or more series of Preferred Stock entitled to elect directors to the Board
pursuant to the terms of the Restated Certificate of Incorporation unanimously
agree otherwise; provided, however, that in connection with a Significant
Transaction, the size of the Board may be increased by majority vote of the
whole Board to the extent such increase in the size of the Board is proportional
(rounded to the nearest whole number) to the increase in the number of shares of
Common Stock outstanding as a result of the issuance of shares of Common Stock
in connection with such Significant Transaction. For purposes of this Agreement,
a "Significant Transaction" means an acquisition, merger, or issuance of
securities to a single Person or group of Persons (other than an underwriter or
group of underwriters) in which shares of Common Stock constituting at least a
percentage of the then outstanding shares of Common Stock (on a fully diluted
basis) equal to the number expressed as a percentage obtained by dividing one by
the then number of Board seats are issued; provided that, in no event will any
transaction involving the issuance of shares constituting less than 5% of the
then outstanding shares of Common Stock (on a fully diluted basis) constitute a
Significant Transaction.
SECTION 2.02. Nomination of Directors. The Company shall take
such actions as are necessary, and each of the Original Owners shall vote its
Shares and shall take, and shall cause any Director elected by it pursuant to
the terms of any series of Preferred Stock held by it to take, such other
actions as are necessary, to cause the Board, at all times from and after the
consummation of the IPO until the tenth anniversary of the date hereof, to
include the following Directors elected or nominated as follows:
(i) Original Owner Directors. Each Original Owner owning
Shares and shares of one or more series of Preferred Stock shall be
entitled to elect such number of individuals to serve as Original Owner
Directors as such series of Preferred Stock shall be entitled to elect
pursuant to the Restated Certificate of Incorporation.
(ii) Management Directors. The Chief Executive Officer, the
Chief Operating Officer and the Chief Financial Officer of the Company
shall be nominated by the Board to be elected as Directors (the
"Management Directors"); provided, however, that until the Company
shall have a Chief Operating Officer, the General Counsel of the
Company shall be nominated to be elected as a Management Director. The
initial Chief Executive Officer shall serve as the Chairman of the
Board. Thereafter, the Board will determine which Director will be the
Chairman of the Board.
(iii) Independent Directors. Three individuals shall be
nominated by the Board to be elected as Directors, each of whom shall
be an "independent director", as such term is used in Rule 303 of the
Rules of the New York Stock Exchange as in existence on the date hereof
or as amended from time to time thereafter (an "Independent Director").
<PAGE> 11
8
(iv) Replacement Original Owner Directors. In the event that
the share of any series of Preferred Stock is redeemed by the Company,
the vacancy resulting from such event shall be filled by the Board with
an Independent Director, as more fully set forth in Section 2.03.
SECTION 2.03. Vacancies. (a) In the event an Original Owner
that owns shares of one or more series of Preferred Stock ceases to own Shares
constituting the applicable percentage of the outstanding Common Stock entitling
the series of Preferred Stock held by such Original Owner to elect any one or
more Original Owner Directors, or the share of such series of Preferred Stock is
redeemed for any other reason pursuant to Section 4.3(f) of the Restated
Certificate of Incorporation, then the Original Owner Director who was
previously elected by the holder of such series of Preferred Stock shall be
deemed to have resigned effective immediately upon the occurrence of such event,
and such Original Owner and the Company shall take all actions necessary to give
effect to such resignation; provided, however, that if an Original Owner's share
or shares of Preferred Stock has or have been redeemed pursuant to Section
4.3(f)(3) of the Restated Certificate of Incorporation due to the fact that such
Original Owner has given the Company notice of its intention to terminate its
Non-Competition Agreement, then the Company shall provide to such Original Owner
during the period between the date on which such share or shares of Preferred
Stock is or are redeemed and the date on which such Original Owner's
Non-Competition Agreement terminates the same financial information as the
Company provides to the Board, except to the extent the Independent Directors
determine that it would be inappropriate for such Original Owner to receive any
particular portion of such financial information in light of the fact that such
Original Owner has delivered to the Company a notice of its intention to
terminate its Non-Competition Agreement. Any vacancy resulting from any such
resignation shall be filled with an Independent Director chosen by a majority of
the whole Board (such individual, a "Replacement Original Owner Director");
provided that if any such vacancy results from the transfer by such Original
Owner of Shares and the share of any series of Preferred Stock to (i) a
Permitted Preferred Stock Transferee and the holder of such series of Preferred
Stock continues to be entitled to elect an individual to the Board pursuant to
the Restated Certificate of Incorporation, or (ii) another Original Owner as a
result of which the holder of the share of such series of Preferred Stock
continues to be entitled to elect an individual to the Board pursuant to the
Restated Certificate of Incorporation, any such vacancy shall be filled in
accordance with the relevant provisions of the Restated Certificate of
Incorporation; and provided further that no Original Owner may transfer the
share of a series of Preferred Stock other than in accordance with this
Agreement and the Restated Certificate of Incorporation.
(b) In the event a vacancy on the Board occurs as a result of
the death, disability, resignation, removal or otherwise of a Director (other
than the resignation of an Original Owner Director as set forth in Section
2.03(a)), such vacancy shall be filled as follows:
<PAGE> 12
9
(i) In the event such vacancy results from the death,
disability, resignation, removal or otherwise of an
Independent Director, such vacancy shall be filled
with another Independent Director chosen by a
majority of the whole Board.
(ii) In the event such vacancy results from the death,
disability, resignation, removal or otherwise of a
Management Director, such vacancy shall be filled by
the Board with the successor Chief Executive Officer,
Chief Financial Officer or Chief Operating Officer
(or General Counsel in the absence of such Chief
Operating Officer), as the case may be, or any other
officer acting in such capacity at the direction of
the Board or the Chief Executive Officer.
(iii) In the event such vacancy results from the death,
disability, resignation, removal or otherwise of an
Original Owner Director, such vacancy shall be filled
by the Original Owner that holds the share of the
series of Preferred Stock that was entitled to elect
the Original Owner Director so ceasing to be a
Director in accordance with the provisions of the
Restated Certificate of Incorporation.
(iv) In the event such vacancy results from the death,
disability, resignation, removal or otherwise of a
Replacement Original Owner Director, such vacancy
shall be filled with an Independent Director chosen
by a majority of the whole Board.
(c) The Directors chosen under subsections (a) and (b) of this
Section 2.03 shall hold office until the next election of the class for which
such Directors were chosen and until their successors shall have been elected
and qualified.
SECTION 2.04. Removal. As provided in the Restated Certificate
of Incorporation, any Original Owner that holds the share of a series of
Preferred Stock may, at any time in its sole discretion, remove the Original
Owner Director elected by such series of Preferred Stock, and elect another
individual to serve in the stead of such removed Original Owner Director;
provided that such removal and election be pursuant to a written notice to the
Company complying with Section 5.05 and identifying the individual to serve in
the stead of such removed Director. The Company shall promptly inform the other
Original Owners of such removal and election. The vacancy resulting from such
removal shall be filled in accordance with Section 2.03(b)(iii).
SECTION 2.05. Classification of Directors. The Company shall
take such actions as are necessary, and each of the Original Owners shall vote
its Shares, elect its Original Owner Directors and take such other actions as
are necessary, to cause the classes
<PAGE> 13
10
of Directors to consist of the following Management Directors, Original Owner
Directors and Independent Directors:
(a) The Directors whose terms will expire at the first annual
meeting of the stockholders of the Company following the consummation
of the IPO shall consist of the General Counsel of the Company, one
Original Owner Director elected by Covia, one Original Owner Director
elected in accordance with Section 2.05(d) by an Original Owner whose
Parent Entity is based in Europe, and one Independent Director;
(b) The Directors whose terms will expire at the second annual
meeting of the stockholders of the Company following the consummation
of the IPO shall consist of the Chief Financial Officer of the Company,
one Original Owner Director elected by Covia, one Original Owner
Director elected in accordance with Section 2.05(d) by an Original
Owner whose Parent Entity is based in Europe, and one Independent
Director;
(c) The Directors whose terms will expire at the third annual
meeting of the stockholders of the Company following the consummation
of the IPO shall consist of the Chief Executive Officer of the Company,
one Original Owner Director elected by Covia, one Original Owner
Director elected by USAM, one Original Owner Director elected in
accordance with Section 2.05(d) by an Original Owner whose Parent
Entity is based in Europe, and one Independent Director;
(d) The Original Owners that hold the shares of any series of
Preferred Stock and whose Parent Entities are based in Europe shall
determine among themselves which of them shall be entitled to elect an
Original Owner Director to each of the classes described in Sections
2.05(a), (b) and (c).
SECTION 2.06. Committees. (a) The Company and each of the
Original Owners shall take such actions as are necessary to cause the Board at
all times to designate annually the following committees of the Board:
(i) A Nominating Committee, which shall review, report and
make recommendations to the Board on the following matters: other than
with respect to Original Owner Directors, and consistent with the terms
of this Agreement, nominees for Directors, selection criteria for
Directors, and removal of Directors if deemed appropriate; evaluation
and performance of the Board and individual Directors; and such other
matters as the Board may from time to time prescribe.
(ii) An Audit Committee, which shall review, report and make
recommendations to the Board on the following matters: the selection of
independent auditors; the fees to be paid to such auditors; the
adequacy of the audit and
<PAGE> 14
11
accounting procedures of the Company; and such other matters as the
Board may from time to time prescribe.
(iii) A Compensation Committee, which shall review, report and
make recommendations to the Board on the following matters: the
management remuneration policies of the Company, including salary rates
and fringe benefits of appointed officers; other remuneration plans
such as incentive compensation, deferred compensation and stock option
plans; directors' compensation and benefits; and such other matters as
the Board may from time to time prescribe.
(b) The Nominating Committee shall include (i) at least one
Original Owner Director elected by an Original Owner whose Parent Entity is
based in Europe and (ii) at least one Original Owner Director elected by an
Original Owner whose Parent Entity is based in North America. In addition, the
Nominating Committee shall include at least one Management Director and one
Independent Director. The initial Chief Executive Officer of the Company shall
be the initial Management Director on the Nominating Committee.
(c) The Compensation Committee shall include (i) at least one
Original Owner Director elected by an Original Owner whose Parent Entity is
based in Europe and (ii) at least one Original Owner Director elected by an
Original Owner whose Parent Entity is based in North America. In addition, the
Compensation Committee shall include at least one Independent Director and one
Management Director (and the initial Chief Executive Officer shall be the
initial Management Director on the Compensation Committee). Notwithstanding the
foregoing, the membership of the Compensation Committee shall be adjusted to the
extent necessary so that (i) it is comprised of two or more "non-employee
directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the
Exchange Act and (ii) it is comprised of two or more "outside directors" within
the meaning of Treas. Reg. Section 1.162-27(e)(3) promulgated under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), except to
the extent that the Company may continue to rely on the transition relief
provided pursuant to the Treas. Reg. Section 1.162-27(f) promulgated under
Section 162(m) of the Code.
SECTION 2.07. Air Vendor Consultation Group. As promptly as
practicable after the date hereof, the Company shall establish an air vendor
consultation group (the "Air Vendor Consultation Group"). The airline Affiliate
or airline Affiliates of each Distributor shall be entitled to appoint one
representative in the aggregate, and the airline Affiliate or airline Affiliates
of each Original Owner that does not have an Affiliate that is a Distributor
shall be entitled to appoint one representative in the aggregate, to the Air
Vendor Consultation Group, provided that no such airline Affiliate shall be
represented on the Air Vendor Consultation Group if the Original Owner
(including, without limitation, any Person that shall have become an Original
Owner pursuant to Section 3.05) of which it is an Affiliate no longer holds an
Interest in the Company. The Air Vendor Consultation Group
<PAGE> 15
12
shall meet from time to time with the Company's management to discuss
distribution-related issues in accordance with appropriate guidelines (including
applicable law).
ARTICLE III
RESTRICTIONS ON TRANSFER
SECTION 3.01. General Restriction. No Original Owner shall,
directly or indirectly, make or solicit any Sale with respect to any Share, or
any share of Preferred Stock, except in compliance with the Securities Act and
this Agreement.
SECTION 3.02. Legends. (a) The Company shall affix to each
certificate evidencing Shares or shares of Preferred Stock a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON
THE BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN
CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY."
(b) In the event that any Shares shall cease to be Restricted
Shares, the Company shall, upon the written request of the holder thereof, issue
to such holder a new certificate evidencing such Shares without the legend
required by Section 3.02(a) endorsed thereon; provided; however, that such
holder shall furnish the Company or its transfer agent such certificates, legal
opinions or other information as the Company or its transfer agent may
reasonably require to confirm that the legend is not required on such
certificate.
(c) The Company shall affix to each certificate evidencing
Shares or shares of Preferred Stock a legend in substantially the following
form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN A
STOCKHOLDERS' AGREEMENT, DATED AS OF ____________, 1997, AS IT
MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES
<PAGE> 16
13
WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND
UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH."
(d) In the event that any Shares or any shares of Preferred
Stock shall cease to be subject to the restrictions on transfer set forth in
this Agreement and in the Restated Certificate of Incorporation, the Company
shall, upon the written request of the holder thereof, issue to such holder a
new certificate evidencing such Shares or such shares of Preferred Stock, as the
case may be, without the legend required by Section 3.02(c).
SECTION 3.03. Restrictions on Certain Transfers of Shares. No
Original Owner shall, directly or indirectly, make or solicit any Sale of any
Share beneficially owned by it other than (a) any Sale to a Third Party or Third
Parties (including in connection with a Sale effected through an offering made
pursuant to the Registration Rights Agreement), (b) any Sale to one of its
Affiliates that is made in compliance with the procedures, and subject to the
limitations, set forth in Section 3.05 and (c) any Sale to another Original
Owner or any of its Affiliates that is made in compliance with the procedures,
and subject to the limitations, set forth in Section 3.04. Notwithstanding the
foregoing, except as otherwise expressly provided in this Agreement, all Sales
permitted by the foregoing clauses (a) through (c) shall be subject to, and
shall not be made other than in compliance with, the provisions of Sections 3.01
and 3.09.
SECTION 3.04. Right of First Refusal. (a) If, at any time, any
Original Owner (the "Selling Original Owner") shall have agreed with another
Original Owner or an Affiliate thereof (a "Prospective Buyer") to sell or
otherwise transfer, whether directly or indirectly, in a bona fide transaction,
any or all of the Shares (the "Offered Shares") held by such Selling Original
Owner (other than pursuant to an Offer (as defined in Section 4.01(b)) or a
public offering effected in accordance with the Registration Rights Agreement or
otherwise) to the Prospective Buyer, such Selling Original Owner shall deliver a
written notice of its intention to sell the Offered Shares (a "Notice of
Intention"), to each of the other Original Owners (other than the Prospective
Buyer) (the "First Refusal Original Owners"), as well as to the Company and the
Prospective Buyer, setting forth such Selling Original Owner's intention to make
such Sale (which shall be for cash only), the number of Offered Shares, the cash
price at which such Selling Original Owner proposes to sell the Offered Shares
to the Prospective Buyer (the "First Refusal Price"), and the other material
terms of the Prospective Buyer's offer. A Notice of Intention, once given, shall
be irrevocable. The Notice of Intention shall be dated the date it is delivered
by the Selling Original Owner to the First Refusal Original Owners and the
Company.
(b) Upon receipt of the Notice of Intention, each First
Refusal Original Owner and the Prospective Buyer shall have the right to
purchase at the First Refusal Price, and otherwise on the same terms set forth
in the Notice of Intention, such number of Offered Shares up to the Pro Rata
Number for such Original Owner or Prospective Buyer; provided, however, that any
of such Persons may indicate in its Notice of Exercise (as defined below)
<PAGE> 17
14
that it wishes to purchase more than its Pro Rata Number. The right of the First
Refusal Original Owners and the Prospective Buyer to purchase Offered Shares
pursuant to this Section 3.04(b) shall be exercisable by written notice to the
Selling Original Owner (the "Notice of Exercise"), which notice shall state the
maximum number of Offered Shares such Person is willing to buy, with copies to
each of the other First Refusal Original Owners, the Prospective Buyer and the
Company, within 30 days from the date of the Notice of Intention (the "Option
Period"). The right of any First Refusal Original Owner pursuant to this Section
3.04(b) shall terminate if it is not exercised within 30 days of the date of the
Notice of Intention. A Notice of Exercise, once given, shall be irrevocable.
(c) Upon receipt of the Notices of Exercise, the Selling
Original Owner shall promptly calculate the number of Offered Shares which the
Prospective Buyer and each First Refusal Original Owner is entitled to purchase
hereunder. If the Notices of Exercise indicate that the Prospective Buyer and
each First Refusal Original Owner wishes to purchase at least its Pro Rata
Number of Offered Shares, the First Refusal Original Owners and the Prospective
Buyer shall each be allocated a number of Offered Shares equal to its respective
Pro Rata Number. If the Notices of Exercise indicate that the Prospective Buyer
or one or more First Refusal Original Owners do not wish to purchase their Pro
Rata Number of Offered Shares, the Prospective Buyer and the First Refusal
Original Owners who have indicated in their respective Notices of Exercise that
they wish to purchase more than their Pro Rata Number of Offered Shares shall
each be given an opportunity to acquire a number of the Offered Shares that are
not so taken up equal to the Pro Rata Number (which shall be calculated, for
purposes of the foregoing allocation only, by taking into account only the
Shares of the Prospective Buyer and the First Refusal Original Owners who shall
have indicated that they wish to purchase more than their Pro Rata Number of
Offered Shares), and the foregoing procedure shall be repeated until all of the
Offered Shares have been taken up; provided, however, that (i) no such First
Refusal Original Owner shall be obligated to purchase more Offered Shares than
such First Refusal Original Owner shall have indicated it is willing to purchase
in its Notice of Exercise, and (ii) in the event that fewer than all of the
Offered Shares have been taken up within 20 days from the date of delivery of
the last Notice of Exercise received by the Selling Original Owner, the Selling
Original Owner shall not be obligated to sell any of the Offered Shares pursuant
to this Section 3.04.
(d) Subject to clause (ii) of the proviso to Section 3.04(c),
the Selling Original Owner shall sell the Offered Shares to such First Refusal
Original Owners and the Prospective Buyer within 45 days from the date of
delivery of the last Notice of Exercise received by the Selling Original Owner.
(e) Notwithstanding the provisions of Sections 3.04(b) and
(c), the Prospective Buyer shall have the right, upon written notice to the
Selling Original Owner (with copies to each of the First Refusal Original Owners
and the Company) within 10 days from the date of the Notice of Intention, to
elect not to purchase any of the Offered Shares pursuant to the procedures set
forth in Sections 3.04(b) and (c). If the Selling Original
<PAGE> 18
15
Owner does not sell any of the Offered Shares to the First Refusal Original
Owners pursuant to this Section 3.04, then the Selling Original Owner may sell
the Offered Shares to the Prospective Buyer within 45 days from the date of
delivery of the last Notice of Exercise at a price no lower than the First
Refusal Price and on terms no more favorable to the Prospective Buyer than those
set forth in the Notice of Intention.
(f) Upon the consummation of any purchase and Sale pursuant to
this Section 3.04, the Selling Original Owner shall deliver certificates
evidencing the Offered Shares sold duly endorsed, or accompanied by written
instruments of transfer, in form and substance satisfactory to the purchaser
thereof, duly executed by the Selling Original Owner, free and clear of any
encumbrance, against delivery of the purchase price for such shares payable in
immediately available funds by wire transfer. The Selling Original Owner shall
be responsible for and pay any stamp taxes or other similar conveyance fees
incurred as a result of the Sale of the Offered Shares.
SECTION 3.05. Affiliate Transferees to Execute Agreement. Each
Original Owner agrees that it will not, directly or indirectly, make any Sale of
any Shares held by such Original Owner to any of its Affiliates, unless, prior
to the consummation of any such Sale, the Affiliate to whom such Sale is
proposed to be made (a "Prospective Affiliate Transferee") (i) executes and
delivers to the Company a counterpart of this Agreement as it may have been
amended as of such time and (ii) represents and warrants in writing to the
Company that such Agreement has been duly authorized, executed and delivered by
such Prospective Affiliate Transferee and is a legal, valid and binding
obligation of such Prospective Affiliate Transferee enforceable against it in
accordance with its terms. Upon the execution and delivery by such Prospective
Affiliate Transferee of the documents referred to in the preceding sentence,
such Prospective Affiliate Transferee shall be deemed an "Original Owner" for
the purposes of this Agreement, and shall have the rights and be subject to the
obligations of an Original Owner hereunder with respect to the Shares held by
such Prospective Affiliate Transferee. Notwithstanding anything to the contrary
set forth herein, if any Shares are transferred from an Original Owner to one of
its Affiliates as a result of a merger between an Original Owner and an
Affiliate of such Original Owner, and pursuant to such merger such Affiliate
assumes such Original Owner's obligations under this Agreement (whether by
operation of law or otherwise), such Affiliate shall not be required to comply
with the provisions of clauses (i) and (ii) of this Section 3.05.
SECTION 3.06. Sale to a Third Party. If a Sale of Shares is
made in connection with a simultaneous Sale of shares of Preferred Stock to a
Permitted Preferred Stock Transferee that complies with all of the requirements
set forth in Section 3.07, such Shares shall be deemed "Shares" and such
Permitted Preferred Stock Transferee shall be deemed an "Original Owner" for all
purposes of this Agreement. If a Sale of Shares is made to a Third Party (a
"Third Party Transferee") that is not a Permitted Preferred Stock Transferee
that complies with all of the requirements set forth in Section 3.07, such
Shares shall immediately cease to be the subject of this Agreement and such
Third Party Transferee
<PAGE> 19
16
will not become an Original Owner for purposes of this Agreement. If a Sale of
Shares results in the selling Original Owner ceasing to own any Shares, such
selling Original Owner shall cease to be an Original Owner for purposes of this
Agreement.
SECTION 3.07. Restrictions on Certain Transfers of Shares of
Preferred Stock. (a) No Original Owner shall, directly or indirectly, make or
solicit any sale of any share of Preferred Stock beneficially owned by it unless
such Sale is in connection with a simultaneous Sale of Shares to (i) another
Original Owner, (ii) one of such Original Owner's Affiliates, or (iii) a Third
Party (each of (i), (ii) and (iii), a "Permitted Preferred Stock Transferee"),
and in each such case, (A) such Permitted Preferred Stock Transferee would,
after giving effect to such transfer, hold Shares representing at least 5% of
the then outstanding shares of Common Stock, provided, that if the Original
Owner transferring such shares of Preferred Stock holds Shares representing less
than 5% of the then outstanding shares of Common Stock but the series of
Preferred Stock held by such Original Owner continues to be entitled to elect a
Director due to the operation of Sections 4.3(d)(2), (3), (4) or (5) of the
Restated Certificate of Incorporation, then the foregoing clause (A) shall be
deemed to be satisfied if (x) such Permitted Preferred Stock Transferee would,
after giving effect to such transfer, hold shares of Common Stock representing
at least 5% of the then outstanding shares of Common Stock, or (y) such
Permitted Preferred Stock Transferee shall have purchased additional shares of
Common Stock in the public market or otherwise in order to increase its holdings
of shares of Common Stock to at least 5% within 90 days after such transfer (and
unless and until such Permitted Preferred Stock Transferee shall have increased
its holdings of shares of Common Stock to at least 5% within such 90 day period,
it shall not be entitled to elect any Directors to the Board pursuant to the
terms of the Preferred Stock that is or are proposed to be transferred to it),
and (B) if the Permitted Preferred Stock Transferee is not already a party to
this Agreement and a Non-Competition Agreement, such Permitted Preferred Stock
Transferee executes and delivers to the Company (x) a counterpart of this
Agreement, together with (y) a Non-Competition Agreement, and represents and
warrants in writing to the Company that such agreements have been duly
authorized, executed and delivered by such Permitted Preferred Stock Transferee
and are legal, valid and binding obligations of such Permitted Preferred Stock
Transferee enforceable against it in accordance with their respective terms.
(b) In no event shall any fraction of a share of Preferred
Stock, or any partial interest therein, be transferred to any other Person.
SECTION 3.08. Improper Sale. Any attempt not in compliance
with this Agreement to make any Sale of any Shares or any shares of Preferred
Stock shall be null and void and the Company shall not give any effect in the
Company's stock records to such attempted Sale.
SECTION 3.09. Limitation on Dispositions. As of the date
hereof and again as of the date of the IPO, and except (i) with respect to the
number of Shares in the
<PAGE> 20
17
secondary offering listed opposite the name of such Parent Entity or the Parent
Entity with respect to such stockholder in the column "Number of Shares of
Common Stock Being Offered" in the section entitled "Principal and Selling
Stockholders" in the Form S-1 filed in connection with the IPO, or (ii) for
transfers permitted by Section 351(c) of the Code, each of the stockholders
listed in Schedule A represents that it, and each of the Parent Entities
represents that its respective Affiliate listed in Schedule A, (x) has not
entered into any binding commitment, obligation or contract to sell, transfer or
dispose of Shares or shares of Preferred Stock received by such stockholder in
connection with the formation of the Company, (y) has no plan, arrangement or
understanding with any Nonaffiliated Person (including, but not limited to,
investment banks or brokers), and is not under any economic compulsion, to sell,
transfer or dispose of Shares or shares of Preferred Stock received by such
stockholder in connection with the formation of the Company to any Person and
(z) has no plan, arrangement or understanding, and is not under any economic
compulsion, to sell, transfer or dispose of Shares or shares of Preferred Stock
received by such stockholder in connection with the formation of the Company to
any Affiliated Person. Notwithstanding any other provision of this Agreement,
except with respect to the number of Shares in the secondary offering listed
opposite the name of such Parent Entity or the Parent Entity with respect to
such stockholder in the column "Number of Shares of Common Stock Being Offered"
in the section entitled "Principal and Selling Stockholders" in the Form S-1
filed in connection with the IPO, each of the stockholders listed in Schedule A,
and each of the Parent Entities agrees that its respective Affiliate listed in
Schedule A, will not sell, transfer or dispose of any of the Shares or shares of
Preferred Stock received by such stockholder in connection with the formation of
the Company prior to the expiration of six months following the IPO unless such
stockholder and its respective Parent Entity has delivered a written opinion of
a nationally recognized U.S. tax counsel to the Company, which opinion provides
that such sale, transfer or disposition will not cause the formation of the
Company to fail to qualify under Section 351 of the Code. In connection with the
rendering by such counsel of such opinion, the Company will provide to such
counsel such information in the Company's possession, and will make reasonable
efforts to obtain such relevant information, as counsel may reasonably request.
The Company shall provide a copy of any opinion received by it pursuant to the
second preceding sentence or pursuant to Section 5.12 hereof to each Parent
Entity and nothing herein shall be construed to prohibit any Parent Entity from
submitting a copy of any such opinion to the United States Internal Revenue
Service or to any state or local taxing authority in the course of an
examination or audit of such Parent Entity or any Affiliate thereof.
<PAGE> 21
18
ARTICLE IV
CERTAIN AGREEMENTS
SECTION 4.01. Certain Agreements. (a) Except as expressly
contemplated by this Agreement, each of the Parent Entities and the Original
Owners and their respective Affiliates shall not:
(i) acquire, offer to acquire, or agree to acquire, directly
or indirectly, by purchase or otherwise, (x) any Voting Securities that
would increase or would have the effect of increasing such Parent
Entity's or Original Owner's (A) level of beneficial ownership in the
Company to more than 50% of the then outstanding Voting Securities or
(B) voting power to more than 50% of the voting power of the then
outstanding Voting Securities, or (y) any direct or indirect rights to
acquire any Voting Securities that would increase or would have the
effect of increasing such Parent Entity's or Original Owner's (A) level
of beneficial ownership in the Company to more than 50% of the then
outstanding Voting Securities or (B) voting power to more than 50% of
the voting power of the then outstanding Voting Securities if such
rights were exercised.
(ii) make any public announcement with respect to, or submit a
proposal for, any transaction involving a Parent Entity, Original Owner
or of any Affiliate thereof that would increase or would have the
effect of increasing such Parent Entity's or Original Owner's (A) level
of beneficial ownership in the Company to more than 50% of the then
outstanding Voting Securities or (B) voting power to more than 50% of
the voting power of the then outstanding Voting Securities;
(iii) form, join or in any way participate in a "group" as
such term is defined for purposes of Section 13(d)(3) of the Securities
Exchange Act, in connection with any of the foregoing; or
(iv) request the Company, directly or indirectly, to amend or
waive any provision of this Section 4.01(a).
(b) Notwithstanding the provisions of Section 4.01(a), a
Parent Entity, Original Owner or any Affiliate thereof, acting individually or
acting in concert as a "group" as such term is defined for purposes of Section
13(d)(3) of the Securities Exchange Act (an "Acquiring Owner"), may offer to
acquire all of the outstanding Voting Securities (the "Offer"); provided,
however, that (i) (A) the Acquiring Owner submits a written proposal (the
"Proposal") to the Independent Directors setting forth a brief description of
the Offer, the price and other material terms of such Offer and any other
information that the Independent Directors may request and (B) the price and
other material terms of the Offer are approved by the Independent Directors or
(ii) in the event that the Independent Directors
<PAGE> 22
19
cannot reach agreement with the Acquiring Owner with respect to the price of the
Offer within 45 days following the receipt of the Proposal, a nationally
recognized investment banking firm selected by the Independent Directors, after
consultation with the Acquiring Owner, independent of the Company and the
Acquiring Owner and knowledgeable with respect to the business of the Company
(the "Investment Bank") will determine a price that is fair from a financial
point of view to the stockholders of the Company (other than the Acquiring
Owner). The fees, costs and expenses of the Investment Bank shall be borne by
the Acquiring Owner. The Independent Directors shall notify the Acquiring Owner
within 2 business days of the delivery of such determination by the Investment
Bank. Notwithstanding anything to the contrary in this Section 4.01, the
Independent Directors shall not be obligated to consider any Offer made by an
Acquiring Owner unless such Offer is a bona fide offer for all of the Voting
Securities of the Company.
SECTION 4.02. No Solicitation. Except as expressly
contemplated by this Agreement, none of the Parent Entities, Original Owners or
any of their respective Affiliates shall make, or in any way participate,
directly or indirectly in, nor shall they form, join or in any way participate
in a "group", as such term is defined for purposes of Section 13(d)(3) of the
Securities Exchange Act, in connection with, any "solicitation" of "proxies" to
vote (as such terms are used in the rules of the Commission) in opposition to
any proxy solicitation being conducted by the Company; provided, however, that
the foregoing shall not prohibit any communication not amounting to a
solicitation of proxies.
SECTION 4.03. Issuances of Shares of Capital Stock. The
Company shall not, at any time during the term of this Agreement, issue any
shares of capital stock unless such issuance is approved by a majority of the
whole Board.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Further Action. Each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all appropriate
action, do or cause to be done all things necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated by this Agreement.
SECTION 5.02. Representations. Each of the parties hereto
represents that this Agreement has been duly authorized, executed and delivered
by such party and
<PAGE> 23
20
constitutes a legal, valid and binding obligation of such party, enforceable
against it in accordance with the terms of this Agreement.
SECTION 5.03. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 5.04. Amendments and Waivers. Any term in this
Agreement may be amended or waived upon the written consent of the holders of
more than 66 2/3% of the Shares then held by the Original Owners; provided,
however, that (i) any amendment or waiver that adversely affects any Parent
Entity or Original Owner shall require the consent in writing of such Parent
Entity or Original Owner (whether or not such amendment or waiver affects any
one or more of the other Original Owners), (ii) any amendment to the provisions
of Article II shall require the consent in writing of the Company and the
Original Owners then party to this Agreement that hold series of Preferred Stock
that are entitled to elect one or more directors to the Board pursuant to the
terms of the Preferred Stock, and (iii) any amendment to any of the provisions
of Section 4.01 or 4.02 shall require the consent in writing of each of the
parties hereto, including the Company. Except where consent is required pursuant
to this Section 5.04, each of the Parent Entities and the Original Owners shall
be bound by any amendment or waiver authorized by this Section 5.04. Each party
hereto, including the Company, agrees that it shall not take or cause to be
taken any action to adopt, amend or repeal any provision of the Restated
Certificate of Incorporation or the Restated By-laws of the Company so as to
make them inconsistent in any manner with this Agreement or the Registration
Rights Agreement.
SECTION 5.05. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 5.05):
(a) if to United or Covia:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
<PAGE> 24
21
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(b) if to USAW or USAM:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(c) if to Air Canada or Resnet:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
<PAGE> 25
22
(d) if to British Airways or DSI:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(e) if to SwissAir or Roscor:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(f) if to KLM or TIS:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
<PAGE> 26
23
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(g) if to Aer Lingus or Retford:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(h) if to Alitalia or Racom:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
<PAGE> 27
24
(i) if to Austrian Airlines or Travidata:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(j) if to Olympic or Olynet:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(k) if to TAP or Coporga:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
<PAGE> 28
25
with a copy to:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
(l) if to the Company:
-------------------------------
-------------------------------
-------------------------------
Telecopy:
---------------------
Attention:
---------------------
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: 212-848-7179
Attention: Clare O'Brien, Esq.
SECTION 5.06. Benefit; Successors and Assigns. Except as
otherwise provided herein, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns; provided however that this Agreement shall not inure to the
benefit of any Prospective Affiliate Transferee unless such Prospective
Affiliate Transferee shall have complied with the terms of Section 3.05 in all
respects; provided, further, that this Agreement shall not inure to the benefit
of any Permitted Preferred Stock Transferee unless such Permitted Preferred
Stock Transferee shall have complied with the terms of Section 3.07 in all
respects; and provided further that this Agreement shall not inure with respect
to additional Shares acquired by a Prospective Buyer unless such Prospective
Buyer and Selling Original Owner shall have complied with Section 3.04 in all
respects. Nothing in this Agreement either express or implied is intended to
confer on any person, other than the parties hereto and their respective
successors and permitted assigns, any rights, remedies or obligations under or
by reason of this Agreement.
SECTION 5.07. Arbitration. Subject to the final sentence of
this Section 5.07, any dispute arising between or among the parties hereto or
any of them involving the subject matters covered by this Agreement shall be
submitted to arbitration under this Section 5.07. Any party asserting a breach
of this Agreement by any other party or parties shall
<PAGE> 29
26
notify all other parties of such alleged breach (a "Dispute Notice") and the
parties shall attempt to resolve such dispute amicably and if they shall fail to
resolve it within thirty (30) days of the date of the Dispute Notice, any party
may notify the other parties that it wishes to commence an arbitration
proceeding under this Section 5.07 (an "Arbitration Request"). In any
arbitration proceeding the party or parties commencing the arbitration (alone or
together, if more than one, the "Petitioner") shall include in the Arbitration
Request (a) a statement of the facts constituting the alleged breach or dispute,
(b) a written statement of position ("Statement") regarding the dispute and (c)
the name of an individual designated by it to appoint an Arbitrator (an
"elector"). The Statement shall state the facts and arguments in support of the
position taken by the party submitting such Statement and shall detail that
party's proposed solution and relief sought (if any). Copies of any Arbitration
Request shall be furnished at the same time to the other parties hereto. The
party or parties with whom the Petitioner has its dispute (alone or together, if
more than one, the "Respondent") shall within fifteen (15) business days after
the date of the Arbitration Request designate a second elector by notice to the
Petitioner (copies of which shall be furnished to the other parties), but if it
or they shall fail to do so within such period the Petitioner may designate an
elector on Respondent's behalf. The electors chosen by the Petitioner and the
Respondent shall attempt to agree upon an arbitrator (the "Arbitrator"), but if
they are unable to do so within twenty (20) business days after the designation
of the second elector, then either elector thereafter may apply to the American
Arbitration Association (the "Association") for the selection of the Arbitrator
in accordance with the Commercial Arbitration Rules of such Association. The
Arbitrator so selected shall have full power to decide any dispute referred to
in this Section 5.07. The arbitration proceedings shall be conducted in the
English language, and the place of arbitration and the making of the Award (as
defined below) shall be the City of New York. The UNCITRAL rules of commercial
arbitration shall apply to any arbitration commenced pursuant to this Section
5.07, as modified by the following procedure:
(i) Within ten (10) business days of the selection of the
Arbitrator (the "Commencement Date"), the Respondent shall deliver its
Statement regarding the dispute to the Arbitrator and to the
Petitioner.
(ii) Within twenty (20) business days from the Commencement
Date, each of the Petitioner and Respondent shall deliver to the
Arbitrator and to the other party, a response ("Response") to the other
party's Statement setting forth opposing facts and arguments and
limited in length to ten (10) typed, single spaced pages (excluding any
evidentiary exhibits included therein).
(iii) Within thirty (30) business days from the Commencement
Date, each of the Petitioner and the Respondent may deliver to the
Arbitrator and to the other party, a reply to the Response limited to
setting forth facts and arguments in rebuttal to the Statement and
Response of the other party and limited in length to five (5) typed,
single spaced pages (excluding any evidentiary exhibits included
therein).
<PAGE> 30
27
(iv) Within forty (40) business days from the Commencement
Date, each of the Petitioner and Respondent shall present an oral
summation of its position to the Arbitrator in the presence of the
other party in accordance with such rules of procedure including,
without limitation, length of presentation and right of
cross-examination, as the Arbitrator shall determine in writing and
deliver to the parties not less than five (5) business days prior to
such hearing; provided, however, that such hearing shall not exceed
eight (8) hours in total and may not be adjourned except for
extraordinary circumstances beyond the control of the parties.
(v) The Arbitrator shall either issue his decision and award
("Award") or request a further meeting of the parties within fifteen
(15) days of the hearing.
(vi) Any such further meeting of the parties shall take place
within fifteen (15) business days of the request therefor and shall be
conducted as determined by the Arbitrator. The Arbitrator shall issue
his Award no later than fifteen (15) days after any such further
meeting of the parties.
(vii) The Award shall be in writing and shall be limited to a
decision either completely in favor of Petitioner's request for relief
or completely in favor of Respondent's request for relief. The Award
shall be final and binding upon the parties hereto and judgment may be
entered thereon in any court of competent jurisdiction and the costs
and expenses of such arbitration shall be borne by the party losing
such arbitration.
This Section 5.07 shall in no way affect the right of any
party to seek such interim relief, and only such relief, as may be required to
maintain the status quo in aid of the arbitration in any court of competent
jurisdiction.
SECTION 5.08. Changes to Non-Competition Agreement. The
Company shall not amend the provisions of any Non-Competition Agreement unless
such amendment is offered to each of the other Persons that are then parties to
a Non-Competition Agreement with the Company. The Company shall not enter into a
non-competition agreement after the date hereof that differs in any material
respect from the terms of the form attached hereto as Exhibit A (as such form
may be amended in accordance with this Section 5.08) unless (i) the terms of
such proposed non-competition agreement are offered to each of the other Persons
that are then parties to a Non-Competition Agreement with the Company, or (ii)
such action is approved by at least four Original Owners; provided, however,
that for purposes of this clause (ii), the approval of an Original Owner and any
Affiliate of such Original Owner shall be deemed to constitute the approval of
only one Original Owner.
SECTION 5.09. Termination. Except for this Article V, this
Agreement shall terminate and be of no further force and effect, automatically
and without any required actions of the parties hereto, on the tenth anniversary
of the date hereof.
<PAGE> 31
28
SECTION 5.10. Miscellaneous. This Agreement, the Registration
Rights Agreement and the Restated Certificate of Incorporation of the Company
set forth the entire agreement and understanding among the parties hereto, and
supersede all prior agreements and understandings, relating to the subject
matter hereof. All representations and warranties contained herein shall survive
the execution and delivery of this Agreement, regardless of any investigation
made by any party hereto or on such party's behalf. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one instrument.
SECTION 5.11. Tax Treatment. For U.S. federal, state and local
income tax purposes, the parties agree to treat the Merger and consummation of
the IPO as a transfer described in Section 351(a) of the Code. For U.S. federal,
state and local income tax purposes, the parties agree to report the formation
of the Company in a manner that is consistent with such treatment described in
the previous sentence and shall not take any position or action contrary thereto
unless required to do so by applicable tax laws pursuant to a final
determination under Section 1313(a) of the Code (or a similar provision of state
or local laws, as the case may be).
SECTION 5.12. Tax Opinion. Prior to the consummation of the
IPO, the Company shall have received a written opinion of a nationally
recognized U.S. tax counsel substantially to the effect that, based on
appropriate representations and assumptions, the Merger and consummation of the
IPO will constitute a transfer described in Section 351(a) of the Code, and as
such will not result in the recognition of gain or loss by the partners or the
Company.
<PAGE> 32
29
IN WITNESS WHEREOF, the parties hereto have duly caused this
Agreement to be executed as of the date first above written above by their
respective officers thereunto duly authorized.
GALILEO INTERNATIONAL, INC.
By _________________________________
Name:
Title:
UNITED AIR LINES, INC.
By _________________________________
Name:
Title:
COVIA CORPORATION
By _________________________________
Name:
Title:
US AIRWAYS, INC.
By _________________________________
Name:
Title:
USAM CORPORATION
By _________________________________
Name:
Title:
<PAGE> 33
30
AIR CANADA
By _________________________________
Name:
Title:
RESNET HOLDINGS, INC.
By _________________________________
Name:
Title:
BRITISH AIRWAYS PLC
By _________________________________
Name:
Title:
DISTRIBUTION SYSTEM, INC.
By _________________________________
Name:
Title:
SWISSAIR TRANSPORT
COMPANY LTD.
By _________________________________
Name:
Title:
<PAGE> 34
31
ROSCOR A.G.
By _________________________________
Name:
Title:
KONINKLIJKE LUCHTVAART
MAATSCHAPPIJ N.V.
KLM ROYAL DUTCH AIRLINES
By _________________________________
Name:
Title:
TRAVEL INDUSTRY SYSTEMS B.V.
By _________________________________
Name:
Title:
AER LINGUS PLC
By _________________________________
Name:
Title:
RETFORD LIMITED
By _________________________________
Name:
Title:
<PAGE> 35
32
ALITALIA-LINEE AEREE
ITALIANE S.P.A.
By _________________________________
Name:
Title:
RACOM TELEDATA S&A
By _________________________________
Name:
Title:
AUSTRIAN AIRLINES
OESTERREICHISCHE
LUFTVERKEHRS
AKTIENGESELLSCHAFT
By _________________________________
Name:
Title:
TRAVIDATA INC.
By _________________________________
Name:
Title:
<PAGE> 36
33
OLYMPIC AIRWAYS S.A.
By _________________________________
Name:
Title:
OLYNET, INC
By _________________________________
Name:
Title:
TRANSPORTES AEREOS
PORTUGUESES S.A.
By _________________________________
Name:
Title:
COPORGA, INC
By _________________________________
Name:
Title:
<PAGE> 37
34
SCHEDULE A
Covia Corp., a Delaware corporation and a wholly owned subsidiary of United
("Covia").
USAM Corp., a Delaware corporation and a wholly owned subsidiary of USAir
("USAM").
Resnet Holdings, Inc., a Delaware corporation and a wholly owned subsidiary of
Air Canada ("Resnet").
Distribution Systems Inc., a Delaware corporation and an indirect wholly owned
subsidiary of British Airways ("DSI").
Roscor A.G., a corporation organized under the laws of Switzerland and a wholly
owned subsidiary of SwissAir ("Roscor").
Travel Industry Systems B.V., a corporation organized under the laws of the
Netherlands and a wholly owned subsidiary of KLM ("TIS").
Retford Limited, a corporation organized under the laws of Ireland and a wholly
owned subsidiary of Aer Lingus ("Retford").
Racom Teledata S&A, a corporation organized under the laws of Italy and a
majority owned subsidiary of Alitalia ("Racom").
Travidata Inc., a New York corporation and a wholly owned subsidiary of Austrian
Airlines ("Travidata").
Olynet Inc., a Delaware corporation and wholly owned subsidiary of Olympic
("Olynet").
Coporga, Inc., a Delaware corporation and wholly owned subsidiary of TAP
("Coporga").
<PAGE> 38
SCHEDULE B
United Air Lines, Inc., a Delaware corporation ("United").
US Airways, Inc., a Delaware corporation ("USAW").
Air Canada, a corporation organized under the laws of Alberta ("Air Canada").
British Airways PLC, a corporation organized under the laws of England and Wales
("British Airways").
Swissair Swiss Air Transport Company Ltd., a corporation organized under the
laws of Switzerland ("SwissAir").
KLM Royal Dutch Airlines, a corporation organized under the laws of the
Netherlands ("KLM").
Aer Lingus PLC, a corporation organized under the laws of Ireland ("Aer
Lingus").
Alitalia-Linee Aeree Italiane S.p.A., a corporation organized under the laws of
Italy ("Alitalia").
Austrian Airlines Oesterreichische Luftverkehrs Aktiengesellschaft, a
corporation organized under the laws of Austria ("Austrian Airlines").
Olympic Airways S.A., a corporation organized under the laws of Greece
("Olympic").
Transportes Aereos Portugueses S.A., a corporation organized under the laws of
Portugal ("TAP").
<PAGE> 1
EXHIBIT 10.5
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
AMENDED AND RESTATED NON-COMPETITION AGREEMENT
dated as of ______________, 1997
among
GALILEO INTERNATIONAL INC.
and
[GROUP MEMBER-OWNER],
[GROUP MEMBER-OWNER DISTRIBUTOR],
[ULTIMATE PARENT ENTITY],
and
[AIR CARRIER AFFILIATE]
<PAGE> 2
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. Additional Permitted Marketing and Distribution of Owner-Developed Products and Customized Products . . . . . . 7
SECTION 4. Ethical Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7. Airline Affiliate Review Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9. Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 10. Rights and Remedies Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 11. Severability of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 12. Blue-Penciling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 13. Attorneys' Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 14. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 15. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 17. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 18. Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 19. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
CONFIDENTIAL TREATMENT (ii)
REQUESTED BY GALILEO
INTERNATIONAL, INC.
<TABLE>
<S> <C> <C>
SECTION 20. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 21. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 4
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
AMENDED AND RESTATED
NON-COMPETITION AGREEMENT
AMENDED AND RESTATED NON-COMPETITION AGREEMENT (the "Agreement"),
dated as of _______, 1997, by and among Galileo International, Inc., a Delaware
corporation ("Galileo"), [to be executed separately by each Owner (the
"Group Member-Owner"), such Group Member-Owner's Distributor (the "Group
Member-Owner Distributor"), such Group Member-Owner's Ultimate Parent Entity
(the "Ultimate Parent Entity") and any Affiliate of such Group Member-Owner that
is an Air Carrier (the "Air Carrier Affiliate")].
WHEREAS, the Group and each Group Member acknowledges that the scope
of the Core Business of Galileo is as defined in Section 1 hereof;
WHEREAS, certain Group Members may have access to the
trade secrets of, and confidential information concerning, the Core Business
which are not available to the public;
WHEREAS, the agreements and covenants contained in this Agreement are
essential to protect the value of the Core Business of Galileo;
WHEREAS, some or all of the Group Members were previously parties to
a Non-Competition Agreement, dated as of September 16, 1993 (the "Original Non
- -Competition Agreement"), among some or all of the Group Members and Galileo
In ternational Partnership, a Delaware general partnership (the "Partnership");
WHEREAS, Galileo is the successor in interest by merger
(the "Merger") to all of the Partnership's rights and obligations under the
Original Non-Competition Agreement;
WHEREAS, as a result of the Merger, the Group Member-Owner's former
partnership interest in the Partnership has been converted into its Galileo
Interest;
WHEREAS, the Group Members and Galileo wish to amend and restate the
terms of the Original Non-Competition Agreement as set forth herein;
<PAGE> 5
CONFIDENTIAL TREATMENT 2
REQUESTED BY GALILEO
INTERNATIONAL, INC.
WHEREAS, the Group Member-Owner acknowledges that its agreements
and covenants set forth herein are an integral part of the arrangements between
itself and its Affiliates, on the one hand, and Galileo and its Affiliates, on
the other hand, and that but for such agreements and covenants, Galileo would
not enter into the arrangements relating to the Group Member-Owner's Galileo
Interest;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Affiliate" means, with respect to any entity at any time, a Person
(i) that at such time owns or controls, directly or indirectly, 50% or more of
the capital stock (or other ownership interest, if not a corporation) of
such entity ordinarily having voting rights, (ii) 50% or more of whose capital
stock (or other ownership interest, if not a corporation) ordinarily having
voting rights at such time is owned or controlled, directly or indirectly, by
such entity or (iii) 50% or more of whose capital stock (or other ownership
interest, if not a corporation) ordinarily having voting rights at such time is
owned or controlled, directly or indirectly, by another Person that at such time
owns or controls, directly or indirectly, 50% or more of the capital stock (or
other ownership interest, if not a corporation) of such entity ordinarily having
voting rights; provided, however, that Galileo shall be deemed not to be an
"Affiliate" of any Owner or any Affiliate thereof; and provided, further, that
(i) no Owner shall be deemed to be an "Affiliate" of any other Owner or any
Affiliate thereof solely by virtue of its Galileo Interest; and (ii) Instituto
Per La Riconstruzione Industriale S.p.A., the Government of the Republic of
Ireland and any ministry thereof, the Republic of Austria and its agencies, the
Republic of Greece and its agencies, the Republic of Portugal and its agencies,
and the Government of The Netherlands or any political subdivision or
instrumentality thereof shall not be deemed to be an "Affiliate" of any Person.
"Air Carrier" means a Person that directly or indirectly or by lease
provides commercial passenger air transportation.
"Air Carrier Competitor" means, with respect to the Group Member-
Owner's Principal Air Carrier Affiliate, an Air Carrier [that such Group Member
- -Owner's Principal Air Carrier Affiliate reasonably believes is a significant
competitor thereof either overall or in a particular market segment, provided
that any relief granted pursuant to Section 7 with respect
<PAGE> 6
CONFIDENTIAL TREATMENT 3
REQUESTED BY GALILEO
INTERNATIONAL, INC.
to an Air Carrier Competitor in a particular market segment shall be limited to
such market segment].
"Board" means the Board of Directors of Galileo.
"Business Day" means any day except a Saturday, Sunday, or other day
on which commercial banks in Chicago, Illinois or London, England are
authorized by law to close.
"Computer Services Agreement" means the Amended and Restated Computer
Services Agreement, dated as of _________________ _, entered into between
Galileo and ________________________.
"Core Business" means the provision of Reservations Services
(excluding Cargo Services) to Neutral Travel Providers.
"CRS Company" means any of SABRE, Amadeus/System One, Abacus, Axxess,
Infini, Worldspan, or any successor in interest thereto, or any other Person
other than Galileo that has earned at least 50% of its revenues in any of its
preceding three fiscal years, or such shorter time that it has been in
business, from the Core Business.
"CRS Owner" means any Person, other than a Group Member with respect
to its direct or indirect ownership interest in Galileo, that is not a CRS
Company and either, (a) beneficially owns, directly or indirectly, an interest
in a CRS Company, or (b) has earned more than 5% but less than 50% of its
revenues in any of its preceding three fiscal years, or such shorter time that
it has been in business, from the Core Business.
"Director" means a director of Galileo.
"Distributor" means a Person which has entered into, or enters into,
a Distributor Agreement with Galileo.
"Distributor Agreement" means any distributor agreement entered into
between Galileo and any Person.
"Effective Date" means the effective date of the IPO.
"Galileo Interest" means an Owner's ownership interest in the capital
stock of Galileo.
<PAGE> 7
CONFIDENTIAL TREATMENT 4
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Group" means the Group Member-Owner signatory hereto, the Group
Member-Owner Distributor signatory hereto, the Ultimate Parent Entity of such
Group Member-Owner, the Principal Air Carrier Affiliate, and any other Air
Carrier Affiliate of any of the foregoing and the Affiliates of any of them
(each individually a "Group Member").
"Internal Reservations System" means the central processing hardware
utilized by a Group Member-Owner's Air Carrier Affiliate to provide its
Internal Reservations Services.
"National Distributor Coordinating Committee" means the committee
comprised of one individual from each Group Member- Owner Distributor, if
any, which is a party to a Distribution Sales and Service Agreement with
Galileo, which individual shall be appointed by such Group Member-Owner
Distributor.
"National Product" means a Reservations Service, Accounting Service,
or Commercial Service (i) that is not otherwise available from Galileo and
(ii) that is developed or licensed at a Group Member's cost. National Products
will include products not otherwise available from Galileo that are developed as
"National Products" by Galileo in accordance with the terms of the applicable
Distributor Agreement between Galileo and the Group Member-Owner Distributor.
"Owner" means any signatory hereto or to any other Non-Competition
Agreement with Galileo that holds any shares of capital stock of Galileo.
"Preferred Stock" means the Preferred Stock, par value $0.01 per
share, of Galileo, in Series A through G.
"Principal Air Carrier Affiliate" means ________________________;
provided, however, that for purposes of Section 7(c) only, "Principal Air
Carrier Affiliate" means _____________, ______________, ______________,
___________, ______________, and ______________.
"Sales Representation Agreement" means any sales representation
agreement entered into between Galileo and any Group Member.
"Significant Competitor" means (i) any entity that, within the
immediately preceding six-month period, accounted for more than 10% of direct
access product bookings or ticketing within any of the billing territories
established by the Galileo International Global Airline Distribution Agreement,
as substantiated on the basis of independent data provided by
<PAGE> 8
CONFIDENTIAL TREATMENT 5
REQUESTED BY GALILEO
INTERNATIONAL, INC.
ARC or BSPs or marketing or billing information provided by other Persons,
Galileo to provide any such information which is in its possession and it is
legally permitted to provide, or (ii) if the measure of an entity's market
share cannot be established after consultation with Galileo and exchange
between Group Member and Galileo of information regarding the entity's market
share, any entity that a Group Member Owner's Principal Air Carrier Affiliate
reasonably believes is a Significant Competitor of Galileo.
Other capitalized terms used in this Agreement and not defined in
this Section 1 shall have the meanings ascribed to them elsewhere in this
Agreement or in Annex I hereto; provided, however, that in the event of any
conflict in the definitions of such terms, the definitions in this Section 1 and
elsewhere in this Agreement shall control.
SECTION 2. Non-Competition. (a) Except through the Group Member
- -Owner's Galileo Interest, or as otherwise provided in this Agreement or
pursuant to a Distributor Agreement or a Sales Representation Agreement, until
this Agreement is terminated, neither the Group nor any Group Member shall
engage in the Core Business, own an interest in a CRS Company, be a CRS Owner or
own an interest in a CRS Owner.
(b) A Group Member may acquire and own an interest that
represents no more than 5% of the voting interests in a CRS Owner or a CRS
Owner may acquire and own an interest that represents no more than 5% of the
voting interests in a Group Member (either a "De Minimis Interest"); provided,
that in either case the Person acquiring such De Minimis Interest does not have
a representative on the board of directors (or similar governing body, if not a
corporation) of the CRS Owner or Group Member, as the case may be.
(c) A Group Member may acquire and own an interest that
represents no more than 25% of the voting interests in a CRS Owner or a CRS
Owner may acquire and own an interest that represents no more than 25% of the
voting interests in a Group Member (either, a "Minor Interest") so long as the
Group complies with the provisions of Section 4 below, except with respect to a
De Minimis Interest, for which compliance with Section 4 is not required. A
Group Member shall be permitted to acquire and own an interest that represents
more than 25% of the voting interests in a CRS Owner and a CRS Owner shall be
permitted to acquire and own an interest that represents more than 25% of the
voting interests in a Group Member (either, a "Major Interest") so long as the
Group Member complies with the provisions of Section 5 below.
(d) Notwithstanding the foregoing, nothing herein shall prohibit
a Group Member from:
<PAGE> 9
CONFIDENTIAL TREATMENT 6
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(i) providing Internal Airline Services or Internal
Reservations Services for itself or for another Air Carrier; to the
extent that a Group Member provides Internal Reservations Services to
an Air Carrier that is not a Group Member, use of the Internal
Reservations Services by such Air Carrier shall not be restricted by
this Agreement and the Group and the Group Member providing such
services shall be deemed not to have violated this Agreement as a
result of such use; provided, however, the Group and the Group Member
providing such services shall be deemed to have violated this
Agreement if the Group Member's conduct is such that the probable
result thereof would be material competition with the Core Business;
(ii) providing Cargo Services to any Person;
(iii) providing Reservations Services to Other Customers,
either through its Internal Reservations System or, at its direction,
through the Computer System and marketing such services directly to
Other Customers; provided, that such Group Member shall take all
reasonable steps necessary to ensure that such services are not
used by Neutral Travel Providers, other than for their Non-Neutral
Travel Business (the "Ancillary Use Restrictions");
(iv) providing services (including Reservations Services) to
Other Customers using Direct Access Products, either through its
Internal Reservations System, a Direct Access Distribution Channel
or, at its direction, through the Computer System, or otherwise, and
marketing such Direct Access Products directly to Other Customers;
provided, that, such Group Member shall take all reasonable steps
necessary to ensure that the Ancillary Use Restrictions are complied
with;
(v) providing Owner-Developed Products to any of its Other
Customers;
(vi) competing with Galileo or any other Person outside the
Core Business;
(vii) participating, as a Vendor, in competing computer
reservations systems owned or operated by one or more Vendors or
Vendor Affiliates ("Competing CRS Systems") or in such systems owned
or operated by Persons not Vendors or Vendor Affiliates, such as
Prodigy, Istel, Videotel, Minitel, Smart Phone, Microsoft Network and
Compuserve, that are not otherwise Competing CRS Systems ("Other
Systems"); provided that, except as provided in subsection (viii) or
(xiii) below, no Group Member may assist in the marketing of a
Competing CRS System to any Person or in the marketing of an Other
System to Persons other than individuals;
<PAGE> 10
CONFIDENTIAL TREATMENT 7
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(viii) promoting its airline products and services distributed
through any distribution channel (including a Competing CRS System), so
long as any such promotion does not, in the view of a reasonable person,
refer negatively to Galileo or its products, either implicitly or
explicitly; provided that the mere participation of such Group Member in
any such distribution channel shall not be deemed in and of itself to
refer negatively to Galileo or its products; provided further that in the
event the promotion in accordance with this clause (viii) involves the
promotion of the product of a Competing CRS and Galileo offers a
comparable product in such distribution channel (in functional, financial
and commercial terms and with due regard to prevailing market conditions)
to the product which a Group Member is promoting through such distribution
channel, then such Group Member shall promote Galileo's product in a
manner similar to, and to the same extent that, such Group Member promotes
the distribution of such comparable product through any such distribution
channel, except to the extent that promotion of Galileo's product would be
commercially unreasonable or not proportionate to the breadth and depth of
Galileo's product; provided further that, for the purposes of this
subsection (viii), a Galileo product which cannot be biased in favor of
the promoting Group Member's Principal Air Carrier Affiliate shall not be
deemed to be comparable to a product of a Galileo competitor which may be
biased in such manner, it being understood that no Group Member will be
required to promote a Galileo product that is biased exclusively in favor
of one or more non-Group Member Air Carriers.
(ix) providing National Products to Neutral Travel Providers
either through its Internal Reservations System or, at its direction,
through the Computer System, but only until such time as Galileo
develops a "Replacement Product" as defined in the Distributor Agreement;
(x) in the case of the Group Member-Owner Distributor executing
this Agreement, providing Distribution Services or other products or
services that such Group Member-Owner Distributor determines are
required by its National Territory and that Galileo, after consultation
with such Group Member-Owner Distributor, has elected not to provide, so
long as the functionality provided is compatible with and does not
conflict with Galileo's Distribution Services;
(xi) holding an interest in SITA or any other air transportation
industry cooperative organization that is not a CRS Company or a CRS
Owner, or having a representative on the board of directors of any such
organization;
<PAGE> 11
CONFIDENTIAL TREATMENT 8
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(xii) providing such services to such Persons as may be
mandated, from time to time, under applicable CRS Rules; or
(xiii) marketing and distributing Owner-Developed Products and
Customized Products in accordance with the provisions of Section 3 below.
(e) No Group Member shall refer to any Person other than Galileo
any business opportunity within the scope of the Core Business.
SECTION 3. Additional Permitted Marketing and Distribution of Owner
- -Developed Products and Customized Products. (a) A Group Member may develop,
market and distribute Owner-Developed Products and Customized Products
directly to any of its Other Customers other than through Neutral Travel
Providers, provided that the non-competition obligations of the Group Members
under Sections 2(a), (b) and (c) of this Agreement shall remain in full force
and effect. No Group Member, other than a Group Member providing customer
support and service to such Other Customers pursuant to paragraph 4 of
Appendix I of this Agreement, shall receive a booking fee split or any other
revenues from Galileo for any Owner-Developed Product or Customized Product
bookings, or any other direct access product bookings.
(b) In addition to a Group Member's rights under Section 3(a),
nothing herein shall prohibit a Group Member from developing, marketing and
distributing Customized Products to corporate and consumer Other Customers
through Neutral Travel Providers and permitting Neutral Travel Providers to
support the use of such Customized Products by such Other Customers, subject
to Appendix I of this Agreement and the following:
(i) such Customized Products run only against a System used by
Galileo to provide Reservations Services to Neutral Travel Providers and
result in the payment of applicable booking fees to Galileo;
(ii) all customization, when performed by or on behalf of Galileo,
and display services in respect of such Customized Products are consistent
with the provisions of the Computer Services Agreement, or with such
other terms as Galileo and the Group Member agree upon; and
(iii) such Customized Products are distributed by the Group Member
in coordination with Galileo and the distributor or Sales Representative,
if any, for the territory in which such Customized Products are used by,
or distributed through, a Neutral Travel Provider, whether any such
distributor is Galileo itself, a wholly owned
<PAGE> 12
CONFIDENTIAL TREATMENT 9
REQUESTED BY GALILEO
INTERNATIONAL, INC.
subsidiary of Galileo or a Person acting as a Distributor pursuant to a
Distributor Agreement, provided that nothing herein will require such
Group Member to use the services of any of the aforementioned entities.
(c) In addition to a Group Member's rights under Section 3(a),
in the event that Galileo cannot or, for any reason, does not, produce any
Customized Products on commercially reasonable third party terms, then a Group
Member may develop, market and distribute Owner-Developed Products to corporate
and consumer Other Customers through Neutral Travel Providers in lieu of
Customized Products pursuant to Section 3(b) above, and may permit Neutral
Travel Providers to support the use of those Owner-Developed Products by such
Other Customers, provided that the Group Member shall not develop, market or
distribute any such Owner-Developed Product unless it has given Galileo
reasonable prior written notice of the Group Member's intention to develop,
market and distribute such product.
(d) As required by applicable law and regulation, Galileo may
provide its direct access products and related services (which will not be
deemed to include Owner-Developed Products or Owner-purchased customization
features) to all participating carriers on non-discriminatory terms.
SECTION 4. Ethical Wall. (a) A Group Member or a CRS Owner may
acquire and own a Minor Interest so long as the Group is in compliance with
each of the following:
(i) No Group Member shall disclose any Confidential Information
to the CRS Owner, the CRS Company owned by the CRS Owner (or their
respective Affiliates) or to any Group Member that might make such
Confidential Information available to the CRS Owner or the CRS Company
owned by the CRS Owner (or their respective Affiliates).
(ii) The Group shall have established and shall strictly enforce
internal administrative procedures (an "Ethical Wall") to (x) maintain a
complete segregation of the operations and personnel of Galileo, on the
one hand, and the CRS Owner or the CRS Company owned by the CRS Owner (or
their respective Affiliates), on the other, and (y) restrict the flow of
Confidential Information from the Group to the CRS Owner, the CRS Company
owned by the CRS Owner (or their respective Affiliates) or to any Group
Member that might make such Confidential Information available to the CRS
Owner or the CRS Company owned by the CRS Owner (or their respective
Affiliates).
<PAGE> 13
CONFIDENTIAL TREATMENT 10
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(iii) Within 15 days of the date on which a Group Member or CRS
Owner has acquired a Minor Interest, and annually thereafter, the Group
shall deliver to Galileo a valid, binding and irrevocable undertaking,
reasonably satisfactory in form and substance to Galileo, stating that
each Group Member will comply with the terms of this Section 4 and setting
forth the procedures to be utilized by the various parties thereto.
(b) The procedures comprising an Ethical Wall shall include, with
out limitation, the following: (i) preparation of a detailed confidentiality
memorandum approved by Galileo which shall be signed periodically by each
recipient of Confidential Information; (ii) confidentiality legends on
correspondence and memoranda; (iii) use of code names to avoid disclosure of
competitively sensitive information relating to customers, supplier and
vendors; (iv) telephone communications confidentiality procedures; (v)
restriction of internal communications to those persons acknowledged by Galileo
to have a demonstrated "need to know"; (vi) channeling of Confidential
Information through a designated individual approved in advance by Galileo;
(vii) prohibition against responding to outside inquiries concerning the
commercial aspects of the Core Business, which inquiries shall be referred to
Galileo; (viii) internal document control, including file maintenance and
document destruction; (ix) word processing and expense record controls to
assure confidentiality; and (x) appropriate acknowledgment and periodic
compliance certification procedures.
(c) In the event that it is alleged by a majority of the whole
Board (excluding for purposes of determining the size of the Board and the
vote required to obtain a majority of the whole Board any Director or Directors
elected by any Group Member) that the Group or any Group Member has not (x)
established an adequate Ethical Wall or (y) strictly enforced such Ethical Wall
at any time (either, an "Ethical Wall Breach"), and the Group Member-Owner
disputes such allegation, such dispute shall be submitted to arbitration
pursuant to Section 9 hereof to determine whether such an Ethical Wall Breach
has occurred. If (i) the Group Member-Owner does not dispute such allegation
or (ii) the Arbitrator determines that the Group or any Group Member has
committed an Ethical Wall Breach, the Group shall comply with the provisions of
Section 5 below.
SECTION 5. Restrictions. (a) If a Group Member shall be a CRS
Owner, or any Group Member shall acquire or own a Major Interest or shall have
a Major Interest in itself held by a CRS Owner or shall have committed an
Ethical Wall Breach, Galileo and all other Owners will not provide to the
Group any Confidential Information and no Director elected by any Group Member
shall be permitted to attend any meeting of Galileo (including, without
limitation, meetings of the Board or any committee thereof) or to vote on any
matters before the Board or any committee thereof, and, in the case of the
Group Member-Owner Distributor, no representative of such Group Member-Owner
<PAGE> 14
CONFIDENTIAL TREATMENT 11
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Distributor shall be permitted to attend any meeting of the National
Distributor Coordinating Committee, or any other committee or organization
formed by or for Distributors, for a period of 20 Business Days (the "Freeze
Period") commencing on the date of the event that triggered this Section 5 (the
"Trigger Date") and the Parties shall comply with the following procedures:
(i) within six (6) Business Days of the Trigger Date, the
Group Member-Owner shall submit a written plan (the "Group's Plan") to
Galileo detailing the procedures to be taken by the Group and Galileo to
ensure that the CRS Owner and the CRS Company owned by the CRS Owner,
and their respective Affiliates, will not have access to any
Confidential Information or to any individual who has access to any
Confidential Information;
(ii) within six (6) Business Days of the receipt of the
Group's Plan, the Board shall meet (such meeting may be held
telephonically) to consider the Group's Plan, a majority of the whole
Board (excluding for purposes of determining the size of the Board and
the vote required to obtain a majority of the whole Board any Director
or Directors elected by any Group Member) may accept the Group's Plan or
propose its own plan ("Galileo's Plan") detailing the procedures to be
taken by the Group and Galileo to ensure that the CRS Owner and the CRS
Company owned by the CRS Owner, and their respective Affiliates, will
not have access to any Confidential Information or to any individual who
has access to any Confidential Information; and
(iii) if the Group's Plan is not approved pursuant to
subclause (ii) above, then within three (3) Business Days of the
approval of Galileo's Plan, the Group Member-Owner shall notify Galileo
whether it will accept Galileo's Plan or whether it will submit the
matter to arbitration pursuant to Section 9 hereof; provided, that if
the Group Member-Owner elects to submit the matter to arbitration the
Freeze Period shall be extended until the completion of the arbitration
process.
(b) In formulating Galileo's Plan, the Board
shall consider, among others, the following factors: (i) the nature of the
relationship between the Group and the CRS Owner; (ii) the extent to which the
CRS Owner and the CRS Company compete with Galileo in the Core Business; (iii)
the independence of the Group's management from the management of the CRS Owner
and the CRS Company; (iv) the adequacy of the Ethical Wall to prevent
communication of the Confidential Information among commonly controlled
Persons; (v) the burden that Galileo's Plan will place on the Group; and (vi)
the costs and risks the Group's Plan will impose on Galileo.
<PAGE> 15
CONFIDENTIAL TREATMENT 12
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(c) If a Group Member shall be a CRS Owner or if the Major
Interest purchased by or invested in a Group Member exceeds 50%, Galileo's Plan
may require divestiture, at such Group Member's option, of (A) the Group
Member's interest in the CRS Owner, (B) the CRS Owner's interest in the Group
Member, or (C) the Group Member's interest in Galileo. In the event the Group
Member elects not to divest its interest in the CRS Owner or elects not to
cause the divestiture of the CRS Owner's interest in the Group Member, then
promptly after the earlier of (i) the approval of Galileo's Plan or (ii) the
rendering of an Award confirming Galileo's Plan, any Director or Directors
elected by any of the Group Members shall immediately resign from the Board and
the Group Member shall begin an orderly divestiture of its shares of Galileo
capital stock in a reasonable manner approved by Galileo's Board.
SECTION 6. Consent. Any Group Member, either alone or in
combination with any other Person, without violating any provision of this
Agreement or any duty of the Group to Galileo or any other Owner or any
Affiliate thereof and without incurring any obligation or liability to Galileo
or any other Owner or any Affiliate thereof, may engage in activities that
would otherwise be prohibited pursuant to Section 2 hereof if: (i) such Group
Member has given written notice to each member of the Board specifying the
nature of such activities, (ii) the Board, by a majority vote of those
Directors (excluding any director elected by any Group Member), specifically
authorizes such Group Member to engage in such activities, and (iii) the Group
Member actively begins to pursue such activities within 90 days of such
authorization.
SECTION 7. Airline Affiliate Review Board. (a) If an Air
Carrier Competitor of a Group Member-Owner's Principal Air Carrier Affiliate
engages in an activity that such Principal Air Carrier Affiliate is prohibited
from engaging in pursuant to Section 2 (other than any activity that is the
subject of Sections 2(b) or (c) or any activity permitted pursuant to Section
6) and such Principal Air Carrier Affiliate (i) reasonably believes that it
will be materially disadvantaged by not being able to engage in such activity
and (ii) either (A) is unlikely in the reasonable judgment of such Principal
Air Carrier Affiliate to receive Board approval to engage in the activity
pursuant to Section 6 because of the activity's probable effect on the business
of Galileo or (B) has sought and failed to receive Board approval pursuant to
Section 6, then such Principal Air Carrier Affiliate (an "AARB Petitioner") may
seek approval to engage in the activity from Galileo's Airline Affiliate Review
Board ("AARB") in accordance with the provisions of this Section 7. Neither
the Principal Air Carrier Affiliate nor any of its Affiliates shall engage in
such activity, whether directly or indirectly, until the later of (x) ten
Business Days after the date on which the AARB reaches a decision permitting
such
<PAGE> 16
CONFIDENTIAL TREATMENT 13
REQUESTED BY GALILEO
INTERNATIONAL, INC.
activity or (y) in the event Galileo appeals a decision by the AARB permitting
such activity pursuant to Section 7(l), the date on which an Award is rendered
permitting such activity.
(b) An AARB Petitioner may initiate a review by the AARB of
its requested activity by submitting a written petition (an "AARB Petition") to
Galileo. The AARB Petition shall specify the nature of the activity to be
engaged in, the nature of the relief sought, the likely impact upon the
Principal Air Carrier Affiliate of the denial of such relief, the likely impact
upon Galileo, in the view of the AARB Petitioner, of the granting of such
relief, and suggested terms for the granting of such relief. The AARB
Petitioner may set forth several alternative proposals for relief. Such
petition shall be limited in length to ten (10) typed, single spaced pages
(excluding any evidentiary exhibits included therein).
(c) The AARB shall be composed of one senior executive from
each Principal Air Carrier Affiliate whose Group Member-Owner is entitled to
elect one or more Directors as a result of its ownership of one or more shares
of Preferred Stock, provided that (i) the AARB shall not include any
representative of the AARB Petitioner or its Affiliates, (ii) no Board member
shall be a member of the AARB and (iii) the AARB shall not include any
representative of any Group Member that has terminated or is not in compliance
with its Non- Competition Agreement.
(d) Not later than 20 days after the receipt by Galileo of
an AARB Petition, each Owner entitled to appoint a representative to the AARB
pursuant to the provisions of Section 7(c) shall deliver to all members of the
Board written notice of the identity of the individual nominated by such Owner
to serve as its AARB representative (an "AARB Member").
(e) In the event the AARB would consist of an even number of
members and such number is greater than two, then the AARB shall exclude the
representative of the Owner selected in accordance with the lottery procedures
set forth in Exhibit A hereto. In the event that the AARB would consist of
only one member, or in the event that no AARB may be constituted in accordance
with the foregoing procedures, the AARB Petition shall be resolved in
accordance with the appeal provisions set forth in Section 7(l).
(f) Not later than 30 days after the receipt by Galileo of
an AARB Petition, Galileo may submit to the AARB Petitioner and to each of the
AARB Members a written reply to the AARB Petition (limited in length to ten
(10) typed, single spaced pages (excluding any evidentiary exhibits included
therein)), stating Galileo's position regarding the requested relief (the
"Galileo Response"). Any such Galileo Response shall specify Galileo's views
on the likely result of granting the requested relief, and suggested terms, if
any, for conditioning the
<PAGE> 17
CONFIDENTIAL TREATMENT 14
REQUESTED BY GALILEO
INTERNATIONAL, INC.
granting of relief on certain actions by the AARB Petitioner. The Galileo
Response may propose that the requested relief be denied and may also set forth
several alternative conditions to the granting of relief.
(g) Not later than 40 days after the receipt by Galileo of an
AARB Petition, the AARB shall convene, either in person or by telephone or
video conference. The AARB Petitioner and, in the event Galileo submits a
Galileo Response, a representative of Galileo shall each be permitted to
present its views in person to the AARB. The AARB shall reach a decision
within 40 days after the receipt of the Galileo Response.
(h) In reaching its determination, the AARB shall consider,
without limitation, in addition to the damage likely to result to the Principal
Air Carrier Affiliate, on the one hand, and Galileo, on the other hand, whether
allowance of such activity would be inconsistent with the arrangements between
such Principal Air Carrier Affiliate and Galileo, including without limitation
such Principal Air Carrier Affiliate's affiliation with a Distributor, and its
employment as a sales representative of Galileo. The AARB shall not consider
any information other than the information provided in the AARB Petition and
the AARB Petitioner's oral presentation, if any, and in the Galileo Response
and Galileo's oral presentation, if any.
(i) The AARB shall permit the requested activity upon a
Principal Air Carrier Affiliate's demonstration to the AARB's satisfaction that
the damage to such Principal Air Carrier Affiliate from continued prohibition
of such activity would be greater than the damage which would be suffered by
Galileo if such activity were allowed. Such damages will be calculated as the
percentage of the relevant Person's total annual revenue which is represented
by the revenue which would be lost by continued prohibition of the activity, in
the case of the Principal Air Carrier Affiliate, or by allowance of the
activity, in the case of Galileo. Damage to either party may, if appropriate,
be measured over a period of years.
(j) The AARB shall have the right to condition its allowance
of any requested activity upon divestiture of the Group Member-Owner's Galileo
Interest, or of the termination of its right, if any, to sell or otherwise
distribute the products and services of Galileo, or upon the modification or
termination of any of the Group's other arrangements with Galileo. The AARB
may also condition its allowance of any requested activity upon payment of
compensation to Galileo. Upon acceptance of any such allowance of an activity
by the AARB, each Group Member shall be deemed to accept any associated
conditions imposed by the AARB and shall be deemed to waive any right to
appeal, delay, or otherwise contest the associated conditions while pursuing
the requested activity; provided, however, that upon
<PAGE> 18
CONFIDENTIAL TREATMENT 15
REQUESTED BY GALILEO
INTERNATIONAL, INC.
rejection of any such allowance of an activity by the AARB, nothing in this
Section 7(j) will prevent a Group Member from appealing any decision of the
AARB.
(k) The AARB shall make its determination in accordance with
the vote of a majority of its members, or in the event the AARB is composed of
only two members, by a unanimous vote. The AARB shall issue a written
statement (the "AARB Determination") finding entirely in favor of one of the
proposals set forth in the AARB Petition or entirely in favor of one of the
proposals set forth in the Galileo Response, provided that if there is no
Galileo Response, the AARB Determination shall either be entirely in favor of
one of the proposals set forth in the AARB Petition or shall condition
acceptance of the request for relief on any conditions the AARB deems
appropriate.
(l) Not later than ten days after the earlier of (i) the date
on which the parties determine that an AARB comprised of two or more members
cannot be constituted in accordance with this Section 7, (ii) in the event
there are only two AARB members, the date on which one or both of such AARB
members report to the AARB Petitioner and Galileo that they cannot reach a
unanimous decision with regard to the AARB Petition, or (iii) the rendering of
the AARB Determination, either the AARB Petitioner or Galileo may, in the case
of clauses (i) and (ii) of this Section 7(l), submit the AARB Petition for
arbitration, or, in the case of clause (iii) of this Section 7(l), appeal the
AARB Determination, in each case pursuant to the arbitration provisions of
Section 9. In the event any such arbitration proceeding is commenced, (A)
neither the AARB Petitioner nor Galileo shall be entitled to act on any aspect
of the proposed activity that is the subject of such AARB Petition or an AARB
Determination until any such appeal, if any, has been exhausted, and (B) the
Arbitrator shall make a determination regarding the allowance or the
prohibition of the activity that is the subject of the AARB Petition on the
basis of the standards set forth in this Section 7.
(m) Notwithstanding anything to the contrary herein, subsequent
to the rendering of the AARB Determination or the issuance of an Award there
occurs a significant change in circumstances that was not anticipated by either
Galileo or the AARB Petitioner, nothing shall prohibit Galileo or the AARB
Petitioner from:
(i) seeking a reconsideration of the AARB Determination or the
Award in light of the change in circumstances, in which case any such
reconsideration shall be conducted in accordance with the procedures
established by this Section 7 (substituting, if and as appropriate, Galileo
for the AARB Petitioner, and vice versa), and in connection therewith the
AARB shall take into consideration any newly developed evidence of the
results of allowance or prohibition of the requested activity; or
<PAGE> 19
CONFIDENTIAL TREATMENT 16
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(ii) seeking to have the compensation to Galileo
reduced or increased in accordance with the procedures described in
Section 7(m)(i).
(n) Notwithstanding anything to the contrary herein, an AARB
Petitioner may not seek approval to engage in the same or a similar activity
pursuant to this Section 7 more than once in any twelve-month period.
SECTION 8. Confidential Information. Each Group Member shall, and
shall cause its officers, directors, employees and agents (including, without
limitation, any Director elected by any Group Member) (collectively,
"Representatives") to, keep secret and retain in strictest confidence all
Confidential Information, and shall not disclose such Confidential Information
and shall cause its Representatives not to disclose such Confidential
Information to anyone outside such Group Member or Galileo and its agents; nor
may a Group Member or any of its Representatives exploit such Confidential
Information for its benefit or the benefit of other relationships with
customers of any Group Member; provided, however, nothing in this Section 8 is
meant to affect any rights or obligations of the Parties under any license
agreements granted by Galileo. The obligations under this Section 8 shall
survive for a period of five (5) years commencing on the termination of this
Agreement.
SECTION 9. Disputes. Subject to the final sentence of Section 9,
any dispute arising between the parties to this Agreement involving the subject
matters covered by this Agreement shall be submitted to arbitration under this
Section 9. Any party asserting a breach of this Agreement shall notify the
other party of such alleged breach (a "Dispute Notice") and the parties shall
attempt to resolve such dispute amicably. An individual will be appointed by
each party to such dispute and such individuals shall meet and attempt to
negotiate, in good faith, a resolution of the dispute. If such individuals
shall fail to resolve the dispute within fourteen (14) Business Days of the
date of the Dispute Notice, either party to the dispute may notify the other
party that it wishes to commence an arbitration proceeding under this paragraph
(an "Arbitration Request"). The party commencing the arbitration (the
"Petitioner") shall include in the Arbitration Request (a) a statement of the
facts constituting the alleged breach or dispute, (b) a written statement of
position ("Statement") regarding the dispute, and (c) the name of an individual
designated by it to appoint an Arbitrator (an "elector"). The Statement shall
state the facts and arguments in support of the position taken by the party
submitting such Statement and shall detail that party's proposed solution and
relief sought (if any). The party with whom the Petitioner has its dispute
(the "Respondent") shall within five (5) Business Days after the date of the
Arbitration Request designate a second elector by notice to the Petitioner, but
if the Respondent shall fail to do so within such period the Petitioner may
designate an elector on Respondent's behalf. The electors chosen by the
Petitioner and the Respondent shall attempt to agree upon an arbitrator (the
"Arbitrator"), but if they are unable
<PAGE> 20
CONFIDENTIAL TREATMENT 17
REQUESTED BY GALILEO
INTERNATIONAL, INC.
to do so within (20) Business Days after the designation of the second elector,
then either elector thereafter may apply to the American Arbitration
Association (the "Association") for the selection of the Arbitrator in
accordance with the Commercial Arbitration Rules of such Association. The
Arbitrator so selected shall have full power to decide any dispute referred to
in this paragraph. The arbitration proceedings shall be conducted in the
English language, and the place of arbitration and the making of the Award (as
defined below) shall be the City of New York. The United Nations Commission on
International Trade Law ("UNCITRAL") rules of commercial arbitration shall
apply to any arbitration commenced pursuant to this paragraph, as modified by
the following procedure:
(a) Within five (5) Business Days of the selection of the
Arbitrator (the "Commencement Date"), the Respondent shall deliver its
Statement regarding the dispute to the Arbitrator and the Petitioner.
(b) Within fifteen (15) Business Days from the Commencement
Date, each of the Petitioner and Respondent shall deliver to the Arbitrator
and to the other party, a response ("Response") to the other party's
Statement setting forth opposing facts and arguments and limited in length
to ten (10) typed, single spaced pages (excluding any evidentiary exhibits
included therein).
(c) Within twenty (20) Business Days from the Commencement
Date each of the Petitioner and the Respondent may deliver to the
Arbitrator and to the other party, a reply to the Response limited to
setting forth facts and arguments in rebuttal to the Statement and Response
of the other party and limited in length to five (5) typed, single spaced
pages (excluding any evidentiary exhibits included therein).
(d) Within twenty-five (25) Business Days from the
Commencement Date each of the Petitioner and the Respondent shall present
an oral summation of its position to the Arbitrator in the presence of the
other party in accordance with such rules of procedure including, without
limitation, length of presentation and right of cross-examination, as the
Arbitrator shall determine in writing and deliver to the parties not less
than three (3) Business Days prior to such hearing; provided, however, that
such hearing shall not exceed eight (8) hours in total and may not be
adjourned except for the extraordinary circumstances beyond the control of
the parties.
(e) The Arbitrator shall either issue his decision and award
("Award") or request a further meeting of the parties within fifteen (15)
days of the hearing.
<PAGE> 21
CONFIDENTIAL TREATMENT 18
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(f) Any such further meeting of the parties shall
take place within five (5) Business Days of the request therefor and
shall be conducted as determined by the Arbitrator. The Arbitrator
shall issue his Award no later than fifteen (15) days after any such
further meeting of the parties.
(g) The Award shall be in writing and shall be limited
to a decision either completely in favor of Petitioner's request for
relief or completely in favor of Respondent's request for relief. The
Award shall be final and binding upon the parties and judgment may be
entered thereon in any court of competent jurisdiction and the costs
and expenses of such arbitration shall be borne by the party losing
such arbitration.
This section shall in no way affect the right of any
party to seek such interim relief, and only such relief, as may be required to
maintain the status quo in aid of the arbitration in any court of competent
jurisdiction.
SECTION 10. Rights and Remedies Upon Breach. (a)
Notwithstanding anything in Section 9 hereof, if a Group Member breaches, or
threatens to commit a breach of, any of the provisions of Section 2 or Section
8 hereof (the "Group Member Restrictive Covenants"), Galileo shall have the
right and remedy to have the Group Member Restrictive Covenants specifically
enforced by any court having jurisdiction, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to
Galileo and that money damages will not provide an adequate remedy to Galileo.
Nothing in this Section 10 shall be construed to limit the right of Galileo to
collect money damages in the event of a breach of the Group Member Restrictive
Covenants.
(b) Notwithstanding anything in Section 9 hereof,
if Galileo breaches, or threatens to commit a breach of, any of the provisions
of Section 7 hereof (the "Galileo Restrictive Covenants"), each Group Member
shall have the right and remedy to have the Galileo Restrictive Covenants
specifically enforced by any court having jurisdiction, it being acknowledged
and agreed that any such breach or threatened breach will cause irreparable
injury to the Group and that money damages will not provide an adequate remedy
to the Group. Nothing in this Section 10 shall be construed to limit the right
of any Group Member to collect money damages in the event of a breach of the
Galileo Restrictive Covenants.
SECTION 11. Severability of Covenants. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid, illegal or unenforceable, the remainder of the Restrictive Covenants
shall, to the extent enforceable under applicable law, not thereby be affected
and shall be given full effect, without regard to the portions which have
<PAGE> 22
CONFIDENTIAL TREATMENT 19
REQUESTED BY GALILEO
INTERNATIONAL, INC.
been declared invalid, illegal or unenforceable, provided that if the economic
or legal substance of the principles and transactions contemplated in this
Agreement is affected in a manner materially adverse to any party as a result
of the determination that a provision hereof is invalid, illegal or
unenforceable, the parties hereto agree to negotiate in good faith to modify
this Agreement so as to effect the original interest of parties as closely as
possible in an acceptable manner to the end that the principles and
transactions contemplated hereby are fulfilled to the closest extent possible,
provided further that each Group and Group Member shall enter into the same
modification with respect to its non-competition agreement with Galileo.
SECTION 12. Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, it is the intention of the
parties that such court shall have the power to modify any such provision, to
the extent necessary to render the provision enforceable, and such provision as
so modified shall be enforced.
SECTION 13. Attorneys' Fees and Costs. In the event of any dispute
arising out of the subject matter of this Agreement, the prevailing party shall
recover, in addition to any other damages assessed, its reasonable attorneys'
fees and court costs incurred in litigating or otherwise settling or resolving
such dispute. In construing this Agreement, none of the parties shall have any
term or provision construed against such party solely by reason of such party
having drafted the same.
SECTION 14. Cumulative Remedies. Each of the several rights and
remedies provided in this Agreement, or by law or in equity, shall be
cumulative, and no one of them shall be exclusive of any other right or remedy,
and the exercise of anyone of such rights or remedies shall not be deemed a
waiver of, or an election to exercise, any other such right or remedy. No waiver
of any term or condition of this Agreement shall be construed as a waiver of any
other term or condition; nor shall any waiver of any default hereunder be
construed as a waiver of any other default hereunder.
SECTION 15. Amendments. This Agreement may not be amended except by
an instrument in writing signed by the Parties.
SECTION 16. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of New York applicable to
contracts made and to be performed in such State.
<PAGE> 23
CONFIDENTIAL TREATMENT 20
REQUESTED BY GALILEO
INTERNATIONAL, INC.
SECTION 17. Notice. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 17):
(a) if to Galileo:
Galileo International, Inc.
5350 S. Valentia Way
Englewood, Colorado 80111
Telecopy: (303) 397-5020
Attention: Babetta R. Gray, Esq.
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: 212-848-7179
Attention: Clare O'Brien, Esq.
(b) if to the Group Member-Owner:
______________________________________
______________________________________
______________________________________
Telecopy:_____________________________
Attention:____________________________
<PAGE> 24
CONFIDENTIAL TREATMENT 21
REQUESTED BY GALILEO
INTERNATIONAL, INC.
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
(c) If to the Ultimate Parent Entity:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
(d) If to the Air Carrier Affiliate:
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
<PAGE> 25
CONFIDENTIAL TREATMENT 22
REQUESTED BY GALILEO
INTERNATIONAL, INC.
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
SECTION 18. Assignability. This Agreement and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, successors and assigns. This
Agreement may not be assigned by any party without the prior written consent of
the other parties and any attempt to assign this Agreement without such consent
shall be void and of no effect.
SECTION 19. Headings. The captions and other headings contained in
this Agreement are for reference purposes only and shall not be considered a
part of or affect the construction and interpretation of any provision of this
Agreement.
SECTION 20. Termination. Subject to the provisions of Section 8
hereof, this Agreement shall terminate in its entirety as provided below.
(a) This Agreement shall automatically terminate in its entirety
at such time as no Group Member owns any interest in Galileo's common stock,
provided that subject to section 20(b) below, if at such time a Distributor is a
Group Member, this Agreement shall remain in effect with respect to such
Distributor until the Distributor Agreement to which such Distributor is a party
is terminated. This Agreement shall automatically terminate with respect to any
Group Member at the time such Group Member ceases to be an Affiliate of the
Group Member-Owner.
(b) If a Distributor remains subject to this Agreement pursuant to
the proviso to section 20(a), this Agreement shall only apply to such
Distributor and to the Affiliates of such Distributor in which such Distributor
owns or controls 50% or more of the capital stock (or other ownership interest,
if not a corporation) ordinarily having voting rights, and not to any other
Affiliates of such Distributor.
(c) If the Group Member-Owner continues to own an interest in
Galileo's capital stock, this Agreement will be terminable at the option of the
Group Member-Owner on
<PAGE> 26
CONFIDENTIAL TREATMENT 23
REQUESTED BY GALILEO
INTERNATIONAL, INC.
at least 12 months' prior written notice to Galileo, which notice may be
given at any time after the second anniversary of the Effective Date;
provided that (i) following the third anniversary of the Effective Date, this
Agreement may be terminated at the option of the Group Member-Owner on at least
6 months prior written notice and (ii) in any case, no notice may be given as
long as a Group Member controls a Distributor. Upon such notice, (i) any
Distributor formerly controlled by a Group Member shall lose all exclusive
distribution and most favored nation rights under its Distributor Agreement,
and (ii) Galileo, at its option, may terminate such Distributor Agreement,
subject to the wind-down and transition provisions of Section 22 of such
Distributor Agreement.
(d) Upon the termination of this Agreement pursuant to Section
20(a) or upon Galileo's receipt of notice of termination pursuant to Section
20(c), Galileo, at its option, may terminate any Sales Representation Agreement
with any Group Member.
SECTION 21. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall be considered one and the same instrument.
<PAGE> 27
CONFIDENTIAL TREATMENT 24
REQUESTED BY GALILEO
INTERNATIONAL, INC.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
GALILEO INTERNATIONAL, INC.
By
_____________________________
Name:
Title:
[GROUP MEMBER-OWNER]
By
_____________________________
Name:
Title:
[GROUP MEMBER-OWNER DISTRIBUTOR]
By
_____________________________
Name:
Title:
<PAGE> 28
CONFIDENTIAL TREATMENT 25
REQUESTED BY GALILEO
INTERNATIONAL, INC.
[ULTIMATE PARENT ENTITY]
By
____________________________
Name:
Title:
[AIR CARRIER AFFILIATE]
By
____________________________
Name:
Title:
[PRINCIPAL AIR CARRIER
AFFILIATE]
By
____________________________
Name:
Title:
<PAGE> 29
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
APPENDIX I
Where a Group Member markets and distributes a Customized
Product to other Customers through Neutral Travel Providers pursuant to Section
3(b) of this Agreement, the following shall apply:
[INFORMATION OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[TWO PAGES OMITTED]
<PAGE> 30
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
EXHIBIT A
---------
AARB EXCLUSION PROCESS
----------------------
In the event that the Airline Affiliate Review Board ("AARB")
constituted pursuant to Section 7 of this Agreement shall consist of an even
number of members which is greater than two, a Group Member-Owner's Air Carrier
Affiliate's designee who would otherwise be entitled to participate in the AARB
process shall be excluded from that process as provided herein.
GROUP MEMBER-OWNER'S
--------------------
AIR CARRIER AFFILIATE ASSIGNED NUMBER
--------------------- ---------------
British Airways 1
KLM 2
Swissair 3
United 4
US Airways 5
In the event that any owner of Galileo not associated with an
Assigned Number as designated above shall become entitled to appoint an AARB
member, each such owner shall receive an Assigned Number which follows, in
ascending numerical order, the highest previously designated Assigned Number.
The Group Member representative excluded from the AARB shall
be the representative of the Group whose Assigned Number appears as the units
digit of the closing Dow Jones Industrial Average on the first Monday following
the date on which the relief request notice issued pursuant to Section 7 is
received by the Chairman of the Board (e.g., 7234.22: excluded Group is
United), the Monday so chosen to be referred to hereinafter as the "Exclusion
Day." If the number appearing as the units digit is not the Assigned Number of
a Group which would be entitled to participate in the AARB process, the
excluded Group Member representative shall be determined by the appearance of
an otherwise participating Group Member's Assigned Number in the locations
listed hereinafter, with such locations to be
<PAGE> 31
CONFIDENTIAL TREATMENT 2
REQUESTED BY GALILEO
INTERNATIONAL, INC.
examined in the sequences listed, and with the process concluding upon the
first appearance of an excludable Group's Assigned Number in a location:
(1) Closing Dow Jones Industrial Average on Exclusion
Day, tenth-point digit (e.g., 7237.22: excludable
Group is KLM);
(2) Exclusion Day Dow Jones Industrial High, units digit;
(3) Exclusion Day Dow Jones Industrial High, tenth-point
digit;
(4) Exclusion Day Dow Jones Industrial Low, units digit;
(5) Exclusion Day Dow Jones Industrial Low, tenth-point
digit;
In the event that the foregoing process does not produce a
Group Member for exclusion from the AARB, or in the absence of a Dow Jones
Industrial Average on the designated Exclusion Day, the excluded Group Member
shall be chosen by the application of the foregoing process to the Dow Jones
Industrial Average results produced on the next Business Day following the
Exclusion Day. Such process shall be applied to each subsequent Business Day
until a Group Member has been selected for exclusion from the AARB.
At any time after the selection of an excludable Group Member
pursuant to the foregoing process and before the convening of the AARB, the
Group Member seeking AARB review shall notify Galileo and each member of the
Board of the Group Member excluded from the AARB. Any party (including
Galileo) may object to such notice on the grounds that the excludable Group
Member was improperly selected, and upon any failure to resolve such dispute,
any party may seek resolution of the dispute via the arbitration provisions of
this Agreement. A dispute regarding the composition of the AARB shall, for its
duration, toll the running of any of the time periods established for AARB
review by Section 7 of this Agreement.
<PAGE> 1
EXHIBIT 10.6
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
MARKETING COOPERATION
AND SALES REPRESENTATION AGREEMENT
between
UNITED AIR LINES, INC.
and
GALILEO INTERNATIONAL, INC.
Dated as of __________________ __, 1997
<PAGE> 2
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
MARKETING COOPERATION
AND SALES REPRESENTATION AGREEMENT
Table of Headings
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Sales Agency and Territories . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Sales to NTP Subscribers . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.1 Sales Agency Appointment . . . . . . . . . . . . . . . . . . . 2
2.1.2 Designated Subscribers . . . . . . . . . . . . . . . . . . . . 2
2.1.3 Multinational Accounts . . . . . . . . . . . . . . . . . . . . 2
2.2 Sales to CTMS Customers . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Other Sales Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Territorial Reassignment . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3 The Administration of this Agreement . . . . . . . . . . . . . . . . . . . . . . 4
3.1 GI-Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 United . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Meetings and Coordination . . . . . . . . . . . . . . . . . . . . . . . . . 6
4 Responsibilities of United . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 NTP Sales Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Multinational Sales Services . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 CTMS Sales Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Support Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Responsibilities With Respect to Excluded Subscribers . . . . . . . . . . . 10
4.6 Sales Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7 Staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7.1 Staffing Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7.2 Review of Staffing Levels . . . . . . . . . . . . . . . . . . . . . . 10
4.7.3 Employee Proficiency and Training . . . . . . . . . . . . . . . . . . 10
4.7.3.1 Introductory Training . . . . . . . . . . . . . . . . . . . 10
4.7.3.2 Employee Proficiency . . . . . . . . . . . . . . . . . . . . 11
4.7.3.3 Training and Test Materials . . . . . . . . . . . . . . . . 11
5 GI-Inc Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
i
<PAGE> 3
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
5.1 Marketplace Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 GI-Inc Support of Sales Services and Support Services . . . . . . . . . . . 12
5.3 Services of GI-Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 New Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 CTMS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5.1 Base Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5.2 Demonstrations . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 Technical Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 Technical Assistance Offices . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 Help Desk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7 Other Marketing Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 GI-Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.2 United . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8 Terms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.1 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.2 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12 Service Marks, Patents, Third Party Data . . . . . . . . . . . . . . . . . . . . 16
12.1 Use of Service Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.1.1 GI-Inc Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.1.2 United Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.2 Patent Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.2.1 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.2.2 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12.3 Third Party Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.1 GI-Inc Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.2 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
ii
<PAGE> 4
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
14 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15 Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16 Termination for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
17 Force Majeure, Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
18 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
19 Guarantee of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20 Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
21 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
22 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
23 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
24 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
25 Governing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
26 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
27 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
28 Entirety of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
29 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
iii
<PAGE> 5
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Table of Attachments
Appendix I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Appendix II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Attachment A . . . . . . . . . . . . . . . . . . . . . Defined Terms
Attachment B . . . . . . . . . . . . . . .Dispute Resolution Procedure
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Exhibit C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Exhibit D . . . . . . . . . . . . . . . . .Sales Representative Reports
Exhibit E . . . . . . . . . . . . . . . . . . . . . Certain Territories
Schedule 1
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
iv
<PAGE> 6
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
MARKETING COOPERATION AND SALES REPRESENTATION AGREEMENT
UNITED AIR LINES, INC. AND GALILEO INTERNATIONAL, INC.
This Marketing Cooperation and Sales Representation Agreement (this
"Agreement") effective as of the ___ day of _______, 1997 (the "Effective
Date"), by and between GALILEO INTERNATIONAL, INC., a Delaware corporation
("GI-Inc") with offices at Suite 400, 9700 West Higgins Road, Rosemont,
Illinois, 60018, and UNITED AIR LINES, INC., a Delaware corporation ("United")
with offices at 1200 E. Algonquin Road, Elk Grove Township, Illinois 60007.
RECITALS
WHEREAS United and Apollo Travel Services Partnership, a Delaware
general partnership ("Apollo Partnership"), are parties to a Sales
Representative Agreement, dated as of January 1, 1994 (the "Original
Agreement"); and
WHEREAS GI-Inc generates computerized reservations services through
GI-Inc's computer reservation system and distributes such services worldwide for
use by travel-related business entities, by CTMS Customers, and by individual
consumers; and
WHEREAS GI-Inc desires to appoint Sales Representatives that will be
responsible for the sale of GI-Inc's reservations services to such persons and
for the provision of ongoing support services to certain of such persons; and
WHEREAS The parties hereto agree that, because of the competitiveness of
the products and services of GI-Inc vis-a-vis like products and services of all
other companies within the CRS Industry, United is desirous of entering into
this Agreement; and
WHEREAS The parties hereto agree that, because of United's knowledge of
and contact with a substantial portion of the community of travel agents within
the Territory, GI-Inc is desirous of entering into this Agreement; and
WHEREAS United and Apollo Partnership intend to terminate the Original
Agreement and United desires to be a Sales Representative for GI-Inc under the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, GI-Inc and United hereby agree as follows:
<PAGE> 7
CONFIDENTIAL TREATMENT 2
REQUESTED BY GALILEO
INTERNATIONAL, INC.
1 Definitions.
Capitalized terms used as defined terms in this Agreement have, unless
otherwise defined elsewhere in this Agreement, the meanings provided for each
in Attachment A hereto.
2 Sales Agency and Territories.
2.1 Sales to NTP Subscribers.
2.1.1 Sales Agency Appointment.
With respect to the Assigned Subscribers, GI-Inc hereby
appoints United as the exclusive limited agent of GI-Inc to
obtain commitments from the Assigned Subscribers to subscribe for
and lease Galileo Services. Except as provided in Section 4.2
below, United will act as the sales agent of GI-Inc only for the
limited purposes of negotiating and obtaining written commitments
from NTP Subscribers on terms and in a form prepared and approved
in advance by GI-Inc.
2.1.2 Designated Subscribers.
Exhibit C hereto lists the NTP Subscribers with locations
in the sales territories of more than one sales representative for
whom United is the designated provider of Sales Services and
Support Services. United is the exclusive provider of Sales
Services and Support Services for all locations of such NTP
Subscribers in the Territory. GI-Inc may add or delete NTP
Subscribers from such Exhibit C only with United's consent.
All NTP Subscribers listed on Exhibit C are "Excluded Subscribers"
for all other sales representatives of GI-Inc, including for GI-Inc
itself.
2.1.3 Multinational Accounts.
An NTP Subscriber whose Headquarters is in the Territory and
that has outlets (whether owned, licensed, or otherwise) for its
business in both the Territory and outside of the Territory is, for
the purposes of this Agreement, a "Multinational Account". GI-Inc
has overall responsibility with respect to Multinational Accounts,
including the provision of services to and all payments of
Financial Assistance to such Multinational Accounts, provided,
however, that United has responsibility for the negotiations with
Multinational Accounts with respect to the products and services of
GI-Inc, and United and GI-Inc agree that United together with
GI-Inc shall undertake all such negotiations pursuant to this
Agreement, including, without limitation, the Multinational
Procedure as
<PAGE> 8
CONFIDENTIAL TREATMENT 3
REQUESTED BY GALILEO
INTERNATIONAL, INC.
described in Section 4.2 below. Exhibit C to this Agreement lists the
Multinational Accounts as of the Effective Date. Subsequent to the
Effective Date, United shall assume the responsibilities described in this
Section 2.1.3 with respect to any National Account that, during the term
of this Agreement, becomes a Multinational Account, whether by growth,
merger, business combination, or otherwise. In the event that any
Multinational Account ceases to be a Multinational Account during the term
of this Agreement (a "Discontinued Multinational Account"), then such
Discontinued Multinational Account shall no longer be deemed to be a
Multinational Account but shall be deemed to be a Designated Subscriber.
2.2 Sales to CTMS Customers.
With respect to CTMS Customers and CTMS Agents, GI-Inc hereby appoints
United as its non-exclusive limited agent to obtain commitments from CTMS
Customers and CTMS Agents to purchase, license, or lease CTMS Services.
Pursuant to Section 4.3 below, and except in those territories where GI-Inc has
granted exclusive distribution rights to third parties with respect to Galileo
Services and CTMS Services, as listed in Exhibit E hereto, United may act as
the sales agent of GI-Inc worldwide for the limited purposes of negotiating and
obtaining written commitments from CTMS Customers and CTMS Agents on terms
and in a form prepared and approved in advance by GI-Inc.
2.3 Other Sales Agents.
Subject to this Section 2 and to Section 3 below, GI-Inc may at its
discretion appoint other persons as sales agents of GI-Inc and GI-Inc may act
on its own behalf as sales agent. GI-Inc will treat each of its sales agents
in a fair and nondiscriminatory manner and as appropriate in a manner
proportionate to United's responsibilities hereunder with respect to the terms
and conditions of its appointment as a sales representative, including, but not
limited to, the provision of Sales Services, Support Services, training, the
criteria for approvals of Form Agreements, the compensation arrangements
provided by GI-Inc, and in all associated support functions that are GI-Inc's
responsibility hereunder.
2.4 Territorial Reassignment.
A "Territorial Reassignment" shall occur in the event of (i) a
reassignment by GI-Inc among its sales representatives of territories outside
of the APR but within the Territory, or (ii) the termination of any arrangement
regarding sales agency between GI-Inc and another sales representative of
GI-Inc who is performing as a sales agent within the Territory but not within
the APR (an "Other Agent"). In the event of a
<PAGE> 9
CONFIDENTIAL TREATMENT 4
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Territorial Reassignment, GI-Inc will offer to United the right of first
refusal to assume sales agent responsibility within such reassigned
territory or within the territory of such terminated Other Agent. Before
such territories are assigned to United, GI-Inc and United will negotiate
in good faith to adjust the performance objectives and the compensation
therefor as provided in Appendix II. If United and GI-Inc are unable
within ninety days (90 days) from the commencement of such negotiations to
agree on the terms of adjustment for the performance objectives and the
compensation then GI-Inc shall be free to make the Territorial Reassignment
to any other agent or GI-Inc may perform such sales function for itself.
2.5 Trade Names.
During the term of this Agreement and except as otherwise provided in
this Agreement, with respect to the APR, GI-Inc will market, and United
will sell, the Reservations Services and CTMS Services of GI-Inc under the
"Apollo" trade name. Notwithstanding the foregoing, if, as a result of
United's efforts under this Agreement, a customer of GI-Inc commits to
purchase GI-Inc products or services outside of the Territory then GI-Inc
will determine the trade name for such products or services outside of the
Territory . For the purposes of this Agreement it is assumed, without
obligation on GI-Inc's part, that such trade name outside the Territory is
"Galileo".
3 The Administration of this Agreement.
United and GI-Inc agree that the proper and efficient administration of each
party's obligations under this Agreement is essential to meeting the objectives
of the parties hereunder. To this purpose, the parties agree to dedicate
appropriate staff and resources at an executive level, and otherwise, as
follows:
3.1 GI-Inc.
At all times during the term of this Agreement GI-Inc will employ an
individual who shall have primary responsibility for meeting GI-Inc's
obligations under this Agreement, which person shall be a duly appointed
officer of GI-Inc (the "GI-Inc Executive"). The GI-Inc Executive shall
report directly to the President and Chief Executive Officer of GI-Inc.
The GI-Inc Executive shall be a person who has experience and background
commensurate with his or her responsibilities. The GI-Inc Executive will
maintain an office in the Chicago metropolitan region.
The GI-Inc Executive shall have full authority to bind GI-Inc in all
matters regarding this Agreement that may arise during the term of this
Agreement, subject to
<PAGE> 10
CONFIDENTIAL TREATMENT 5
REQUESTED BY GALILEO
INTERNATIONAL, INC.
the provisions of the corporate by-laws and commitment authorities
of GI-Inc as approved by GI-Inc's Board of Directors or CEO, including,
without limitation:
(i) matters regarding Financial Assistance;
(ii) the approval of agreements with current and potential customers of
GI-Inc that are negotiated by United on GI-Inc's behalf pursuant to
this Agreement;
(iii) the negotiation with United of goals and targets related to
GI-Inc's and United's performance under this Agreement;
(iv) the compensation owed United by GI-Inc under this Agreement,
including the negotiation and payment thereof;
(v) the quantity, quality of performance and training of personnel
provided by GI-Inc pursuant to its obligations under this
Agreement;
(vi) the coordination of GI-Inc's role in negotiations with any third
party where such negotiations involve the participation of parties
other than GI-Inc, United, and that third party; and
(vii) the coordination and resolution of any issues arising under this
Agreement that, in United's or GI-Inc's estimation, are affected by
actions that have been or may be taken by other sales agents of
GI-Inc or by GI-Inc.
The GI-Inc Executive may delegate to employees of GI-Inc or to persons
under the control of GI-Inc such matters that are his or her responsibility
hereunder and as may be, in the GI-Inc Executive's discretion, appropriate for
delegation provided that, if United reasonably objects that such delegation will
result in a diminishment of GI-Inc's performance hereunder or in a detriment to
United's ability to perform its obligations hereunder, or both, then GI-Inc will
review the proposed delegation and inform United as to how GI-Inc will address
United's reasonable concerns.
3.2 United.
At all times during the term of this Agreement United will employ an
individual to have primary responsibility for meeting United's obligations
under this Agreement, which person shall be a duly appointed officer of United
(the "United Executive"). The United Executive shall he a person who has
experience and background commensurate with his or her responsibilities. The
United Executive will maintain an office in the Chicago metropolitan region.
The United Executive shall have full authority to bind United in all matters
regarding this Agreement that may arise during the term of this Agreement,
subject to the provisions of the corporate by-laws and commitment
<PAGE> 11
CONFIDENTIAL TREATMENT 6
REQUESTED BY GALILEO
INTERNATIONAL, INC.
authorities of United Air Lines, Inc., as approved by United Air Lines,
Inc.'s Board of Directors or CEO, including, without limitation:
(i) the conduct of United's negotiations with current and potential
customers of GI-Inc on GI-Inc's behalf pursuant to this Agreement;
(ii) the negotiation with GI-Inc of goals and targets related to
GI-Inc's and United's performance under this Agreement;
(iii) the compensation owed United by GI-Inc under this agreement,
including the negotiation and payment thereof;
(iv) the quantity, quality of performance and training of personnel
provided by United pursuant to its obligations under this
Agreement;
(v) the coordination of United's role in negotiations with any third
party where such negotiations involve the participation of parties
other than GI-Inc, United, and that third party; and
(vi) the coordination and resolution of any issues arising under this
Agreement that, in United's or GI-Inc's estimation, are affected by
actions that have been or may be taken by other sales agents of
GI-Inc or by GI-Inc.
The United Executive may delegate to employees of United or to persons
under the control of United such matters that are his or her responsibility
hereunder and as may be, in the United Executive's estimation, appropriate
for delegation, provided that, if GI-Inc reasonably objects that such
delegation will result in a diminishment of United's performance hereunder
or in a detriment to GI-Inc's ability to perform its obligations hereunder,
or both, then United will review the proposed delegation and inform GI-Inc
as to how United will address GI-Inc's reasonable concerns.
3.3 Meetings and Coordination.
The GI-Inc Executive and the United Executive shall meet from time to
time, whether telephonically or in person and on a schedule to which
they mutually agree, to review the progress of each party's performance
under this Agreement as well as general economic and travel industry market
conditions or factors that may potentially affect one or the other party
performance hereunder.
4 Responsibilities of United.
4.1 NTP Sales Services.
Primarily using United's General Sales Personnel, United will
actively engage in the sale, marketing, and promotion of Galileo Services
to the Assigned Subscribers.
<PAGE> 12
CONFIDENTIAL TREATMENT 7
REQUESTED BY GALILEO
INTERNATIONAL, INC.
To this end, United will perform the following services for GI-Inc
pursuant to this Agreement (such services are, collectively, "NTP Sales
Services"):
(i) Scope. United will engage in NTP Sales Services regarding only
those Galileo Services as directed or authorized in advance by GI-
Inc.
(ii) Contact. United will maintain current and establish new personal a
nd telephone contact and sales relationships, including, where
appropriate, in person or telephone sales calls. At GI-Inc's
expense, United may, on approval of GI-Inc, undertake direct mail
solicitations, promotions, and other sales efforts, with NTP
Subscribers within the APR. GI-Inc may disapprove any sales
promotion or solicitation with respect to the Galileo Services that
GI-Inc in its reasonable discretion determines to be contrary to
the objectives or policies of GI-Inc.
(iii) Commitment Review Procedure. United shall follow the Commitment
Review Procedure described in Section 5.2 below.
(iv) Support Services. Subject to the NTP Form Agreement and within the
Negotiation Range, United shall offer to NTP Subscribers within the
APR such NTP Support Services as are approved in advance by GI-Inc.
(v) Discontinued Services. Upon receipt of a Discontinued Service
Notice, as such term is defined in Section 5.1 below, United will
cease Sales Services regarding such Galileo Service or feature.
(vi) Changes to United Organization. United will give GI-Inc prompt
written notice regarding any significant re-organization,
redeployment or change of responsibilities of its General
Sales Personnel (an "Organization Change"). If such Organization
Change is likely to result in an inability of United to perform NTP
Sales Services in a metropolitan area in the APR that provides a
significant portion of Total Revenue then United will notify GI-Inc
as to whether
(a) United chooses to continue providing services under this
Agreement in such area, in which case United will propose to
GI-Inc how United will staff the necessary Sales Force
coverage for such area, and GI-Inc will review United's
proposal in good faith and determine whether it accepts the
proposal; or
(b) United chooses not to continue providing services under this
Agreement in such area.
In the event of (b), above, or of GI-Inc's rejection of United's
proposal in (a), above, then GI-Inc may reassign sales
responsibility in such area to another person, including to GI-Inc
itself.
<PAGE> 13
CONFIDENTIAL TREATMENT 8
REQUESTED BY GALILEO
INTERNATIONAL, INC.
4.2 Multinational Sales Services.
United will actively engage in the sale, marketing, and promotion
of Galileo Services to Multinationals. To this end, and notwithstanding
the provisions of Section 4.1 above, United will perform the following services
for GI-Inc pursuant to this Agreement (such services are, collectively,
"Multinational Sales Services"):
(i) Scope. United will engage in Multinational Sales Services regarding
only those Galileo Services as directed or authorized in advance by
GI-Inc.
(ii) Multinational Procedure; GI-Inc Lead; United Lead. With respect to the
management of the account of each Multinational, the GI-Inc Executive
shall appoint an individual (the "GI-Inc Lead") and the United Executive
shall appoint an individual (the "United Lead") who shall have joint
responsibility for the preparation and conduct of negotiations with that
Multinational. The following procedure (the "Multinational Procedure")
shall apply to the preparation and conduct of such negotiations:
(a) US Deal. The United Lead shall be the lead negotiator in negotiations
with a Multinational that apply to Galileo Services that are to be
provided by GI-Inc in at least the United States of America (a "US
Deal").
(b) Sales Calls. All sales calls related to a US Deal and made in person
with the Multinational shall be made jointly by the United Lead and
the GI-Inc Lead. The GI-Inc Lead and the United Lead shall jointly
coordinate contacts and meetings, whether in person or telephonic or
via some other electronic means, with the Multinational. In the event
that the Multinational initiates contact with one Lead outside of the
presence of the other Lead, then the contacted Lead will promptly
provide the other Lead with information about such contact insofar as
it relates to the subject matter of this Agreement. In no case will
any GI-Inc employee or agent discuss any element of United's business
with the Multinational without United's prior knowledge and consent.
(c) Account Leads - Non-US Deals. In the case of negotiations with a
Multinational that are not related to a US Deal, this Agreement does
not apply, provided that, GI-Inc will regularly provide United with any
information related to such non-United States of America negotiations
or services that may reasonably be understood to be related either to
the conduct and maintenance of United's good relations with such
Multinational or to United's effective performance under this
Agreement, or both. GI-Inc will endeavor to provide to United in
<PAGE> 14
CONFIDENTIAL TREATMENT 9
REQUESTED BY GALILEO
INTERNATIONAL, INC.
advance of the presentation of proposals with respect
to non-US Deals to Multinationals, a summary of the
terms of such proposals. If United provides GI-Inc
with United's reasonable objections to such terms to
the effect that such terms will, in United estimate,
have a negative effect on United ability to negotiate
acceptable US Deals in the future, with respect to
Financial Assistance or otherwise, then GI-Inc will
take United's objections into account. If GI-Inc
negotiates a non-US Deal that includes a level of
Financial Assistance for a Multinational that is
greater than the level of Financial Assistance then
currently agreed with that Multinational under a US
Deal then GI-Inc will not thereafter attempt to
increase the Revenue Goal or reduce the FA Budget to
offset such increased Financial Assistance.
4.3 CTMS Sales Services.
United will actively engage in the sale, marketing, and promotion of
CTMS Services to CTMS Customers and CTMS Agents. To this end, United will
perform the following services for GI-Inc pursuant to this Agreement (such
services are, collectively, "CTMS Sales Services"):
(i) Scope. United will engage in CTMS Sales Services regarding only
those CTMS Services as directed or authorized in advance by GI-Inc.
(ii) Product Licensing. As GI-Inc's non-exclusive sales agent for the
licensing of CTMS Services, subject to Section 2.2 above, United may
market and license CTMS Services to CTMS Customers and to CTMS
Agents. The parties will work together to develop marketing plans for
CTMS Services, including the name or names of products.
(iii) Contact. United will maintain current and establish new personal
and telephone contact and sales relationships, including, where
appropriate, in person or telephone sales calls with CTMS Customers
and CTMS Agents. At GI-Inc's expense, United may, on approval of
GI-Inc, undertake direct mail solicitations, promotions, and other
sales efforts, with CTMS Customers and CTMS Agents. GI-Inc may
disapprove any sales promotion or solicitation with respect to the
CTMS Services that GI-Inc in its reasonable discretion determines to
be contrary to the objectives or policies of GI-Inc.
(iv) Commitment Review Procedure. United shall follow the Commitment
Review Procedure described in Section 5.2 below.
(v) CTMS Support Services. Subject to the CTMS Form Agreement and within
the Negotiation Range, United shall offer to CTMS Customers or CTMS
Agents, or
<PAGE> 15
CONFIDENTIAL TREATMENT 10
REQUESTED BY GALILEO
INTERNATIONAL, INC.
both, as the case may be, such CTMS Support Services as are approved
in advance by GI-Inc.
(vi) Discontinued Services. Upon receipt of a Discontinued Service
Notice, as such term is defined in 5.1 below, United will cease CTMS
Sales Services regarding such CTMS Service.
4.4 Support Services.
In addition to the Sales Services, United will perform the following
services for GI-Inc pursuant to this Agreement for those NTP Subscribers
with annual HOL Flow in excess of $5 million (such services are,
collectively, "Support Services").
(i) Support Services Calls. Responses to inquiries from, and regular
premises visits and assistance to, NTP Subscribers in order to
establish and maintain good relations and to improve relations
between NTP Subscribers and GI-Inc, and to aid in familiarization
with and use of Galileo Services and CTMS Services.
(ii) Technical Questions Received. United will relay promptly to GI-Inc
any technical questions received by United from customers of GI-Inc
and, as requested by GI-Inc, will coordinate responses thereto.
(iii) Area of Support. United will be responsible for Support Services for
locations of NTP Subscribers within the APR, and as designated by
GI-Inc outside of the APR (although associated revenue from non-APR
Subscribers designated for support will be included in Total
Revenue).
4.5 Responsibilities With Respect to Excluded Subscribers.
United will not enter into sales negotiations with Excluded
Subscribers except with the prior written approval of GI-Inc. GI-Inc may
add or delete NTP Subscribers as Excluded Subscribers on Exhibit B hereto
after consulting with and receiving the consent of all affected sales
representatives, including United. Revenues from all Assigned Subscribers
who become Excluded Subscribers will continue to be counted for that year
in the Total Revenue. United may negotiate with NTP Subscribers regarding
sales commitments outside of the APR (i) after prior notice to GI-Inc, (ii)
after a reasonable period of time in which GI-Inc has had the opportunity
to coordinate such sales calls with its own sales force and with GI-Inc's
other sales representatives, and (iii) after consent of GI-Inc. Only those
sales outside of the APR approved in advance by GI-Inc will be included in
Total Revenue totals.
4.6 Sales Planning.
Subject to Appendix II, and in no event later than February 28 of
each year, GI-Inc and United jointly will develop a sales plan for such
year, which sales plan will be
<PAGE> 16
CONFIDENTIAL TREATMENT 11
REQUESTED BY GALILEO
INTERNATIONAL, INC.
designed to increase business opportunities, procure profitable NTP
Subscriber accounts for GI-Inc and attain or exceed the Revenue Goal.
4.7 Staffing.
4.7.1 Staffing Commitment.
As described in Appendix I, United will staff a Sales Force who
will provide Sales Services to GI-Inc under this Agreement.
4.7.2 Review of Staffing Levels.
United will consult with GI-Inc from time to time as requested
by either party to review the job descriptions, minimum
qualifications, career paths, and other matters in connection with the
Sales Force. United will consult with GI-Inc regarding the staffing
of Dedicated Personnel and Active Support Personnel positions to be
provided under this Agreement. Such consultations will include review
of job descriptions and necessary qualifications, consideration of
possible applicants from GI-Inc and United as well as third parties,
and full consultation and review of proposed training schedules for
each Dedicated Personnel and Active Support Personnel.
4.7.3 Employee Proficiency and Training.
4.7.3.1 Introductory Training.
Prior to commencing any Sales Services on behalf of
GI-Inc hereunder, all Sales Force personnel of United must
attend a five-day introductory training course and, thereafter,
a two-day refresher training course at least once annually, at
a location or locations to be mutually agreed between United
and GI-Inc. As new GI-Inc products or services are released by
GI-Inc for Sales Services hereunder, GI-Inc will provide
training with respect thereto to the Sales Force at a location
or locations as agreed by the parties. GI-Inc will bear its
own expenses in providing the training and United will bear its
own expenses of the Sales Force in attending such training.
4.7.3.2 Employee Proficiency.
United will take all reasonable steps to ensure that
all of the Sales Force who are authorized to sell or support
the products and services of GI-Inc hereunder have been trained
appropriately and are proficient to provide Sales Services in
accordance with the terms of this Agreement.
<PAGE> 17
CONFIDENTIAL TREATMENT 12
REQUESTED BY GALILEO
INTERNATIONAL, INC.
GI-Inc shall have the right to test the proficiency of
individual Sales Force personnel at the time of their
refresher training and to require additional training for
such individuals as do not demonstrate minimum proficiency.
GI-Inc will provide all course materials, test materials,
and training facilities necessary to provide such additional
training, and United and GI-Inc will mutually establish a
reasonable schedule for the administration of such
additional training. Sales Force personnel who have
completed such additional training will be again tested and
those who again demonstrate an inability to achieve the
minimum level of proficiency will not be counted toward the
required staffing levels prescribed in this Section 4.7.
4.7.3.3 Training and Test Materials.
GI-Inc will provide to United in advance of their
use copies of all introductory training materials, refresher
training materials, and proficiency test vehicles to he used
pursuant to this Section 4.7.3 (collectively, the "Training
Materials"). The Training Materials will always be
constructed according to the best practices for Training
Materials then employed by U.S. industry and shall be
related solely to the reasonable skills required of a person
engaged in the sales of products and services such as those
of GI-Inc. United may, at its request, review such Training
Materials in advance of their use hereunder and GI-Inc will
make all reasonable changes requested by United to the
Training Materials.
5 GI-Inc Responsibilities.
5.1 Marketplace Competitiveness.
GI-Inc will at all times during the term of this Agreement use its
best efforts to ensure that Galileo Services maintain a superior level of
competitiveness in the CRS Industry. GI-Inc will give United as much
notice as is reasonably practicable if GI-Inc discontinues general
distribution or provision of any particular Galileo Service or CTMS Service
or major feature thereof (a "Discontinued Service Notice")
5.2 GI-Inc Support of Sales Services and Support Services.
With the objective of ensuring the proper level of GI-Inc support for
Sales Services and for Support Services provided by United under this
Agreement, GI-Inc will provide the following support to United
(collectively, the "GI-Inc Support"):
<PAGE> 18
CONFIDENTIAL TREATMENT 13
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(i) Copies. GI-Inc will ensure that United at all times has a
current copy of each version of the Form Agreements together with
such commentary or explanation of the Form Agreements as may be
reasonably required by United for the comprehension and
understanding of the Form Agreements.
(ii) Changes to Form Agreements. GI-Inc will provide United with no
less than 30 days written notice in the event that GI-Inc
modifies or discontinues the use of any of the Form Agreements.
5.3 Services of GI-Inc.
GI-Inc will provide Galileo Services, CTMS Services and New
Services to NTP Subscribers, CTMS Customers and CTMS Agents, subject
to the terms of the Form Agreements as negotiated by Untied and
approved by GI-Inc pursuant to this Agreement.
5.4 New Services.
GI-Inc will not distribute any Galileo Service (but excluding
enhancements or replacements of any Galileo Service) that did not
exist as of the Effective Date (a "New Service") through any sales
representative in the Territory, and including GI-Inc itself, without
first offering United the right of first refusal to become the
exclusive sales agent for such New Service for the APR. GI-Inc and
United shall negotiate on the reasonable terms of such agency,
including the performance objectives and the compensation therefor as
provided in Appendix II. Failing agreement with United within ninety
days (90 days) of the inception of such negotiations, GI-Inc may, upon
giving notice to United pursuant to Section 26, below, make the other
sales representative arrangements for the New Service within the
Territory.
5.5 CTMS Products.
5.5.1 Base Products.
GI-Inc has the ultimate role in determining product
specifications and features of any CTMS Service, and GI-Inc will
ensure that such specifications and product implementations of
such specifications meet prevailing market needs. To that end,
the GI-Inc Executive shall consult regularly with the United
Executive as to information that United may gather in the course
of its business that United believes is relevant to ensuring that
the CTMS Service is competitive with like services and products
provided by other service providers.
5.5.2 Demonstrations.
<PAGE> 19
CONFIDENTIAL TREATMENT 14
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Upon United's request, subject to GI-Inc.'s agreement, GI-Inc, at
its expense, will provide demonstrations of CTMS Services to CTMS
Customers and/or CTMS Agents. GI-Inc will coordinate the content and
scheduling of such demonstrations with United.
5.6 Technical Support.
GI-Inc will provide in a good and workmanlike manner all installation,
connection, and testing of all Galileo Services, CTMS Services and any
field or technical support or field maintenance required by NTP
Subscribers, CTMS Customers, or CTMS Agents. GI-Inc will maintain ongoing
and appropriate contact with NTP Subscribers, CTMS Customers and CTMS
Agents to facilitate user operation of the Galileo Services and CTMS
Services. Technical sales consulting support will also be provided by
GI-Inc to the Sales Force.
5.7 Technical Assistance Offices.
GI-Inc will maintain regional Tech Offices for the use of its sales
representatives that will be staffed by knowledgeable employees capable of
providing technical assistance regarding Galileo Services and CTMS
Services. Such assistance will be available to United during normal GI-Inc
business hours.
5.8 Help Desk.
GI-Inc, at its expense, will maintain a telephone call center or
centers for use by the Sales Force, NTP Subscribers, CTMS Customers, and
CTMS Agents during normal business hours for each of those persons in their
places of business. The call centers will be staffed by knowledgeable
persons under the control of GI-Inc who are capable of providing prompt,
thorough, courteous, and professional technical assistance regarding the
products and services of GI-Inc.
6 Reporting.
United will furnish, at no cost to GI-Inc, the reports and documents set
forth in Exhibit D hereto.
7 Other Marketing Rights.
7.1 GI-Inc.
GI-Inc reserves the right to market and to support services in the
Sales APR. During the term of this Agreement, and except as otherwise
provided in this
<PAGE> 20
CONFIDENTIAL TREATMENT 15
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Agreement, GI-Inc will not designate the Sales APR of United as the area
of primary sales responsibility of any other sales agent of GI-Inc,
including GI-Inc itself.
7.2 United.
Subject to the provisions of the Non-Competition Agreement, while United
is the sales agent of GI-Inc under the terms of this Agreement, United
will not act as a sales agent for the reservations or accounting
services of another entity in the CRS Industry in the APR without the
prior consent of GI-Inc, provided, however, that nothing in this Agreement
will prevent United from:
(i) having United Group Products and Services displayed or listed in any
person's computer reservation system, schedule, other electronic or
paper communications medium, or otherwise;
(ii) providing to any person any technological or computerized means of
delivering information and automation functionality;
(iii) authorizing any person to use United's trademarks and trade names
in connection with advertising United's participation in such
person's computer information or reservation system, or otherwise;
(iv) endorsing the products or services of another member of the CRS
Industry, provided, however, that United may not endorse such
products or services of such other member of the CRS Industry as
being preferred to those of GI-Inc, provided, however, (a) if
GI-Inc does not itself provide such products or services, or
(b) GI-Inc provides such products or services but they do not meet
United's needs, then, subject to the provisions of the
Non-Competition Agreement, United may endorse such products or
services of such other member of the CRS Industry in any manner.
8 Terms of Payment.
GI-Inc will pay United quarterly in arrears, upon receipt and acceptance by
GI-Inc of United's reports pursuant to Section 6 above for the preceding
quarter and of its invoice therefor, an amount equal to one quarter of the Base
Compensation. Invoices will be prepared and mailed on the first work day of
April, July, October and January of each year. After the end of each calendar
year, following receipt and acceptance by GI-Inc of United's report pursuant to
Section 6 above with results for the year as a whole, adjustments will be made
as required by Appendix II, and GI-Inc or United, as appropriate, will make
payment to the other in an amount determined in accordance with the application
of such Section. All payments hereunder will be made within 30 days of date of
invoice by wire transfer, banking instructions to be given by the recipient
thereof in advance of each such transfer. All amounts due and
<PAGE> 21
CONFIDENTIAL TREATMENT 14
REQUESTED BY GALILEO
INTERNATIONAL, INC.
payable hereunder and not paid within 30 days of date of invoice shall be
subject to late payment interest subject to the following: (i) the Interest
Rate shall be fixed as of the due date of the invoice, and (ii) interest shall
be calculated, on the basis of a 360-day year, from the due date.
9 Currency.
For the purposes of this Agreement all currency calculations shall be in US
Dollars and, to the extent paid in a currency other than US Dollars, revenue
received by GI-Inc or expenses incurred by GI-Inc will be converted to US
Dollars at the exchange rate in effect at the date of the receipt of such
revenue or payment of such expense, as the case may be.
10 Term.
This Agreement is effective as of the Effective Date, and will continue
until the termination of the Non-Competition Agreement. GI-Inc may issue, no
earlier than July 1 of each year a conditional notice of termination if GI-Inc
has reasonably determined that United may, as a result of its own failure to
perform and not as a result of a Material Change, not meet its then current
Revenue Goal; if, as of 120 days after such conditional notice, GI-Inc
reasonably determines that United will not meet such Revenue Goal and so
notifies United, this Agreement will terminate 90 days after such determination
(with no sales exclusivity during the last 30 days of the 90 day period) and
United will be paid for sales services during the last 30 days only at direct
labor cost (adjusted to reflect time devoted to GI-Inc) and associated
expenses.
11 Confidentiality.
11.1 Confidential Information.
Confidential information, including, without limitation, source code,
object code, manufacturing, financial and marketing data, orders,
forecasts, plans, designs, drawings and specifications of either United
or GI-Inc, which is contained in tangible records designated as
"CONFIDENTIAL", "TRADE SECRET" or "PROPRIETARY", or which is otherwise
communicated on the express basis that the information is confidential,
and which is provided to the other party during the performance of this
Agreement (hereafter "Confidential Information"), will be treated as
confidential and not further disclosed to any third party without the
prior written consent of the providing party, except as provided under the
terms of this Agreement, for five years from the date such Confidential
Information was first received, unless such Confidential Information was
already in the possession of the other party, is placed in the public
<PAGE> 22
CONFIDENTIAL TREATMENT 17
REQUESTED BY GALILEO
INTERNATIONAL, INC.
domain through no fault of the party receiving such information, or
becomes rightfully available to the other party through other sources
without restriction on disclosure.
11.2 Service.
If either party is served with a subpoena or other legal process
requiring the production or disclosure of any Confidential Information or
United Information, then that party will immediately notify the owner
thereof, and will in good faith attempt to permit the owner at the owner's
expense to intervene and contest such disclosure or production.
12 Service Marks, Patents, Third Party Data.
12.1 Use of Service Marks.
12.1.1 GI-Inc Marks.
United will use and display the GI-Inc trade and
service marks in the form specified by GI-Inc. United will market
the Galileo Services and CTMS Services under product names
established by GI-Inc and must identify all such Galileo
Services and CTMS Services as the products or services of GI-Inc.
United may include its name and identifying marks in association
with the name "GI-Inc". GI-Inc reserves the right to disapprove
any use of the trade and service marks and other proprietary rights
of GI-Inc if GI-Inc determines in its reasonable discretion that
such use is contrary to the objectives or policies of GI-Inc.
12.1.2 United Marks.
GI-Inc will not use the trade or service marks of
United without United's prior written consent. United reserves
the right to disapprove any use of the trade and service marks and
other proprietary rights of United if United determines in its
reasonable discretion that such use is contrary to the objectives
or policies of United.
12.2 Patent Indemnity.
12.2.1 Actions.
GI-Inc will defend at its expense any suit or
proceeding against United based on a claim that any product or
service of GI-Inc ("GI-Inc Product") constitutes an infringement of
the patent, trademark, or copyright laws of the United States,
provided that GI-Inc is notified promptly in writing
<PAGE> 23
CONFIDENTIAL TREATMENT 18
REQUESTED BY GALILEO
INTERNATIONAL, INC.
and given full and complete authority, information, and assistance
for the defense of such suit or proceeding. If the foregoing
provision is complied with, GI-Inc will pay damages and costs
awarded against United, but GI-Inc will not be responsible for any
compromise or settlement made without its prior written consent.
If any GI-Inc Product is held to constitute infringement of such
patent, trademark, or copyright and its use is enjoined, GI-Inc
will, at its election and expense, either obtain for United the
right to continue using such GI-Inc Product, modify such GI-Inc
Product so that it is not infringing, or remove such GI-Inc
Product.
12.2.2 Limitation.
GI-Inc will not be liable to United with respect
to any claim of infringement which is based upon (a)
combination or utilization of an GI-Inc Product with products or
services not supplied by GI-Inc; (b) the unauthorized modification
by United or a person other than GI-Inc or its designated
representatives of any GI-Inc Product or (c) the use of any GI-Inc
Product not in accordance with GI-Inc's specifications or
recommendations.
12.3 Third Party Data.
GI-Inc makes no representation or warranty regarding the accuracy
or reliability of any schedule, fare, quote, or other information provided
to GI-Inc by airlines or by hotels, car rental companies or other vendors
of travel related services. GI-Inc will not be responsible for, and
United hereby releases and waives any claims against GI-Inc conceding, the
accuracy or reliability of any such information provided by such third
parties.
13 Taxes.
13.1 GI-Inc Responsibilities.
GI-Inc will pay any sales, use, or personal property taxes
(except for any tax levied upon or measured by United's gross
receipts) imposed by any taxing authority and required to be paid by
GI-Inc or United as a result of services provided to GI-Inc under this
Agreement. GI-Inc will not be liable for any tax levied upon or
measured by the income of United.
13.2 Claims.
If a claim is made against United for any taxes that are to be
paid by GI-Inc, United will timely notify GI-Inc. If GI-Inc so requests
in writing, United will, at GI-Inc's expense, take such action as GI-Inc
may reasonably direct with respect to such
<PAGE> 24
CONFIDENTIAL TREATMENT 19
REQUESTED BY GALILEO
INTERNATIONAL, INC.
taxes, including payment of such taxes under protest. If the tax has
been paid, and if requested by GI-Inc, United will, at GI-Inc's
expense, take such action as GI-Inc may reasonably direct, including
allowing GI-Inc to file a claim or commence legal action in United's
name, to recover such tax payment. In the event of refund or recovery
of any tax, or part thereof, United will pay to GI-Inc promptly that
portion of the tax paid by GI-Inc, including any interest received
thereon.
14 Limitation of Liability.
Except as provided under Section 18 below ("Indemnification"), each
party's total liability regarding any claim by the other party for breach of
this Agreement is limited to the amount of compensation earned by United for
the year in which the claim arises or, if based on obligations of a continuing
nature and arising after termination, then the final year of this Agreement,
and each party hereby releases and waives any claims against the other party
for such breach in excess of such amount.
15 Consequential Damages.
NEITHER PARTY WILL BE LIABLE FOR, AND EACH PARTY WAIVES AND RELEASES
ANY CLAIMS AGAINST THE OTHER PARTY FOR, ANY SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, INCLUDING DAMAGE TO OR DESTRUCTION OF PROPERTY, LOST
REVENUES, LOST PROFIT, OR LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE, RESULTING
FROM PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT.
16 Termination for Breach.
If either party (the "Defaulting Party") breaches any of its duties or
obligations under this Agreement, and such breach continues for thirty days
(ten days regarding failure to pay amounts due) after written notice of such
default from the other party, then the other party may terminate this Agreement
at any time thereafter, effective immediately upon written notice of
termination to the Defaulting Party, without prejudice to any other rights or
remedies the non-defaulting party may have. Upon notice of such termination,
the Defaulting Party will return immediately to the non-defaulting party any
and all confidential or proprietary information, programs, materials, or other
data, and any copies thereof, in the possession or control of the Defaulting
Party.
17 Force Majeure, Delay.
<PAGE> 25
CONFIDENTIAL TREATMENT 20
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Neither party will be responsible for delays in performance caused by
acts of God or governmental authority, strikes or labor disputes, fires or
other loss of manufacturing facilities, breach by suppliers of supply
agreements, or any other cause beyond the reasonable control of that party.
18 Indemnification.
Each party (the "Indemnitor") will indemnify the other party, its
officers, employees, and agents (collectively "Indemnitees") against and hold
each Indemnitee harmless from all claims, suits, judgments, losses, damages,
fines or costs (including reasonable legal fees and expenses) resulting from
any claim, suit, or demand by any third party for injuries to or deaths of
persons or loss of or damage to property arising out of the Indemnitor's
performance or, willful misconduct of the Indemnitor its employees, officers,
or agents, in connection with the Indemnitor's performance of this Agreement,
except to the extent caused by the negligence of any Indemnitee. The
Indemnitor's obligations under this paragraph will survive the termination of
this Agreement.
19 Guarantee of Performance.
If either party (the "Insolvent Party") becomes insolvent; if the
other party (the "Insecure Party") has evidence that the Insolvent Party is not
paying its bills when due without just cause; if a receiver of the Insolvent
Party's assets is appointed; if the Insolvent Party takes any step leading to
its cessation as a going concern; or if the Insolvent Party either ceases or
suspends operations for reasons other than a strike, then immediately upon
receipt of written notice from the Insecure Party the Insolvent Party will
provide adequate assurance, satisfactory to the Insecure Party, of the future
performance of this Agreement. If bankruptcy proceedings are commenced with
respect to the Insolvent Party, then the Insecure Party may suspend all further
performance of this Agreement until the Insolvent Party assumes or rejects this
Agreement pursuant to section 365 of the Bankruptcy Code or any similar or
successor provision. Any such suspension of further performance by the
Insecure Party pending the Insolvent Party's assumption or rejection will not
be a breach of this Agreement and will not affect the Insecure Party's right to
pursue or enforce any of its rights under this Agreement or otherwise
20 Third Party Rights.
Nothing contained in this Agreement establishes or creates, or is
intended or will be construed to establish or create, any right in or any duty
or obligation to any third party.
<PAGE> 26
CONFIDENTIAL TREATMENT 21
REQUESTED BY GALILEO
INTERNATIONAL, INC.
21 Assignment.
United may assign or transfer this Agreement or any rights granted or
provided for hereunder, in whole or in part, to any person or entity that is
controlled by United, otherwise United may not assign or transfer this
Agreement or any rights granted or provided for hereunder, in whole or in part,
without the written Agreement of GI-Inc. GI-Inc may assign or transfer this
Agreement or any rights granted or provided for hereunder, in whole or in part,
to any person or entity that is controlled by GI-Inc, otherwise GI-Inc may not
assign or transfer this Agreement or any rights granted or provided for
hereunder, in whole or in part, without the written Agreement of United.
22 Relationship of the Parties.
The relationship of the parties is that of principal and limited
agent. United may bind GI-Inc only as specifically provided in this
Agreement.
23 Severability.
If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect, then the Agreement shall he construed to exclude
such provision and to be enforceable in all other respects, unless to do so
would prejudice the rights of either party or result in such a material change
as to cause performance by either party to be unreasonable.
24 Survival.
All provisions of this Agreement which by their terms survive
termination thereof will continue thereafter in full force and effect.
25 Governing Law.
This Agreement, and any dispute arising under or in connection with
this Agreement, including any action in tort, will be governed by the internal
laws of the State of Illinois. Any action brought to (i) preserve the status
quo pending arbitration or (ii) enforce an arbitration proceeding or decision
shall be brought in courts located within Cook County, Illinois, the parties
hereby consenting to personal jurisdiction and venue therein.
26 Notices.
All notices to either party under this Agreement must be in writing
and sent to the following addressee and at the following address:
<PAGE> 27
CONFIDENTIAL TREATMENT 22
REQUESTED BY GALILEO
INTERNATIONAL, INC.
for GI-Inc:
Galileo International Incorporated
Suite 400
9700 West Higgins Road
Rosemont, Illinois 60018
Attn: President
for United:
United Airlines Department WHQSS
1200 E. Algonquin Road
Elk Grove Township, Illinois 60007
Attn: Vice President and General Sales Manager
Notices will be deemed effective on the date received. Notices by
certified or registered mail (return receipt requested) will be deemed received
on the date shown on the return receipt. Notices sent by telex or facsimile
will be deemed received on the date transmitted if transmitted before 3:30 p.m.
time of recipient, otherwise on the next business day following transmission.
27 Headings.
The section headings and captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and will not be deemed to limit, characterize or in any way affect any
provision of this Agreement, and all provisions of this Agreement will be
enforced and construed as if no heading or caption had been used in this
Agreement.
28 Entirety of Agreement.
This Agreement including any Exhibits or attachments, supersedes all
prior oral or written representations or communications between the parties and
constitutes the entire understanding of the parties regarding the subject
matter of this Agreement. This Agreement may be modified only in a writing
signed by both parties.
<PAGE> 28
CONFIDENTIAL TREATMENT 23
REQUESTED BY GALILEO
INTERNATIONAL, INC.
29 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall be considered one and
the same instrument.
IN WITNESS WHEREOF, the parties have agreed to and executed this
Agreement by their authorized representatives as of the Effective Date first
set forth above
GALILEO INTERNATIONAL, INC. UNITED AIR LINES, INC.
By: ______________________________ By: ______________________________
Name: ____________________________ Name: ____________________________
Title: ___________________________ Title: ___________________________
<PAGE> 29
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Appendix I
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[THREE PAGES OMITTED]
(APPENDIX I-1)
<PAGE> 30
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Appendix II
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[FIVE PAGES OMITTED]
(APPENDIX II-1)
<PAGE> 31
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Attachment A
Defined Terms
As used in this Agreement, including the Attachments, Exhibits and Schedules
hereto, the terms listed in this Attachment A have the meanings ascribed to
them. The use of a term in the singular that is defined herein in the plural
is understood in this Agreement to signify a single instance of such defined
matter.
"Accounting Services" means those travel agency accounting services that are
provided by GI-Inc to customer of GI-Inc.
"Active Support Personnel" means General Sales Personnel who will be dedicated
primarily (80 percent of work time) to providing Sales Services pursuant to
this Agreement.
"Administrative Support Personnel" means those General Sales Personnel who
perform primarily administrative or management functions in the provision of
Sales Services pursuant to this Agreement.
"Advance Credit" has the meaning ascribed to that term in Section 9 of Appendix
II.
"APR" means "Area of Primary Sales Responsibility" as defined herein.
"ARC" means Airlines Reporting Corporation.
"Area of Primary Sales Responsibility" means the exclusive geographic area of
primary sales responsibility assigned to United as described in Exhibit A
hereto and as such geographic area may be amended from time to time in
accordance with the provisions of this Agreement.
"Assigned Subscribers" means (i) all NTP Subscribers within the APR and (ii)
the Designated Subscribers, but excluding the Excluded Subscribers.
"Base Compensation" has the meaning ascribed to that term in Section 6 of
Appendix II and, in the event that there is a Carryover Base Compensation,
means such Carryover Base Compensation.
"BSP" means an entity, including, without limitation, IATA, that performs
accreditation, revenue reporting and clearing functions such as those performed
by ARC.
(ATTACHMENT A-1)
<PAGE> 32
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Cancelled Deal" has the meaning ascribed to that term in Section 5.2 above.
"Carryover Base Compensation" has the meaning ascribed to that term in Section
4.2 of Appendix II.
"Carryover FA Budget" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
"Carryover Plan" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
"Carryover Revenue Goal" has the meaning ascribed to that term in Section 4.2
of Appendix II.
"Commitment Review Procedure" has the meaning ascribed to that term in Section
5.2 above.
"Corporate Direct System" means a computerized travel reservations system that
is integrated with desktop travel management software including, for example,
travel policy enforcement, expense management, and management reporting
functionality and is (i) selected by a CTMS Customer for use by its employees,
or (ii) selected for use by a CTMS Agent retained by a CTMS Customer to service
the travel planning and management requirements of such CTMS Customer.
"CRS Industry" means the group of business entities who provide products and
services alike to the products and services of GI-Inc.
"CTMS Agent" means a Travel Agent, NTP Subscriber, service bureau, or other
person with whom a CTMS Customer has an agreement pursuant to which the CTMS
Agent performs services related to the use of a CTMS and other aspects of that
CTMS Customer's travel planning and travel management requirements.
"CTMS Customer" means a corporation, partnership, or other person who is an
existing or a potential purchaser of CTMS Services from GI-Inc.
"CTMS Form Agreement" means a Form Agreement that relates to CTMS Services.
"CTMS Sales Services" has the meaning ascribed to that term in Section 4.3
above.
"CTMS Services" means any portion of a Corporate Direct System provided by
GI-Inc, whether itself, or through an arrangement or arrangements between
GI-Inc and a third party or third parties.
(ATTACHMENT A-2)
<PAGE> 33
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"CTMS" means a CTMS Service.
"Designated Subscribers" means those NTP Subscribers listed on Exhibit C hereto
and as amended pursuant to this Agreement.
"Dedicated Personnel" means General Sales Personnel of at least Account
Executive level who will be dedicated full-time (100 percent of work time) to
the provision of Sales Services pursuant to this Agreement.
"Discontinued Multinational Account" has the meaning ascribed to that term in
Section 2.1.3 above.
"Discontinued Service Notice" has the meaning ascribed to that term in Section
5.1 above.
"Dispute" means any dispute, disagreement, claim, or controversy arising in
connection with or relating to this Agreement, or the validity, interpretation,
performance, breach, or termination of this Agreement, including any claim of
breach of representation or warranty or of non-performance.
"Dispute Resolution Procedure" means the procedure described in Attachment B
hereto.
"Dispute Summary" means, with respect to a Dispute and with respect to the
party to the Dispute who shall prepare a Dispute Summary, a written declaration
presenting (i) a statement expressing the issue(s) in Dispute, (ii) facts
relevant to the understanding of the issue(s) in Dispute, and (iii) a statement
expressing the resolution of the Dispute that is sought by the party who
prepares the Dispute Summary.
"Excluded Subscribers" means those NTP Subscribers listed on Exhibit B pursuant
to this Agreement.
"FAA Factor" means, with respect to the Carryover Plan year in question, the
change, expressed as a percentage, in forecast domestic revenue passenger
enplanements for that Carryover Plan year versus the immediately preceding
year, where "forecast domestic revenue passenger enplanements" shall be as
provided in the then-current (as of the time the Carryover Plan is created)
"FAA Aviation Forecasts" issued by the U.S. Department of Transportation,
Federal Aviation Administration, Office of Aviation Policy and Plans.
"Financial Assistance" means the provision by GI-Inc, and at GI-Inc's expense,
to any one or more of (i) the Assigned Subscribers, (ii) CTMS Customers, and
(iii) CTMS Agents, of any
(ATTACHMENT A-3)
<PAGE> 34
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
one or more of: (a) cash payments; (b) indemnification payments; (c) revenue
sharing; (d) booking fee rebates; (e) lease fee waivers; (f) license fee
waivers; (g) productivity or efficiency fee waivers; (h) airline tickets or
other airline, car or hotel perquisites; (i) computer or other hardware; and (j)
other benefits.
"FA Budget" means the amount of Financial Assistance established in accordance
with the provisions of Section 3 of Appendix II and, in the event that there is
a Carryover FA Budget, means such Carryover FA Budget.
"Form Agreements" has the meaning ascribed to that term in Section 5.2 above.
"Galileo Board" means the Board of Directors of GI-Inc.
"Galileo Services" means, collectively, Reservations Services and Accounting
Services, as provided by GI-Inc in the APR, excluding CTMS Services.
"General Sales Personnel" means regular, full-time employees of United who
either are in training for or are actively engaged in the sale of air
transportation on United, or other persons as may be agreed by GI-Inc and
United, including Administrative Support Personnel as provided above, but
excluding employees of United engaged primarily in administrative or management
positions that supervise sale planning or implementation policies or processes
of United.
"GI-Inc Executive" has the meaning ascribed to that term in Section 3.1 above.
"GI-Inc Lead" has the meaning ascribed to that term in Section 4.2 above.
"GI-Inc Support" has the meaning ascribed to that term in Section 5.2 above.
"Guaranteed Compensation" has the meaning ascribed to that term in Section 7 of
Appendix II.
"Headquarters" means, with respect to the corporation or partnership in
question, the city or place in which that corporation or partnership maintains
its principal offices.
"HOL Flow" means, with respect to an individual NTP Subscriber, the annual
sales of air transportation revenue, as measured by ARC and BSPS, for all
locations of that NTP Subscriber.
"IATA" means the International Air Transport Association.
(ATTACHMENT A-4)
<PAGE> 35
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Independent Directors" means the members of the Galileo Board who are neither
nominated by an airline owner of GI-Inc or are members of the executive
management of GI-Inc.
"Interest Rate" means the mathematical average of the prevailing
dollar-denominated 30 day and 90 day London Interbank Offered Rates (LIBOR), as
reported in the Wall Street journal for a specified business day, plus 200
basis points.
"Level One Bonus" has the meaning ascribed to that term in Section 8 of
Appendix II.
"Level Two Bonus" has the meaning ascribed to that term in Section 8 of
Appendix II.
"Material Change" has the meaning ascribed to that term in Section 5 of
Appendix II.
"Multinational Accounts" means (i) those Designated Subscribers listed under
"(A) Multinational Accounts" on Exhibit C hereto, and (ii) any other NTP
Subscriber who may become a "Multinational Account" as provided in Section
2.1.3 above.
"Multinational Procedure" has the meaning ascribed to that term in Section 4.2
above.
"Multinational Sales Services" has the meaning ascribed to that term in Section
4.2 above.
"National Accounts" means those Designated Subscribers listed under "(B)
National Accounts" on Exhibit C hereto.
"Negotiation Range" has the meaning ascribed to that term in Section 5.2 above.
"Neutral Travel Provider" means any Travel Agent that sells the products and
services of Vendors and holds itself out as a neutral source of information
regarding Vendors and their services or products.
"New Service" has the meaning ascribed to such term in Section 5.4 above.
"Non-Competition Agreement" means the Amended and Restated Non-Competition
Agreement, dated as of _____________ ___, 1997, among GI-Inc, United Air Lines,
Inc., UAL Corporation and Covia Corporation.
"Non-Vendor Revenue" means all revenue received by GI-Inc from NTP Subscribers,
CTMS Customers, CTMS Agents, and other persons and including, without
limitation, lease and license payments, install/deinstall charges, variable
charges (including but not limited to
(ATTACHMENT A-5)
<PAGE> 36
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
charges for tickets, itineraries and invoice documents), and backroom lease and
license fees, net of discounts, but not including Vendor Revenue.
"NTP" means Neutral Travel Provider, as defined herein.
"NTP Form Agreement" means a Form Agreement that relates to Galileo Services,
but excluding CTMS Services.
"NTP Sales Services" has the meaning ascribed to that term in Section 4.1
above.
"NTP Subscriber" means a Neutral Travel Provider who is an existing or a
potential purchaser of Galileo Services from GI-Inc.
"OPS" means United's Organizational Pay Summary system or any replacement
system that United may use, in United's sole discretion, and which is a
proprietary system that tracks United PMEs.
"Other Agent" has the meaning ascribed to that term in Section 2.4 above.
"Performance Compensation" has the meaning ascribed to that term in Section 7
of Appendix II.
"PME" means Paid Manpower Equivalent, which is commonly used in United's
business practices as a measure of average employee headcount for a the period
of time in question.
"Reporting Number" means an account number issued by the Airline Reporting
Corporation or by the International Air Transport Association, or both, to an
individual or entity for the purpose of authorizing such individual or entity
to operate as a travel agency.
"Reservations Services" means the computerized display, reservation, ticketing,
or sale of the services or products of Vendors including the availability and
price thereof, as generated by GI-Inc to any person other than Vendors.
"Revenue Goal" has the meaning ascribed to that term in Section 2 of Appendix
II.
"Sales Services" means, collectively, NTP Sales Services, Multinational Sales
Services, and CTMS Sales Services.
(ATTACHMENT A-6)
<PAGE> 37
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Sales Force" means, collectively, the Active Support Personnel, Dedicated
Support Personnel and General Sales Personnel.
"Senior Review Committee" means a committee consisting of GI-Inc's President
and United's Senior Vice President - North America.
"Support Services" has the meaning ascribed to that term in Section 4.4 above.
"Tech Office" means a technical support center (at times referred to
colloquially as a "TN" office) operated and staffed by GI-Inc with personnel
proficient in all technical aspects of the use by end-users of GI-Inc products
and services.
"Territorial Reassignment" has the meaning ascribed to that term in Section 2.4
above.
"Territory" means, collectively, the United States of America together with its
territories and protectorates, and the Republic of Mexico.
"Total Revenue" means the sum of Non-Vendor Revenue and Vendor Revenue, with
respect to the APR plus such revenue generated from Designated Subscribers less
such revenue generated from Excluded Subscribers, provided that any such
revenue generated from the location of an Excluded Subscriber in the calendar
year in which such location commences purchasing Galileo Services shall be
included in the Total Revenue only for the sales representative who was
responsible for such sale of Galileo Services.
"Training Materials" has the meaning ascribed to that term in Section 4.7.3.3
above.
"Travel Agent" means an individual or entity, that has been assigned a
Reporting Number.
"United Executive" has the meaning ascribed to that term in Section 3.2 above.
"United Group Products and Services" means with respect to United and any
carrier that uses United's airline designator code in the display of certain
designated flights (collectively, the "group carriers") the schedule, seat
availability, and price thereof of the group carriers, including, without
limitation, air and/or non-air travel packages that may include ancillary air
segments on non-group-carrier airlines.
"United Lead" has the meaning ascribed to that term in Section 4.2 above.
"US Deal" has the meaning ascribed to that term in Section 4.2 above.
(ATTACHMENT A-7)
<PAGE> 38
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"US Dollar" means the lawful currency of the United States of America.
"Vendor" means a vendor of travel-related services, such as an airline, hotel,
or rental car company, tour package, cruise operator, or travel insurance
company, that has purchased or subscribed for Reservations Services.
"Vendor Revenue" means all revenue received by GI-Inc from Vendors with respect
to booking fees and other service charges or fees as a result of bookings and
other transactions for which GI-Inc charges a fee to Vendors, which such
bookings and other transactions are generated by NTP Subscribers, CTMS
Customers, CTMS Agents, and other persons.
(ATTACHMENT A-8)
<PAGE> 39
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Attachment B
Dispute Resolution Procedure
1. General Procedure.
Except as otherwise stated in the Agreement, the parties hereto shall
resolve all Disputes in accordance with this procedure:
(a) Each party shall instruct its appropriate representative to promptly
negotiate in good faith with the other party's appropriate
representative to resolve the Dispute. The GI-Inc Executive shall be
the representative of GI-Inc. The United Executive shall be the
representative of United.
(b) if the representatives do not resolve the Dispute within ten business
days (or such longer period as the Representatives may agree) after
the date of referral of the Dispute to them, the representative of
each party will prepare a Dispute Summary with respect to that party's
position in the Dispute. The Dispute shall be referred (by either or
both of the representatives) to the Senior Review Committee for
resolution on the basis of the Dispute Summaries prepared by each
party.
(c) If the Senior Review Committee does not resolve the Dispute within ten
business days (or such longer period as that Committee may agree) from
the date of referral to it, either party may submit the Dispute to
binding arbitration in accordance with Section 2 of this Attachment.
2. Arbitration Procedure
The Arbitration Procedure shall be the "baseball" arbitration procedure
provided in Section 5.04 of the Amended and Restated Computer Services
Agreement between United and GI-Inc, modified as necessary with respect to
defined terms in this Agreement.
(ATTACHMENT B-1)
<PAGE> 40
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit A
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(EXHIBIT A-1)
<PAGE> 41
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit B
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(EXHIBIT B-1)
<PAGE> 42
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit C
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(EXHIBIT C-1)
<PAGE> 43
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit D
Sales Representative Reports
1) Staffing Report. A quarterly written advice of staffing levels.
2) Account Activity Reports setting forth: Gains (signed
contracts/OA's); Losses, Renewals; Changes/Updates to target lists -
due on last day of each month.
3) Redistricting Reports and Administrative Files. On GI-Inc's request,
contains account alignments and assignments.
(EXHIBIT D-1)
<PAGE> 44
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit E
Certain Territories
[This Exhibit E is to contain a list of territories for which Galileo has
granted exclusive distribution rights for products to a third party and in
which United may not sell CTMS Services so long as the exclusivity provision(s)
of Galileo's agreement with that third party is in effect.]
(EXHIBIT E-1)
<PAGE> 45
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Schedule 1
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(Schedule 1-1)
<PAGE> 1
EXHIBIT 10.7
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
MARKETING COOPERATION
AND SALES REPRESENTATION AGREEMENT
between
US AIRWAYS, INC.
and
GALILEO INTERNATIONAL, INC.
Dated as of__________________, 1997
<PAGE> 2
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
MARKETING COOPERATION
AND SALES REPRESENTATION AGREEMENT
Table of Headings
-----------------
<TABLE>
Section Page
- ------- ----
<S> <C> <C>
1 Definitions ...................................................................... 1
2 Sales Agency and Territories ..................................................... 2
2.1 Sales to NTP Subscribers .................................................. 2
2.1.1 Sales Agency Appointment ......................................... 2
2.1.2 Designated Subscribers ........................................... 2
2.2 Sales to CTMS Customers ................................................... 2
2.3 Other Sales Agents ........................................................ 2
2.4 Territorial Reassignment .................................................. 3
2.5 Trade Names 3
3 The Administration of this Agreement ............................................. 3
3.1 GI-Inc .................................................................... 3
3.2 US Airways 4
3.3 Meetings and Coordination ................................................. 5
4 Responsibilities of US Airways ................................................... 6
4.1 NTP Sales Services ........................................................ 6
4.2 CTMS Sales Services ....................................................... 7
4.3 Support Services .......................................................... 7
4.4 Responsibilities With Respect to Excluded Subscribers ..................... 8
4.5 Sales Planning ............................................................ 8
4.6 Staffing .................................................................. 8
4.6.1 Staffing Commitment ...................................... 8
4.6.2 Review of Staffing Levels ................................ 8
4.6.3 Employee Proficiency and Training ........................ 9
4.6.3.1 Introductory Training ........................... 9
4.6.3.2 Employee Proficiency ............................ 9
4.6.3.3 Training and Test Materials ..................... 10
5 GI-Inc Responsibilities .......................................................... 10
5.1 Marketplace Competitiveness ............................................... 10
</TABLE>
i
<PAGE> 3
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
<TABLE>
<S> <C> <C> <C>
5.2 GI-Inc Support of Sales Services and Support Services .................... 10
5.3 Services of GI-Inc. ...................................................... 10
5.4 New Services ............................................................. 11
5.5 CTMS Products ............................................................ 11
5.5.1 Base Products ............................................. 11
5.5.2 Demonstrations ............................................ 11
5.6 Technical Support ........................................................ 11
5.7 Technical Assistance Offices ............................................. 12
5.8 Help Desk ................................................................ 12
6 Reporting ........................................................................... 12
7 Other Marketing Rights .............................................................. 12
7.1 GI-Inc ................................................................... 12
7.2 US Airways ............................................................... 12
8 Terms of Payment .................................................................... 13
9 Currency ............................................................................ 13
10 Term ................................................................................ 13
11 Confidentiality ..................................................................... 14
11.1 Confidential Information ................................................. 14
11.2 Service .................................................................. 14
12 Service Marks, Patents, Third Party Data ............................................ 14
12.1 Use of Service Marks .......................................................... 14
12.1.1 GI-Inc Marks ......................................................... 14
12.1.2 US Airways Marks ..................................................... 15
12.2 Patent Indemnity ............................................................ 15
12.2.1 Actions .............................................................. 15
12.2.2 Limitation ........................................................... 15
12.3 Third Party Data ............................................................ 15
13 Taxes ............................................................................... 16
13.1 GI-Inc Responsibilities ..................................................... 16
13.2 Claims ...................................................................... 16
14 Limitation of Liability ............................................................. 16
</TABLE>
ii
<PAGE> 4
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
15 Consequential Damages......................... 16
16 Termination for Breach........................ 17
17 Force Majeure, Delay.......................... 17
18 Indemnification............................... 17
19 Guarantee of Performance...................... 17
20 Third Party Rights............................ 18
21 Assignment.................................... 18
22 Relationship of the Parties................... 18
23 Severability.................................. 18
24 Survival...................................... 18
25 Governing..................................... 18
26 Notices....................................... 19
27 Headings...................................... 19
28 Entirety of Agreement......................... 19
29 Counterparts.................................. 20
iii
<PAGE> 5
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Table of Attachments
Appendix I..............................................................
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Appendix II.............................................................
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Attachment A.............................................. Defined Terms
Attachment B............................... Dispute Resolution Procedure
Exhibit A...............................................................
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Exhibit B...............................................................
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Exhibit C...............................................................
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
Exhibit D.................................. Sales Representative Reports
Exhibit E........................................... Certain Territories
Schedule 1..............................................................
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
iv
<PAGE> 6
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
MARKETING COOPERATION AND SALES REPRESENTATION AGREEMENT
US AIRWAYS, INC. AND GALILEO INTERNATIONAL, INC.
This Marketing Cooperation and Sales Representation Agreement (this
"Agreement") effective as of the ___ day of _______, 1997 (the "Effective
Date"), by and between GALILEO INTERNATIONAL, INC., a Delaware corporation
("GI-Inc") with offices at Suite 400, 9700 West Higgins Road, Rosemont,
Illinois, 60018, and US AIRWAYS, INC., a Delaware corporation ("US Airways")
with offices at 2345 Crystal Drive, Arlington, Virginia 22227.
RECITALS
WHEREAS US Airways and Apollo Travel Services Partnership, a Delaware
general partnership ("Apollo Partnership"), are parties to a Sales
Representative Agreement, dated as of January 1, 1994 (the "Original
Agreement"); and
WHEREAS GI-Inc generates computerized reservations services through
GI-Inc's computer reservation system and distributes such services worldwide
for use by travel-related business entities, by CTMS Customers, and by
individual consumers; and
WHEREAS GI-Inc desires to appoint Sales Representatives that will be
responsible for the sale of GI-Inc's reservations services to such persons and
for the provision of ongoing support services to certain of such persons; and
WHEREAS The parties hereto agree that, because of the competitiveness of
the products and services of GI-Inc vis-a-vis like products and services of all
other companies within the CRS Industry, US Airways is desirous of entering
into this Agreement; and
WHEREAS The parties hereto agree that, because of US Airways' knowledge of
and contact with a substantial portion of the community of travel agents within
the Territory, GI-Inc is desirous of entering into this Agreement; and
WHEREAS US Airways and Apollo Partnership intend to terminate the Original
Agreement and US Airways desires to be a Sales Representative for GI-Inc under
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, GI-Inc and US Airways hereby agree as follows:
<PAGE> 7
CONFIDENTIAL TREATMENT 2
REQUESTED BY GALILEO
INTERNATIONAL, INC.
1 Definitions.
Capitalized terms used as defined terms in this Agreement have, unless
otherwise defined elsewhere in this Agreement, the meanings provided for each
in Attachment A hereto.
2 Sales Agency and Territories.
2.1 Sales to NTP Subscribers.
2.1.1 Sales Agency Appointment.
With respect to the Assigned Subscribers, GI-Inc hereby
appoints US Airways as the exclusive limited agent of GI-Inc to
obtain commitments from the Assigned Subscribers to subscribe for
and lease Galileo Services. US Airways will act as the sales agent
of GI-Inc only for the limited purposes of negotiating and
obtaining written commitments from NTP Subscribers on terms and in
a form prepared and approved in advance by GI-Inc.
2.1.2 Designated Subscribers.
Exhibit C hereto lists the NTP Subscribers with locations
in the sales territories of more than one sales representative for
whom US Airways is the designated provider of Sales Services and
Support Services. US Airways is the exclusive provider of Sales
Services and Support Services for all locations of such NTP
Subscribers in the Territory. GI-Inc may add or delete NTP
Subscribers from such Exhibit C only with US Airways' consent.
All NTP Subscribers listed on Exhibit C are "Excluded Subscribers"
for all other sales representatives of GI-Inc, including for
GI-Inc itself.
2.2 Sales to CTMS Customers.
With respect to CTMS Customers and CTMS Agents, GI-Inc hereby
appoints US Airways as its non-exclusive limited agent to obtain
commitments from CTMS Customers and CTMS Agents to purchase, license, or
lease CTMS Services. Pursuant to Section 4.2 below, and except in those
territories where GI-Inc has granted exclusive distribution rights to
third parties with respect to Galileo Services and CTMS Services, as
listed in Exhibit E hereto, US Airways may act as the sales agent of
GI-Inc worldwide for the limited purposes of negotiating and obtaining
written commitments from CTMS Customers and CTMS Agents on terms and in a
form prepared and approved in advance by GI-Inc.
2.3 Other Sales Agents.
<PAGE> 8
CONFIDENTIAL TREATMENT 3
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Subject to this Section 2 and to Section 3 below, GI-Inc may at its
discretion appoint other persons as sales agents of GI-Inc and GI-Inc may
act on its own behalf as sales agent. GI-Inc will treat each of its
sales agents in a fair and nondiscriminatory manner and as appropriate in
a manner proportionate to US Airways' responsibilities hereunder with
respect to the terms and conditions of its appointment as a sales
representative, including, but not limited to, the provision of Sales
Services, Support Services, training, the criteria for approvals of Form
Agreements, the compensation arrangements provided by GI-Inc, and in all
associated support functions that are GI-Inc's responsibility hereunder.
2.4 Territorial Reassignment.
A "Territorial Reassignment" shall occur in the event of (i) a
reassignment by GI-Inc among its sales representatives of territories
outside of the APR but within the Territory, or (ii) the termination of
any arrangement regarding sales agency between GI-Inc and another sales
representative of GI-Inc who is performing as a sales agent within the
Territory but not within the APR (an "Other Agent"). In the event of a
Territorial Reassignment, GI-Inc will offer to US Airways the right of
first refusal to assume sales agent responsibility within such reassigned
territory or within the territory of such terminated Other Agent. Before
such territories are assigned to US Airways, GI-Inc and US Airways will
negotiate in good faith to adjust the performance objectives and the
compensation therefor as provided in Appendix II. If US Airways and
GI-Inc are unable within ninety days (90 days) from the commencement of
such negotiations to agree on the terms of adjustment for the performance
objectives and the compensation then GI-Inc shall be free to make the
Territorial Reassignment to any other agent or GI-Inc may perform such
sales function for itself.
2.5 Trade Names.
During the term of this Agreement and except as otherwise provided
in this Agreement, with respect to the APR, GI-Inc will market, and US
Airways will sell, the Reservations Services and CTMS Services of GI-Inc
under the "Apollo" trade name. Notwithstanding the foregoing, if, as a
result of US Airways' efforts under this Agreement, a customer of GI-Inc
commits to purchase GI-Inc products or services outside of the Territory
then GI-Inc will determine the trade name for such products or services
outside of the Territory. For the purposes of this Agreement it is
assumed, without obligation on GI-Inc's part, that such trade name
outside of the Territory is "Galileo".
3 The Administration of this Agreement.
<PAGE> 9
CONFIDENTIAL TREATMENT 4
REQUESTED BY GALILEO
INTERNATIONAL, INC.
US Airways and GI-Inc agree that the proper and efficient administration
of each party's obligations under this Agreement is essential to meeting the
objectives of the parties hereunder. To this purpose, the parties agree to
dedicate appropriate staff and resources at an executive level, and otherwise,
as follows:
3.1 GI-Inc.
At all times during the term of this Agreement GI-Inc will employ an
individual who shall have primary responsibility for meeting GI-Inc's
obligations under this Agreement, which person shall be a duly appointed
officer of GI-Inc (the "GI-Inc Executive"). The GI-Inc Executive shall
report directly to the President and Chief Executive Officer of GI-Inc.
The GI-Inc Executive shall be a person who has experience and background
commensurate with his or her responsibilities. The GI-Inc Executive will
maintain an office in the Chicago metropolitan region.
The GI-Inc Executive shall have full authority to bind GI-Inc in all
matters regarding this Agreement that may arise during the term of this
Agreement, subject to the provisions of the corporate by-laws and
commitment authorities of GI-Inc as approved by GI-Inc's Board of
Directors or CEO, including, without limitation:
(i) matters regarding Financial Assistance;
(ii) the approval of agreements with current and
potential customers of GI-Inc that are negotiated by US
Airways on GI-Inc's behalf pursuant to this Agreement;
(iii) the negotiation with US Airways of goals and
targets related to GI-Inc's and US Airways' performance under
this Agreement;
(iv) the compensation owed US Airways by GI-Inc under
this Agreement, including the negotiation and payment thereof;
(v) the quantity, quality of performance and training
of personnel provided by GI-Inc pursuant to its obligations
under this Agreement;
(vi) the coordination of GI-Inc's role in negotiations
with any third party where such negotiations involve the
participation of parties other than GI-Inc, US Airways, and
that third party; and
(vii) the coordination and resolution of any issues
arising under this Agreement that, in US Airways' or GI-Inc's
estimation, are affected by actions that have been or may be
taken by other sales agents of GI-Inc or by GI-Inc.
The GI-Inc Executive may delegate to employees of GI-Inc or to
persons under the control of GI-Inc such matters that are his or her
responsibility hereunder and as
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REQUESTED BY GALILEO
INTERNATIONAL, INC.
may be, in the GI-Inc Executive's discretion, appropriate for delegation
provided that, if US Airways reasonably objects that such delegation will
result in a diminishment of GI-Inc's performance hereunder or in a
detriment to US Airways' ability to perform its obligations hereunder, or
both, then GI-Inc will review the proposed delegation and inform US
Airways as to how GI-Inc will address US Airways' reasonable concerns.
3.2 US Airways.
At all times during the term of this Agreement US Airways will
employ an individual to have primary responsibility for meeting US
Airways' obligations under this Agreement, which person shall be a duly
appointed officer of US Airways (the "US Airways Executive"). The US
Airways Executive shall he a person who has experience and background
commensurate with his or her responsibilities. The US Airways Executive
will maintain an office in the Washington, D.C. metropolitan region. The
US Airways Executive shall have full authority to bind US Airways in all
matters regarding this Agreement that may arise during the term of this
Agreement, subject to the provisions of the corporate by-laws and
commitment authorities of US Airways, Inc., as approved by US Airways,
Inc.'s Board of Directors or CEO, including, without limitation:
(i) the conduct of US Airways' negotiations with
current and potential customers of GI-Inc on GI-Inc's behalf
pursuant to this Agreement;
(ii) the negotiation with GI-Inc of goals and targets
related to GI-Inc's and US Airways' performance under this
Agreement;
(iii) the compensation owed US Airways by GI-Inc under
this agreement, including the negotiation and payment thereof;
(iv) the quantity, quality of performance and training
of personnel provided by US Airways pursuant to its
obligations under this Agreement;
(v) the coordination of US Airways' role in
negotiations with any third party where such negotiations
involve the participation of parties other than GI-Inc, US
Airways, and that third party; and
(vi) the coordination and resolution of any issues
arising under this Agreement that, in US Airways' or GI-Inc's
estimation, are affected by actions that have been or may be
taken by other sales agents of GI-Inc or by GI-Inc.
The US Airways Executive may delegate to employees of US Airways or
to persons under the control of US Airways such matters that are his or
her responsibility hereunder and as may be, in the US Airways Executive's
estimation, appropriate for delegation, provided that, if GI-Inc
reasonably objects that such delegation will result in
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INTERNATIONAL, INC.
a diminishment of US Airways' performance hereunder or in a detriment to
GI-Inc's ability to perform its obligations hereunder, or both, then US
Airways will review the proposed delegation and inform GI-Inc as to how
US Airways will address GI-Inc's reasonable concerns.
3.3 Meetings and Coordination.
The GI-Inc Executive and the US Airways Executive shall meet from
time to time, whether telephonically or in person and on a schedule to
which they mutually agree, to review the progress of each party's
performance under this Agreement as well as general economic and travel
industry market conditions or factors that may potentially affect one or
the other party performance hereunder.
4 Responsibilities of US Airways.
4.1 NTP Sales Services.
Primarily using US Airways' General Sales Personnel, US Airways will
actively engage in the sale, marketing, and promotion of Galileo Services
to the Assigned Subscribers. To this end, US Airways will perform the
following services for GI-Inc pursuant to this Agreement (such services
are, collectively, "NTP Sales Services"):
(i) Scope. US Airways will engage in NTP Sales Services regarding
only those Galileo Services as directed or authorized in advance by
GI-Inc.
(ii) Contact. US Airways will maintain current and establish new
personal and telephone contact and sales relationships, including,
where appropriate, in person or telephone sales calls. At GI-Inc's
expense, US Airways may, on approval of GI-Inc, undertake direct
mail solicitations, promotions, and other sales efforts, with NTP
Subscribers within the APR. GI-Inc may disapprove any sales
promotion or solicitation with respect to the Galileo Services that
GI-Inc in its reasonable discretion determines to be contrary to the
objectives or policies of GI-Inc.
(iii) Commitment Review Procedure. US Airways shall follow the
Commitment Review Procedure described in Section 5.2 below.
(iv) Support Services. Subject to the NTP Form Agreement and
within the Negotiation Range, US Airways shall offer to NTP
Subscribers within the APR such NTP Support Services as are approved
in advance by GI-Inc.
(v) Discontinued Services. Upon receipt of a Discontinued
Service Notice, as such term is defined in Section 5.1 below, US
Airways will cease Sales Services regarding such Galileo Service or
feature.
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(vi) Changes to US Airways Organization. US Airways will give GI-Inc prompt
written notice regarding any significant re-organization, redeployment or
change of responsibilities of its General Sales Personnel (an
"Organization Change"). If such Organization Change is likely to result
in an inability of US Airways to perform NTP Sales Services in a
metropolitan area in the APR that provides a significant portion of Total
Revenue then US Airways will notify GI-Inc as to whether
(a) US Airways chooses to continue providing services under this
Agreement in such area, in which case US Airways will propose to
GI-Inc how US Airways will staff the necessary Sales Force coverage
for such area, and GI-Inc will review US Airways' proposal in good
faith and determine whether it accepts the proposal; or
(b) US Airways chooses not to continue providing
services under this Agreement in such area.
In the event of (b), above, or of GI-Inc's rejection of US Airways'
proposal in (a), above, then GI-Inc may reassign sales responsibility in
such area to another person, including to GI-Inc itself.
4.2 CTMS Sales Services.
US Airways will actively engage in the sale, marketing, and promotion of
CTMS Services to CTMS Customers and CTMS Agents. To this end, US Airways will
perform the following services for GI-Inc pursuant to this Agreement (such
services are, collectively, "CTMS Sales Services"):
(i) Scope. US Airways will engage in CTMS Sales Services regarding only those
CTMS Services as directed or authorized in advance by GI-Inc.
(ii) Product Licensing. As GI-Inc's non-exclusive sales agent for the
licensing of CTMS Services, subject to Section 2.2 above, US Airways may
market and license CTMS Services to CTMS Customers and to CTMS Agents.
The parties will work together to develop marketing plans for CTMS
Services, including the name or names of products.
(iii) Contact. US Airways will maintain current and establish new personal and
telephone contact and sales relationships, including, where appropriate,
in person or telephone sales calls with CTMS Customers and CTMS Agents.
At GI-Inc's expense, US Airways may, on approval of GI-Inc, undertake
direct mail solicitations, promotions, and other sales efforts, with CTMS
Customers and CTMS Agents. GI-Inc may disapprove any sales promotion or
solicitation
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CONFIDENTIAL TREATMENT 8
REQUESTED BY GALILEO
INTERNATIONAL, INC.
with respect to the CTMS Services that GI-Inc in its reasonable
discretion determines to be contrary to the objectives or policies
of GI-Inc.
(iv) Commitment Review Procedure. US Airways shall follow the
Commitment Review Procedure described in Section 5.2 below.
(v) CTMS Support Services. Subject to the CTMS Form Agreement
and within the Negotiation Range, US Airways shall offer to CTMS
Customers or CTMS Agents, or both, as the case may be, such CTMS
Support Services as are approved in advance by GI-Inc.
(vi) Discontinued Services. Upon receipt of a Discontinued
Service Notice, as such term is defined in Section 5.1 below, US
Airways will cease CTMS Sales Services regarding such CTMS Service.
4.3 Support Services.
In addition to the Sales Services, US Airways will perform the
following services for GI-Inc pursuant to this Agreement for those NTP
Subscribers with annual HOL Flow in excess of $5 million (such services
are, collectively, "Support Services").
(i) Support Services Calls. Responses to inquiries from, and
regular premises visits and assistance to, NTP Subscribers in order
to establish and maintain good relations and to improve relations
between NTP Subscribers and GI-Inc, and to aid in familiarization
with and use of Galileo Services and CTMS Services.
(ii) Technical Questions Received. US Airways will relay promptly
to GI-Inc any technical questions received by US Airways from
customers of GI-Inc and, as requested by GI-Inc, will coordinate
responses thereto.
(iii) Area of Support. US Airways will be responsible for Support
Services for locations of NTP Subscribers within the APR, and as
designated by GI-Inc outside of the APR (although associated revenue
from non-APR Subscribers designated for support will be included in
Total Revenue).
4.4 Responsibilities With Respect to Excluded Subscribers.
US Airways will not enter into sales negotiations with Excluded
Subscribers except with the prior written approval of GI-Inc. GI-Inc may
add or delete NTP Subscribers as Excluded Subscribers on Exhibit B hereto
after consulting with and receiving the consent of all affected sales
representatives, including US Airways. Revenues from all Assigned
Subscribers who become Excluded Subscribers will continue to be counted for
that year in the Total Revenue. US Airways may negotiate with NTP
Subscribers regarding sales commitments outside of the APR (i) after prior
notice to GI-Inc, (ii) after a reasonable period of time in which GI-Inc
has had the opportunity to coordinate such sales calls with its own sales
force and with GI-Inc's
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CONFIDENTIAL TREATMENT 9
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INTERNATIONAL, INC.
other sales representatives, and (iii) after consent of GI-Inc. Only
those sales outside of the APR approved in advance by GI-Inc will be
included in Total Revenue totals.
4.5 Sales Planning.
Subject to Appendix II, and in no event later than February 28 of
each year, GI-Inc and US Airways jointly will develop a sales plan for
such year, which sales plan will be designed to increase business
opportunities, procure profitable NTP Subscriber accounts for GI-Inc and
attain or exceed the Revenue Goal.
4.6 Staffing.
4.6.1 Staffing Commmitment.
As described in Appendix I, US Airways will staff a Sales
Force who will provide Sales Services to GI-Inc under this
Agreement.
4.6.2 Review of Staffing Levels.
US Airways will consult with GI-Inc from time to time as
requested by either party to review the job descriptions, minimum
qualifications, career paths, and other matters in connection with
the Sales Force. US Airways will consult with GI-Inc regarding the
staffing of Dedicated Personnel and Administrative Support
Personnel positions to be provided under this Agreement. Such
consultations will include review of job descriptions and necessary
qualifications, consideration of possible applicants from GI-Inc
and US Airways as well as third parties, and full consultation and
review of proposed training schedules for each Dedicated Personnel
and Administrative Support Personnel.
4.6.3 Employee Proficiency and Training.
4.6.3.1 Introductory Training.
Prior to commencing any Sales Services on behalf of
GI-Inc hereunder, all Sales Force personnel of US Airways
must attend a five-day introductory training course and,
thereafter, a two-day refresher training course at least
once annually, at a location or locations to be mutually
agreed between US Airways and GI-Inc. As new GI-Inc
products or services are released by GI-Inc for Sales
Services hereunder, GI-Inc will provide training with
respect thereto to the Sales Force at a location or
locations as agreed by the parties. GI-Inc will bear its
own
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CONFIDENTIAL TREATMENT 10
REQUESTED BY GALILEO
INTERNATIONAL, INC.
expenses in providing the training and US Airways will bear
its own expenses of the Sales Force in attending such
training.
4.6.3.2 Employee Proficiency.
US Airways will take all reasonable steps to ensure
that all of the Sales Force who are authorized to sell or
support the products and services of GI-Inc hereunder have
been trained appropriately and are proficient to provide
Sales Services in accordance with the terms of this Agreement.
GI-Inc shall have the right to test the proficiency of
individual Sales Force personnel at the time of their
refresher training and to require additional training for
such individuals as do not demonstrate minimum proficiency.
GI-Inc will provide all course materials, test materials, and
training facilities necessary to provide such additional
training, and US Airways and GI-Inc will mutually establish a
reasonable schedule for the administration of such additional
training. Sales Force personnel who have completed such
additional training will be again tested and those who again
demonstrate an inability to achieve the minimum level of
proficiency will not be counted toward the required staffing
levels prescribed in this Section 4.6.
4.6.3.3 Training and Test Materials.
GI-Inc will provide to US Airways in advance of their
use copies of all introductory training materials, refresher
training materials, and proficiency test vehicles to he used
pursuant to this Section 4.6.3 (collectively, the "Training
Materials"). The Training Materials will always be
constructed according to the best practices for Training
Materials then employed by U.S. industry and shall be related
solely to the reasonable skills required of a person engaged
in the sales of products and services such as those of
GI-Inc. US Airways may, at its request, review such Training
Materials in advance of their use hereunder and GI-Inc will
make all reasonable changes requested by US Airways to the
Training Materials.
5 GI-Inc Responsibilities.
5.1 Marketplace Competitiveness.
GI-Inc will at all times during the term of this Agreement use its
best efforts to ensure that Galileo Services maintain a superior level of
competitiveness in the CRS Industry. GI-Inc will give US Airways as much
notice as is reasonably practicable if
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REQUESTED BY GALILEO
INTERNATIONAL, INC.
GI-Inc discontinues general distribution or provision of any particular
Galileo Service or CTMS Service or major feature thereof (a "Discontinued
Service Notice")
5.2 GI-Inc Support of Sales Services and Support Services.
With the objective of ensuring the proper level of GI-Inc support
for Sales Services and for Support Services provided by US Airways under
this Agreement, GI-Inc will provide the following support to US Airways
(collectively, the "GI-Inc Support"):
(i) Copies. GI-Inc will ensure that US Airways at all times has
a current copy of each version of the Form Agreements together with
such commentary or explanation of the Form Agreements as may be
reasonably required by US Airways for the comprehension and
understanding of the Form Agreements.
(ii) Changes to Form Agreements. GI-Inc will provide US Airways
with no less than 30 days written notice in the event that GI-Inc
modifies or discontinues the use of any of the Form Agreements.
5.3 Services of GI-Inc.
GI-Inc will provide Galileo Services, CTMS Services and New Services
to NTP Subscribers, CTMS Customers and CTMS Agents, subject to the terms
of the Form Agreements as negotiated by US Airways and approved by GI-Inc
pursuant to this Agreement.
5.4 New Services.
GI-Inc will not distribute any Galileo Service (but excluding
enhancements or replacements of any Galileo Service) that did not exist
as of the Effective Date (a "New Service") through any sales
representative in the Territory, and including GI-Inc itself, without
first offering US Airways the right of first refusal to become the
exclusive sales agent for such New Service for the APR. GI-Inc and US
Airways shall negotiate on the reasonable terms of such agency, including
the performance objectives and the compensation therefor as provided in
Appendix II. Failing agreement with US Airways within ninety days (90
days) of the inception of such negotiations, GI-Inc may, upon giving
notice to US Airways pursuant to Section 26, below, make the other sales
representative arrangements for the New Service within the Territory.
5.5 CTMS Products.
5.5.1 Base Products.
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REQUESTED BY GALILEO
INTERNATIONAL, INC.
GI-Inc has the ultimate role in determining product
specifications and features of any CTMS Service, and GI-Inc will
ensure that such specifications and product implementations of
such specifications meet prevailing market needs. To that end,
the GI-Inc Executive shall consult regularly with the US Airways
Executive as to information that US Airways may gather in the
course of its business that US Airways believes is relevant to
ensuring that the CTMS Service is competitive with like services
and products provided by other service providers.
5.5.2 Demonstrations.
Upon US Airways' request, subject to GI-Inc's agreement,
GI-Inc, at its expense, will provide demonstrations of CTMS
Services to CTMS Customers and/or CTMS Agents. GI-Inc will
coordinate the content and scheduling of such demonstrations with
US Airways.
5.6 Technical Support.
GI-Inc will provide in a good and workmanlike manner all
installation, connection, and testing of all Galileo Services, CTMS
Services and any field or technical support or field maintenance required
by NTP Subscribers, CTMS Customers, or CTMS Agents. GI-Inc will maintain
ongoing and appropriate contact with NTP Subscribers, CTMS Customers and
CTMS Agents to facilitate user operation of the Galileo Services and CTMS
Services. Technical sales consulting support will also be provided by
GI-Inc to the Sales Force.
5.7 Technical Assistance Offices.
GI-Inc will maintain regional Tech Offices for the use of its
sales representatives that will be staffed by knowledgeable employees
capable of providing technical assistance regarding Galileo Services and
CTMS Services. Such assistance will be available to US Airways during
normal GI-Inc business hours.
5.8 Help Desk.
GI-Inc, at its expense, will maintain a telephone call center or
centers for use by the Sales Force, NTP Subscribers, CTMS Customers, and
CTMS Agents during normal business hours for each of those persons in their
places of business. The call centers will be staffed by knowledgeable
persons under the control of GI-Inc who are capable of providing prompt,
thorough, courteous, and professional technical assistance regarding the
products and services of GI-Inc.
6 Reporting.
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REQUESTED BY GALILEO
INTERNATIONAL, INC.
US Airways will furnish, at no cost to GI-Inc, the reports and documents
set forth in Exhibit D hereto.
7 Other Marketing Rights.
7.1 GI-Inc.
GI-Inc reserves the right to market and to support services in the
Sales APR. During the term of this Agreement, and except as otherwise
provided in this Agreement, GI-Inc will not designate the Sales APR of US
Airways as the area of primary sales responsibility of any other sales
agent of GI-Inc, including GI-Inc itself.
7.2 US Airways.
Subject to the provisions of the Non-Competition Agreement, while US
Airways is the sales agent of GI-Inc under the terms of this Agreement,
US Airways will not act as a sales agent for the reservations or
accounting services of another entity in the CRS Industry in the APR
without the prior consent of GI-Inc, provided, however, that nothing in
this Agreement will prevent US Airways from:
(i) having US Airways Group Products and Services displayed or
listed in any person's computer reservation system, schedule, other
electronic or paper communications medium, or otherwise;
(ii) providing to any person any technological or computerized
means of delivering information and automation functionality;
(iii) authorizing any person to use US Airways' trademarks and
trade names in connection with advertising US Airways' participation
in such person's computer information or reservation system, or
otherwise;
(iv) endorsing the products or services of another member of the
CRS Industry, provided, however, that US Airways may not endorse
such products or services of such other member of the CRS Industry
as being preferred to those of GI-Inc, provided, however, (a) if
GI-Inc does not itself provide such products or services, or (b)
GI-Inc provides such products or services but they do not meet US
Airways' needs, then, subject to the provisions of the
Non-Competition Agreement, US Airways may endorse such products or
services of such other member of the CRS Industry in any manner.
8 Terms of Payment.
GI-Inc will pay US Airways quarterly in arrears, upon receipt and
acceptance by GI-Inc of US Airways' reports pursuant to Section 6 above for the
preceding quarter and of its invoice
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CONFIDENTIAL TREATMENT 14
REQUESTED BY GALILEO
INTERNATIONAL, INC.
therefor, an amount equal to one quarter of the Base Compensation. Invoices
will be prepared and mailed on the first work day of April, July, October and
January of each year. After the end of each calendar year, following receipt
and acceptance by GI-Inc of US Airways' report pursuant to Section 6 above with
results for the year as a whole, adjustments will be made as required by
Appendix II, and GI-Inc or US Airways, as appropriate, will make payment to the
other in an amount determined in accordance with the application of such
Section. All payments hereunder will be made within 30 days of date of invoice
by wire transfer, banking instructions to be given by the recipient thereof in
advance of each such transfer. All amounts due and payable hereunder and not
paid within 30 days of date of invoice shall be subject to late payment
interest subject to the following: (i) the Interest Rate shall be fixed as of
the due date of the invoice, and (ii) interest shall be calculated, on the
basis of a 360-day year, from the due date.
9 Currency.
For the purposes of this Agreement all currency calculations shall be in
US Dollars and, to the extent paid in a currency other than US Dollars, revenue
received by GI-Inc or expenses incurred by GI-Inc will be converted to US
Dollars at the exchange rate in effect at the date of the receipt of such
revenue or payment of such expense, as the case may be.
10 Term.
This Agreement is effective as of the Effective Date, and will continue
until the termination of the Non-Competition Agreement. GI-Inc may issue, no
earlier than July 1 of each year a conditional notice of termination if GI-Inc
has reasonably determined that US Airways may, as a result of its own failure
to perform and not as a result of a Material Change, not meet its then current
Revenue Goal; if, as of 120 days after such conditional notice, GI-Inc
reasonably determines that US Airways will not meet such Revenue Goal and so
notifies US Airways, this Agreement will terminate 90 days after such
determination (with no sales exclusivity during the last 30 days of the 90 day
period) and US Airways will be paid for sales services during the last 30 days
only at direct labor cost (adjusted to reflect time devoted to GI-Inc) and
associated expenses.
11 Confidentiality.
11.1 Confidential Information.
Confidential information, including, without limitation, source
code, object code, manufacturing, financial and marketing data, orders,
forecasts, plans, designs, drawings and specifications of either US
Airways or GI-Inc, which is contained in
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REQUESTED BY GALILEO
INTERNATIONAL, INC.
tangible records designated as "CONFIDENTIAL", "TRADE SECRET" or
"PROPRIETARY", or which is otherwise communicated on the express basis
that the information is confidential, and which is provided to the other
party during the performance of this Agreement (hereafter "Confidential
Information"), will be treated as confidential and not further disclosed
to any third party without the prior written consent of the providing
party, except as provided under the terms of this Agreement, for five
years from the date such Confidential Information was first received,
unless such Confidential Information was already in the possession of the
other party, is placed in the public domain through no fault of the party
receiving such information, or becomes rightfully available to the other
party through other sources without restriction on disclosure.
11.2 Service.
If either party is served with a subpoena or other legal process
requiring the production or disclosure of any Confidential Information or
US Airways Information, then that party will immediately notify the owner
thereof, and will in good faith attempt to permit the owner at the
owner's expense to intervene and contest such disclosure or production.
12 Service Marks, Patents, Third Party Data.
12.1 Use of Service Marks.
12.1.1 GI-Inc Marks.
US Airways will use and display the GI-Inc trade and service
marks in the form specified by GI-Inc. US Airways will market the
Galileo Services and CTMS Services under product names established
by GI-Inc and must identify all such Galileo Services and CTMS
Services as the products or services of GI-Inc. US Airways may
include its name and identifying marks in association with the name
"GI-Inc". GI-Inc reserves the right to disapprove any use of the
trade and service marks and other proprietary rights of GI-Inc if
GI-Inc determines in its reasonable discretion that such use is
contrary to the objectives or policies of GI-Inc.
12.1.2 US Airways Marks.
GI-Inc will not use the trade or service marks of US Airways
without US Airways' prior written consent. US Airways reserves the
right to disapprove any use of the trade and service marks and
other proprietary rights of US
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REQUESTED BY GALILEO
INTERNATIONAL, INC.
Airways if US Airways determines in its reasonable discretion that
such use is contrary to the objectives or policies of US Airways.
12.2 Patent Indemnity.
12.2.1 Actions.
GI-Inc will defend at its expense any suit or proceeding
against US Airways based on a claim that any product or service of
GI-Inc ("GI-Inc Product") constitutes an infringement of the
patent, trademark, or copyright laws of the United States, provided
that GI-Inc is notified promptly in writing and given full and
complete authority, information, and assistance for the defense of
such suit or proceeding. If the foregoing provision is complied
with, GI-Inc will pay damages and costs awarded against US Airways,
but GI-Inc will not be responsible for any compromise or settlement
made without its prior written consent. If any GI-Inc Product is
held to constitute infringement of such patent, trademark, or
copyright and its use is enjoined, GI-Inc will, at its election and
expense, either obtain for US Airways the right to continue using
such GI-Inc Product, modify such GI-Inc Product so that it is not
infringing, or remove such GI-Inc Product.
12.2.2 Limitation.
GI-Inc will not be liable to US Airways with respect to any
claim of infringement which is based upon (a) combination or
utilization of an GI-Inc Product with products or services not
supplied by GI-Inc; (b) the unauthorized modification by US Airways
or a person other than GI-Inc or its designated representatives of
any GI-Inc Product or (c) the use of any GI-Inc Product not in
accordance with GI-Inc's specifications or recommendations.
12.3 Third Party Data.
GI-Inc makes no representation or warranty regarding the accuracy or
reliability of any schedule, fare, quote, or other information provided
to GI-Inc by airlines or by hotels, car rental companies or other vendors
of travel related services. GI-Inc will not be responsible for, and US
Airways hereby releases and waives any claims against GI-Inc conceding,
the accuracy or reliability of any such information provided by such
third parties.
13 Taxes.
13.1 GI-Inc Responsibilities.
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CONFIDENTIAL TREATMENT 17
REQUESTED BY GALILEO
INTERNATIONAL, INC.
GI-Inc will pay any sales, use, or personal property taxes
(except for any tax levied upon or measured by US Airways' gross
receipts) imposed by any taxing authority and required to be paid by
GI-Inc or US Airways as a result of services provided to GI-Inc under
this Agreement. GI-Inc will not be liable for any tax levied upon or
measured by the income of US Airways.
13.2 Claims.
If a claim is made against US Airways for any taxes that are to
be paid by GI-Inc, US Airways will timely notify GI-Inc. If GI-Inc so
requests in writing, US Airways will, at GI-Inc's expense, take such
action as GI-Inc may reasonably direct with respect to such taxes,
including payment of such taxes under protest. If the tax has been
paid, and if requested by GI-Inc, US Airways will, at GI-Inc's
expense, take such action as GI-Inc may reasonably direct, including
allowing GI-Inc to file a claim or commence legal action in US
Airways' name, to recover such tax payment. In the event of refund or
recovery of any tax, or part thereof, US Airways will pay to GI-Inc
promptly that portion of the tax paid by GI-Inc, including any
interest received thereon.
14 Limitation of Liability.
Except as provided under Section 18 below ("Indemnification."), each
party's total liability regarding any claim by the other party for breach of
this Agreement is limited to the amount of compensation earned by US Airways for
the year in which the claim arises or, if based on obligations of a continuing
nature and arising after termination, then the final year of this Agreement, and
each party hereby releases and waives any claims against the other party for
such breach in excess of such amount.
15 Consequential Damages.
NEITHER PARTY WILL BE LIABLE FOR, AND EACH PARTY WAIVES AND RELEASES
ANY CLAIMS AGAINST THE OTHER PARTY FOR, ANY SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, INCLUDING DAMAGE TO OR DESTRUCTION OF PROPERTY, LOST
REVENUES, LOST PROFIT, OR LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE, RESULTING FROM
PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT.
<PAGE> 23
CONFIDENTIAL TREATMENT 18
REQUESTED BY GALILEO
INTERNATIONAL, INC.
16 Termination for Breach.
If either party (the "Defaulting Party") breaches any of its duties or
obligations under this Agreement, and such breach continues for thirty days
(ten days regarding failure to pay amounts due) after written notice of such
default from the other party, then the other party may terminate this Agreement
at any time thereafter, effective immediately upon written notice of
termination to the Defaulting Party, without prejudice to any other rights or
remedies the non-defaulting party may have. Upon notice of such termination,
the Defaulting Party will return immediately to the non-defaulting party any
and all confidential or proprietary information, programs, materials, or other
data, and any copies thereof, in the possession or control of the Defaulting
Party.
17 Force Majeure, Delay.
Neither party will be responsible for delays in performance caused by acts
of God or governmental authority, strikes or labor disputes, fires or other
loss of manufacturing facilities, breach by suppliers of supply agreements, or
any other cause beyond the reasonable control of that party.
18 Indemnification.
Each party (the "Indemnitor") will indemnify the other party, its
officers, employees, and agents (collectively "Indemnitees") against and hold
each Indemnitee harmless from all claims, suits, judgments, losses, damages,
fines or costs (including reasonable legal fees and expenses) resulting from
any claim, suit, or demand by any third party for injuries to or deaths of
persons or loss of or damage to property arising out of the Indemnitor's
performance or, willful misconduct of the Indemnitor its employees, officers,
or agents, in connection with the Indemnitor's performance of this Agreement,
except to the extent caused by the negligence of any Indemnitee. The
Indemnitor's obligations under this paragraph will survive the termination of
this Agreement.
19 Guarantee of Performance.
If either party (the "Insolvent Party") becomes insolvent; if the other
party (the "Insecure Party") has evidence that the Insolvent Party is not
paying its bills when due without just cause; if a receiver of the Insolvent
Party's assets is appointed; if the Insolvent Party takes any step leading to
its cessation as a going concern; or if the Insolvent Party either ceases or
suspends operations for reasons other than a strike, then immediately upon
receipt of written notice from the Insecure Party the Insolvent Party will
provide adequate assurance, satisfactory
<PAGE> 24
CONFIDENTIAL TREATMENT 19
REQUESTED BY GALILEO
INTERNATIONAL, INC.
to the Insecure Party, of the future performance of this Agreement. If
bankruptcy proceedings are commenced with respect to the Insolvent Party, then
the Insecure Party may suspend all further performance of this Agreement until
the Insolvent Party assumes or rejects this Agreement pursuant to section 365
of the Bankruptcy Code or any similar or successor provision. Any such
suspension of further performance by the Insecure Party pending the Insolvent
Party's assumption or rejection will not be a breach of this Agreement and will
not affect the Insecure Party's right to pursue or enforce any of its rights
under this Agreement or otherwise
20 Third Party Rights.
Nothing contained in this Agreement establishes or creates, or is intended
or will be construed to establish or create, any right in or any duty or
obligation to any third party.
21 Assignment.
US Airways may assign or transfer this Agreement or any rights granted or
provided for hereunder, in whole or in part, to any person or entity that is
controlled by US Airways, otherwise US Airways may not assign or transfer this
Agreement or any rights granted or provided for hereunder, in whole or in part,
without the written Agreement of GI-Inc. GI-Inc may assign or transfer this
Agreement or any rights granted or provided for hereunder, in whole or in part,
to any person or entity that is controlled by GI-Inc, otherwise GI-Inc may not
assign or transfer this Agreement or any rights granted or provided for
hereunder, in whole or in part, without the written Agreement of US Airways.
22 Relationship of the Parties.
The relationship of the parties is that of principal and limited agent.
US Airways may bind GI-Inc only as specifically provided in this Agreement.
23 Severability.
If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect, then the Agreement shall he construed to exclude
such provision and to be enforceable in all other respects, unless to do so
would prejudice the rights of either party or result in such a material change
as to cause performance by either party to be unreasonable.
24 Survival.
All provisions of this Agreement which by their terms survive termination
thereof will continue thereafter in full force and effect.
<PAGE> 25
CONFIDENTIAL TREATMENT 20
REQUESTED BY GALILEO
INTERNATIONAL, INC.
25 Governing Law.
This Agreement, and any dispute arising under or in connection with this
Agreement, including any action in tort, will be governed by the internal laws
of the State of Illinois. Any action brought to (i) preserve the status quo
pending arbitration or (ii) enforce an arbitration proceeding or decision shall
be brought in courts located within Cook County, Illinois, the parties hereby
consenting to personal jurisdiction and venue therein.
26 Notices.
All notices to either party under this Agreement must be in writing and
sent to the following addressee and at the following address:
for GI-Inc:
Galileo International Incorporated
Suite 400
9700 West Higgins Road
Rosemont, Illinois 60018
Attn: President
for US Airways:
US Airways, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
Attn:
Notices will be deemed effective on the date received. Notices by
certified or registered mail (return receipt requested) will be deemed received
on the date shown on the return receipt. Notices sent by telex or facsimile
will be deemed received on the date transmitted if transmitted before 3:30 p.m.
time of recipient, otherwise on the next business day following transmission.
27 Headings.
The section headings and captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement
and will not be deemed to limit, characterize or in any way affect any
provision of this Agreement, and all provisions of this Agreement will be
enforced and construed as if no heading or caption had been used in this
Agreement.
28 Entirety of Agreement.
<PAGE> 26
CONFIDENTIAL TREATMENT 21
REQUESTED BY GALILEO
INTERNATIONAL, INC.
This Agreement including any Exhibits or attachments, supersedes all prior
oral or written representations or communications between the parties and
constitutes the entire understanding of the parties regarding the subject
matter of this Agreement. This Agreement may be modified only in a writing
signed by both parties.
29 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall be considered one and the
same instrument.
IN WITNESS WHEREOF, the parties have agreed to and executed this Agreement
by their authorized representatives as of the Effective Date first set forth
above
GALILEO INTERNATIONAL, INC. US AIRWAYS, INC.
By:____________________________ By:_________________________
Name:__________________________ Name:_______________________
Title:_________________________ Title:______________________
<PAGE> 27
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Appendix I
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[THREE PAGES OMITTED]
(APPENDIX I-1)
<PAGE> 28
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Appendix II
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[FOUR PAGES OMITTED]
(APPENDIX II-1)
<PAGE> 29
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Attachment A
Defined Terms
As used in this Agreement, including the Attachments, Exhibits and Schedules
hereto, the terms listed in this Attachment A have the meanings ascribed to
them. The use of a term in the singular that is defined herein in the plural
is understood in this Agreement to signify a single instance of such defined
matter.
"Accounting Services" means those travel agency accounting services that are
provided by GI-Inc to customer of GI-Inc.
"Administrative Support Personnel" means those General Sales Personnel who
perform primarily administrative or management functions in the provision of
Sales Services pursuant to this Agreement.
"Advance Credit" has the meaning ascribed to that term in Section 9 of Appendix
II.
"APR" means "Area of Primary Sales Responsibility" as defined herein.
"ARC" means Airlines Reporting Corporation.
"Area of Primary Sales Responsibility" means the exclusive geographic area of
primary sales responsibility assigned to US Airways as described in Exhibit A
hereto and as such geographic area may be amended from time to time in
accordance with the provisions of this Agreement.
"Assigned Subscribers" means (i) all NTP Subscribers within the APR and (ii)
the Designated Subscribers, but excluding the Excluded Subscribers.
"Base Compensation" has the meaning ascribed to that term in Section 6 of
Appendix II and, in the event that there is a Carryover Base Compensation,
means such Carryover Base Compensation.
"BSP" means an entity, including, without limitation, IATA, that performs
accreditation, revenue reporting and clearing functions such as those performed
by ARC.
"Cancelled Deal" has the meaning ascribed to that term in Section 5.2 above.
(ATTACHMENT A-1)
<PAGE> 30
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Carryover Base Compensation" has the meaning ascribed to that term in Section
4.2 of Appendix II.
"Carryover FA Budget" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
"Carryover Plan" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
"Carryover Revenue Goal" has the meaning ascribed to that term in Section 4.2
of Appendix II.
"Commitment Review Procedure" has the meaning ascribed to that term in Section
5.2 above.
"Corporate Direct System" means a computerized travel reservations system that
is integrated with desktop travel management software including, for example,
travel policy enforcement, expense management, and management reporting
functionality and is (i) selected by a CTMS Customer for use by its employees,
or (ii) selected for use by a CTMS Agent retained by a CTMS Customer to service
the travel planning and management requirements of such CTMS Customer.
"CRS Industry" means the group of business entities who provide products and
services alike to the products and services of GI-Inc.
"CTMS Agent" means a Travel Agent, NTP Subscriber, service bureau, or other
person with whom a CTMS Customer has an agreement pursuant to which the CTMS
Agent performs services related to the use of a CTMS and other aspects of that
CTMS Customer's travel planning and travel management requirements.
"CTMS Customer" means a corporation, partnership, or other person who is an
existing or a potential purchaser of CTMS Services from GI-Inc.
"CTMS Form Agreement" means a Form Agreement that relates to CTMS Services.
"CTMS Sales Services" has the meaning ascribed to that term in Section 4.3
above.
"CTMS Services" means any portion of a Corporate Direct System provided by
GI-Inc, whether itself, or through an arrangement or arrangements between
GI-Inc and a third party or third parties.
"CTMS" means a CTMS Service.
(ATTACHMENT A-2)
<PAGE> 31
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Designated Subscribers" means those NTP Subscribers listed on Exhibit C hereto
and as amended pursuant to this Agreement.
"Dedicated Personnel" means General Sales Personnel of at least Account
Executive level who will be dedicated full-time (100 percent of work time) to
the provision of Sales Services pursuant to this Agreement.
"Discontinued Multinational Account" has the meaning ascribed to that term in
Section 2.1.3 above.
"Discontinued Service Notice" has the meaning ascribed to that term in Section
5.1 above.
"Dispute" means any dispute, disagreement, claim, or controversy arising in
connection with or relating to this Agreement, or the validity, interpretation,
performance, breach, or termination of this Agreement, including any claim of
breach of representation or warranty or of non-performance.
"Dispute Resolution Procedure" means the procedure described in Attachment B
hereto.
"Dispute Summary" means, with respect to a Dispute and with respect to the
party to the Dispute who shall prepare a Dispute Summary, a written declaration
presenting (i) a statement expressing the issue(s) in Dispute, (ii) facts
relevant to the understanding of the issue(s) in Dispute, and (iii) a statement
expressing the resolution of the Dispute that is sought by the party who
prepares the Dispute Summary.
"Excluded Subscribers" means those NTP Subscribers listed on Exhibit B pursuant
to this Agreement.
"FAA Factor" means, with respect to the Carryover Plan year in question, the
change, expressed as a percentage, in forecast domestic revenue passenger
enplanements for that Carryover Plan year versus the immediately preceding
year, where "forecast domestic revenue passenger enplanements" shall be as
provided in the then-current (as of the time the Carryover Plan is created)
"FAA Aviation Forecasts" issued by the U.S. Department of Transportation,
Federal Aviation Administration, Office of Aviation Policy and Plans.
"Financial Assistance" means the provision by GI-Inc, and at GI-Inc's expense,
to any one or more of (i) the Assigned Subscribers, (ii) CTMS Customers, and
(iii) CTMS Agents, of any one or more of: (a) cash payments; (b)
indemnification payments; (c) revenue sharing; (d) booking fee rebates; (e)
lease fee waivers; (f) license fee waivers; (g) productivity or
(ATTACHMENT A-3)
<PAGE> 32
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
efficiency fee waivers; (h) airline tickets or other airline, car or hotel
perquisites; (i) computer or other hardware; and (j) other benefits.
"FA Budget" means the amount of Financial Assistance established in accordance
with the provisions of Section 3 of Appendix II and, in the event that there is
a Carryover FA Budget, means such Carryover FA Budget.
"Form Agreements" has the meaning ascribed to that term in Section 5.2 above.
"Galileo Board" means the Board of Directors of GI-Inc.
"Galileo Services" means, collectively, Reservations Services and Accounting
Services, as provided by GI-Inc in the APR, excluding CTMS Services.
"General Sales Personnel" means regular, full-time employees of US Airways who
either are in training for or are actively engaged in the sale of air
transportation on US Airways, or other persons as may be agreed by GI-Inc and
US Airways, including Administrative Support Personnel as provided above, but
excluding employees of US Airways engaged primarily in administrative or
management positions that supervise sale planning or implementation policies or
processes of US Airways.
"GI Corp Executive" has the meaning ascribed to that term in Section 3.1 above.
"GI-Inc Lead" has the meaning ascribed to that term in Section 4.2 above.
"GI-Inc Support" has the meaning ascribed to that term in Section 5.2 above.
"Guaranteed Compensation" has the meaning ascribed to that term in Section 7 of
Appendix II.
"Headquarters" means, with respect to the corporation or partnership in
question, the city or place in which that corporation or partnership maintains
its principal offices.
"HOL Flow" means, with respect to an individual NTP Subscriber, the annual
sales of air transportation revenue, as measured by ARC and BSPS, for all
locations of that NTP Subscriber.
"IATA" means the International Air Transport Association.
(ATTACHMENT A-4)
<PAGE> 33
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Independent Directors" means the members of the Galileo Board who are neither
nominated by an airline owner of GI-Inc or are members of the executive
management of GI-Inc.
"Interest Rate" means the mathematical average of the prevailing
dollar-denominated 30 day and 90 day London Interbank Offered Rates (LIBOR), as
reported in the Wall Street journal for a specified business day, plus 200
basis points.
"Level One Bonus" has the meaning ascribed to that term in Section 8 of
Appendix II.
"Level Two Bonus" has the meaning ascribed to that term in Section 8 of
Appendix II.
"Material Change" has the meaning ascribed to that term in Section 5 of
Appendix II.
"Multinational Accounts" means those Excluded Subscribers listed under "(A)
Multinational Accounts" on Exhibit B hereto.
"Negotiation Range" has the meaning ascribed to that term in Section 5.2 above.
"Neutral Travel Provider" means any Travel Agent that sells the products and
services of Vendors and holds itself out as a neutral source of information
regarding Vendors and their services or products.
"New Service" has the meaning ascribed to such term in Section 5.2 above.
"Non-Competition Agreement" means the Amended and Restated Non-Competition
Agreement among GI-Inc, US Airways and USAM Corp. dated as of
, 1997.
"Non-Vendor Revenue" means all revenue received by GI-Inc from NTP Subscribers,
CTMS Customers, CTMS Agents, and other persons and including, without
limitation, lease and license payments, install/deinstall charges, variable
charges (including but not limited to charges for tickets, itineraries and
invoice documents), and backroom lease and license fees, net of discounts, but
not including Vendor Revenue.
"NTP" means Neutral Travel Provider, as defined herein.
"NTP Form Agreement" means a Form Agreement that relates to Galileo Services,
but excluding CTMS Services.
"NTP Sales Services" has the meaning ascribed to that term in Section 4.1
above.
(ATTACHMENT A-5)
<PAGE> 34
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"NTP Subscriber" means a Neutral Travel Provider who is an existing or a
potential purchaser of Galileo Services from GI-Inc.
"Other Agent" has the meaning ascribed to that term in Section 2.4 above.
"Performance Compensation" has the meaning ascribed to that term in Section 7
of Appendix II.
"Reporting Number" means an account number issued by the Airline Reporting
Corporation or by the International Air Transport Association, or both, to an
individual or entity for the purpose of authorizing such individual or entity
to operate as a travel agency.
"Reservations Services" means the computerized display, reservation, ticketing,
or sale of the services or products of Vendors including the availability and
price thereof, as generated by GI-Inc to any person other than Vendors.
"Revenue Goal" has the meaning ascribed to that term in Section 2 of Appendix
II.
"Sales Services" means, collectively, NTP Sales Services, and CTMS Sales
Services.
"Sales Force" means, collectively, the Administrative Support Personnel and
Dedicated Support Personnel.
"Senior Review Committee" means a committee consisting of GI-Inc's President
and US Airways' Senior Vice President - North America.
"Support Services" has the meaning ascribed to that term in Section 4.4 above.
"Tech Office" means a technical support center (at times referred to
colloquially as a "TN" office) operated and staffed by GI-Inc with personnel
proficient in all technical aspects of the use by end-users of GI-Inc products
and services.
"Territorial Reassignment" has the meaning ascribed to that term in Section 2.4
above.
"Territory" means, collectively, the United States of America together with its
territories and protectorates, and the Republic of Mexico.
"Total Revenue" means the sum of Non-Vendor Revenue and Vendor Revenue, with
respect to the APR plus such revenue generated from Designated Subscribers less
such revenue generated
(ATTACHMENT A-6)
<PAGE> 35
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
from Excluded Subscribers, provided that any such revenue generated from the
location of an Excluded Subscriber in the calendar year in which such location
commences purchasing Galileo Services shall be included in the Total Revenue
only for the sales representative who was responsible for such sale of Galileo
Services.
"Training Materials" has the meaning ascribed to that term in Section 4.7.3.3
above.
"Travel Agent" means an individual or entity, that has been assigned a
Reporting Number.
"US Airways Executive" has the meaning ascribed to that term in Section 3.2
above.
"US Airways Group Products and Services" means with respect to US Airways and
any carrier that uses US Airways' airline designator code in the display of
certain designated flights (collectively, the "group carriers") the schedule,
seat availability, and price thereof of the group carriers, including, without
limitation, air and/or non-air travel packages that may include ancillary air
segments on non-group-carrier airlines.
"US Dollar" means the lawful currency of the United States of America.
"Vendor" means a vendor of travel-related services, such as an airline, hotel,
or rental car company, tour package, cruise operator, or travel insurance
company, that has purchased or subscribed for Reservations Services.
"Vendor Revenue" means all revenue received by GI-Inc from Vendors with respect
to booking fees and other service charges or fees as a result of bookings and
other transactions for which GI-Inc charges a fee to Vendors, which such
bookings and other transactions are generated by NTP Subscribers, CTMS
Customers, CTMS Agents, and other persons.
(ATTACHMENT A-7)
<PAGE> 36
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Attachment B
Dispute Resolution Procedure
1. General Procedure.
Except as otherwise stated in the Agreement, the parties hereto shall
resolve all Disputes in accordance with this procedure:
(a) Each party shall instruct its appropriate representative to promptly
negotiate in good faith with the other party's appropriate representative
to resolve the Dispute. The GI-Inc Executive shall be the representative
of GI-Inc. The US Airways Executive shall be the representative of US
Airways.
(b) if the representatives do not resolve the Dispute within ten business
days (or such longer period as the Representatives may agree) after the
date of referral of the Dispute to them, the representative of each party
will prepare a Dispute Summary with respect to that party's position in
the Dispute. The Dispute shall be referred (by either or both of the
representatives) to the Senior Review Committee for resolution on the
basis of the Dispute Summaries prepared by each party.
(c) If the Senior Review Committee does not resolve the Dispute within ten
business days (or such longer period as that Committee may agree) from the
date of referral to it, either party may submit the Dispute to binding
arbitration in accordance with Section 2 of this Attachment.
2. Arbitration Procedure
The Arbitration Procedure shall be the "baseball" arbitration procedure
provided in Section 5.04 of the Amended and Restated Computer Services
Agreement between US Airways and GI-Inc, modified as necessary with respect to
defined terms in this Agreement.
(ATTACHMENT B-1)
<PAGE> 37
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit A
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[TWO PAGES OMITTED]
(EXHIBIT A-1)
<PAGE> 38
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit B
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(EXHIBIT B-1)
<PAGE> 39
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit C
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(EXHIBIT C-1)
<PAGE> 40
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit D
Sales Representative Reports
1) Staffing Report. A quarterly written advice of staffing levels.
2) Account Activity Reports setting forth: Gains (signed contracts/OA's);
Losses, Renewals; Changes/Updates to target lists - due on last day of
each month.
3) Redistricting Reports and Administrative Files. On GI-Inc's request,
contains account alignments and assignments.
(EXHIBIT D-1)
<PAGE> 41
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Exhibit E
Certain Territories
[This Exhibit E is to contain a list of territories for which Galileo has
granted exclusive distribution rights for products to a third party and in
which US Airways may not sell CTMS Services so long as the exclusivity
provision(s) of Galileo's agreement with that third party is in effect.]
(EXHIBIT E-1)
<PAGE> 42
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Schedule 1
[INTENTIONALLY OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
(Schedule 1-1)
<PAGE> 1
Exhibit 10.16
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE is made and entered into this 23rd day of
June, 1988, by and between Linclay, a Missouri general partnership (herein
called "Landlord") and Covia Partnership, a Delaware general partnership
(herein called "Tenant"). This First Amendment To Lease amends that certain
Lease dated April 18, 1988, (hereinafter called the "Lease").
WHEREAS, both Landlord and Tenant reaffirm such Lease to be in
full force and effect; and
WHEREAS, both Landlord and Tenant now wish to modify and amend
the above referenced Lease.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, both
Landlord and Tenant, for themselves, their heirs,
successors and assigns, intending to be legally bound
thereby, hereby agree to this First Amendment To Lease.
If any provision of the Lease is inconsistent with any
provision herein, this First Amendment To Lease shall
govern and control. All other terms, conditions and
covenants of the Lease are hereby ratified and
confirmed.
AMENDMENTS TO LEASE
Landlord and tenant hereby mutually agree that the Lease
is amended by addition of or substitution of the
following terms, conditions and agreements for those
similarly numbered provisions of the lease.
ITEM NUMBER ONE; Section 1. Property, of the Lease is hereby deleted
and in its place the following is substituted:
1. PROPERTY. Landlord hereby leases to Tenant and Tenant hereby takes
and hires from Landlord the land consisting of
approximately 18.88 acres as legally described on
Exhibit "A" attached to the Lease and incorporated by
reference herein (the "Land"), together with the (a)
building (the "Building") containing approximately
137,900 gross square feet of building area (including
basement level, first floor, second floor and mechanical
penthouses) per BOMA standards for single tenant users
(the "Office Space"), and (b) not less than 700 paved
parking spaces on the Land (the "Parking Spaces"),
together with access aisles, driveways, sidewalks and
landscaping (collectively called the "Appurtenances"),
to be constructed by Landlord thereon pursuant to
Paragraph II.A. of Appendix A to the Lease as modified
by this First Amendment To Lease. Landlord shall
construct the Building and the Appurtenances in
accordance with the procedures set forth in Appendix "A"
to the Lease and in accordance with the Design Criteria
described in this First Amendment To Lease. The Land,
the Building and the Appurtenances are sometimes
hereinafter collectively called the "Property".
<PAGE> 2
Page 2
ITEM NUMBER TWO: Section 3. RENTS, Paragraph (a) (ii) line six and line nine
shall have the value $18,297,380.00 hereby deleted and the
value $17,728,568.00 substituted in its place in both line
six and line nine. The balance of this Section 3 shall
remain unmodified and in full force and effect.
B. AMENDMENTS TO EXHIBIT B TO THE LEASE
Landlord and tenant hereby mutually agree that Exhibit B
to the Lease is hereby deleted and in its place the
following is substituted:
EXHIBIT B
(A) At the time of execution of this First Amendment To Lease, the Total
Assembly Costs have been estimated to be $17,728,568.00 (the "Estimated Total
Assembly Costs") based on the following list of component costs:
1. Land Purchase Price $ 2,455,100.00
2. Guaranteed Maximum Price
(subject to adjustment as
provided in the Lease and this
First Amendment to Lease) 11,450,000.00
3. Development Costs 390,000.00
4. Architectural and Engineering Costs 664,706.00
5. Development Overhead and Fees 800,000.00
6. Broker Commission 600,000.00
7. Legal, Points/Fees 275,000.00
8. Project Contingency 200,000.00
9. Construction Loan Interest 893,762.00
--------------
Estimated Total Assembly Costs $17,728,568.00
==============
(B) Landlord and Tenant acknowledge and mutually agree that the Estimated
Total Assembly Costs is subject to the following:
(a) The component costs described in Section 1 above (Land Purchase Price),
Section 5 above (Development Overhead and Fees), and Section 6 above (Broker
Commissions) are fixed component costs (which have been negotiated as such)
which shall not be subject to credit offset of one component cost against
another.
<PAGE> 3
Page 3
(b) The component cost described in Section 2 above (Guaranteed Maximum
Service) is a fixed component cost which is subject to adjustment pursuant to
the provisions of Appendix A to the Lease, and subject to Tenant audit, but is
not subject to credit offset of one component cost against another, except for
Section 8 above (Project Contingency).
(c) The component costs described in Section 3 above (Development
Costs), Section 4 above (Architectural and Engineering Costs), Section 7 above
(Legal, Points and Fees), Section 8 above (Project Contingency) and Section 9
above (Construction Loan Interest) are variable component costs and subject to
Tenant audit. Any credits in any one of said component costs may be used to
offset any overages in the component cost categories described above in
Sections 3, 4, 7, 8 and 9.
C. AMENDMENTS TO APPENDIX A TO THAT CERTAIN LEASE AGREEMENT DATED
APRIL 18, 1988 BETWEEN LINCLAY AS LANDLORD AND COVIA PARTNERSHIP AS
TENANT
Landlord and Tenant hereby mutually agree that Appendix A to the
Lease is amended by addition of or substitution of the following
items, conditions and agreements for those similarly numbered
provisions of Appendix A to the Lease.
ITEM NUMBER ONE; Paragraph II.A. of the Appendix A to the Lease is
hereby deleted and in its place the following is substituted:
II. CONSTRUCTION
A. Landlord shall construct the Building and Appurtenances
upon the Land in accordance with:
(i) Design Criteria, dated as revised January 14,
1988, and with pages 15 and 24, revised January
19, 1988, and pages 16, 23 and 24, revised
January 27, 1988, prepared by Swanson Rink
Consulting Engineers.
(ii) Schematic Design, dated January 26, 1988, and
with page 24, revised May 12, 1988 (pages 34 and
35 deleted), prepared by Swanson Rink Consulting
Engineers.
(iii) Design Development Mechanical Narrative, dated
May 27, 1988, prepared by Swanson Rink
Consulting Engineers and DMJM. The following
revisions to the Table of Contents are hereby
incorporated: HVAC Equipment Schedule pages 34
and 35 have been deleted; HVAC Outline
Specification (pages 36-39) is the same as
included in the January 26, 1988 Schematic
Design referenced in Number (ii) above; Point
Schedule pages 10 and 11 from the January 26,
1988 Schematic Design referenced in Number (ii)
above have been deleted. In addition, add and
include the following changes to the Design
Development Mechanical Narrative:
<PAGE> 4
Page 4
(a) Equipment Schedule:
Item M-1: AHU-8 - Maintenance and parts air
handling unit:
Single zone package air handling unit with
outside air economizer, horizontal draw-thru,
700 CFM; 1 hp. fan motor, cooling coil, chilled
water - 19 MBH heating coil - HTL water - 13
MBH
Filter Section: 2.2 SF x 2" thick
Air Blender: 700 CFM at .12" air pressure drop
Item M-2:
Air Blenders shall be provided with air
handling units AHU-5, AHY-6 and AHU-7.
Item M-3:
On page 22-I, cooling tower shall be two cell
not 3 cell.
Item M-4: Delete K. kitchen make-up air unit.
(b) Control Item:
The automation control contractor is to supply
provisions for transmission interface of all
system control and monitoring points to 5350 S.
Valentia Way by Covia-furnished transmission
system.
(iv) Outline Specifications, dated May 27, 1988, prepared
by Linclay.
(v) Scheme A, West patio design, 1/16 inch scale, undated,
prepared by THK Associates, Inc.
(vi) Preliminary Landscape Plan, dated May 27, 1988,
prepared by THK Associates, Inc.
(vii) [The following Design Development Drawings, dated
May 27, 1988, prepared by Swanson Rink Consulting
Engineers and DVJM:]
----------------------------------------------------
Sheet No. Title
----------------------------------------------------
C-1 Grading Plan
A-1 First Floor Plan
A-2 Second Floor Plan
A-3 Penthouse Level Plan
A-4 Building Sections
A-5 Building Elevations
A-6 Building Elevations
A-7 Wall Sections and Details
A-8 Typical Sections and Wall Elevations
A-9 First Floor, Reflected Ceiling Plan
<PAGE> 5
Page 5
----------------------------------------------------
Sheet No. Title
----------------------------------------------------
A-10 Second Floor, Reflected Ceiling Plan
A-11 First Floor, Access Flooring
Location Plan
A-12 Second Floor, Access Flooring
Location Plan
S-1 First Floor Plan
S-2 Second Floor Framing Plan
S-3 Roof Framing Plan
S-4 Partial Roof Plans
FP-1 First Floor Sprinkler Plan
FP-2 Second Floor Sprinkler Plan
M-1 First Floor Plan - HVAC
M-2 Second Floor Plan - HVAC
M-3 Penthouse Plan and Section
M-4 HVAC Piping Flow Diagram
E-1 Fixture Schedule and Legend
E-2 Electrical Site Plan
E-3 Basement and First Floor Lighting
Plan
E-4 Second Floor Lighting Plan
E-5 First Floor Power Plan
E-6 Second Floor Power Plan
E-7 First Floor Special Systems Plan
E-8 Second Floor Special Systems Plan
E-9 Penthouse Level Power and Systems
Plan
E-10 Electrical One Line
(ix) The following clarifications are provided for the
Design Development Drawings specificed in Number
(viii) above:
Sheet No. C-1:
(a) Drive width from South Fulton Street shall be
32 feet in lieu of 25 feet as shown. Taper 32
foot width to 25 foot at curb return to north
parking lot.
(b) North and south retaining walls at loading dock
shall have top of wall elevation = 5752. South
retaining wall shall have a length of 30 feet.
(c) Retaining wall at entry plaza shall have top of
wall elevations = 5750 and length of 90 feet.
(d) Retaining wall at northeast corner of building
shall have top of wall elevation = 5750 and
length of 30 feet. Retaining wall shall also
be extended in a northeasterly direction
(parallel to building) 40 feet with a top of
wall elevation = 5750.
<PAGE> 6
Page 6 (e) Entrance from South Havana Street shall have
Arapahoe County standard right-in/right-out
island with minimum island width of 8 feet.
(f) Building foundation drain shall be discharged
through 4 inch drain to proposed 27 inch RCP at
north side of property.
(g) Basement F.F. Elevation is revised to 5740.5 and
5737.5.
(h) Provide painted metal handrail at all exterior
stairs as required, typical.
(i) Fire protection service main to building shall
connect to existing 16 inch ductile iron water
main located 40 feet south of north right-of-way
of East Easter Avenue. New water main installed
under existing pavement shall be bored and
pothole, open cutting is not permitted. For
basis of pricing assume 100 l.f. of 12 inch
ductile iron water main plus 400 l.f. of 8 inch
ductile iron water main for fire protection
service to building. Include one fire hydrant
assembly, complete, at entrance drive from
East Easter Avenue, fire hydrant connection
from new 12 inch.
(j) Building domestic water service shall be priced
as 4 inch with 600 l.f. of 4 inch service line.
Include meter pit and connection per Castlewood
Water District requirements. Do not include
service fees as required for service (by owner).
The building domestic service meter and service
tap shall be three (3) inch size.
(k) Lawn irrigation service shall be priced as 2
inch. Lawn irrigation service meter shall be
two (2) inch size.
(l) Building sanitary sewer service shall be priced
as 6 inch with 400 l.f. of service line. Service
shall tap into existing 10 inch sanitary sewer
service located along north property line.
(Existing M.H. 3D, rim elevation = 5741.5 +/-,
invert elevation = 5729.9 +/-).
<PAGE> 7
Page 7
Sheet No. A-1: Business office provide one hour fire shutter,
Cookson or equal.
Sheet No. A-2: Building shall have glazed curtain wall at
exterior wall between column line 5 and 6 and
column line 10 and 11 as shown on building
elevations (Sheet No. A-5 and No. A-6).
Sheet No. A-3: Provide overflow roof drain at each roof drain
shown as required per code.
Sheet No. A-7: Section 2/7 Typical Wall Section, Revise three
foot compacted fill to four foot compacted fill.
Sheet No. A-8: Section 5/8 Section at Penthouse, 4 inch
concrete on metal deck at second floor revise to
5-1/4 inch lightweight concrete with 6x6 W 1.4 x
W 1.4 WWF on 2", 18-gauge metal deck.
Sheet No. A-9:
(a) Slot diffusers are required along south side of
building at column line F in the individual
offices. (Add 8 l.f. of slot diffusers for eight
separate offices total of additional 64 l.f.).
(b) Reception/Secretary Area Ceiling shall have
beams and structural elements wrapped with
drywall for one hour rating above suspended
ceiling.
Sheet No. A-10: Add 8 l.f. of slot diffusers for one office.
Sheet No. A-11:
(a) Raised concrete slab at kitchen shall have
appropriate bond break to allow removal from
concrete slab on grade in future.
(b) Notwithstanding the Design Criteria referenced
above as Number (i) as it relates to the Access
Flooring System (Section 3.02), the access floor
included in the scope of the work is 40% Concore
and 60% Woodcore, not 100% Concore.
Sheet No. A-12: Notwithstanding the Design Criteria referenced
above as Number (i) as it relates to the Access
Flooring System (Section 3.02), the access floor
included in the scope of the work is 40% Concore
and 60% Woodcore, not 100% Concore.
Sheet No. S-1: NOTE: An additional 12 inch caisson is required
at south end of loading dock.
<PAGE> 8
Page 8
Sheet No. S-2: Cross bracing (x-Bracing) is required along Grid
A between Columns 4 and 5 and along Grid D
between Columns 3 and 4. (Both first and second
floors).
Sheets No. S-1:
S-2:
S-3:
S-4: All Steel is A 572-50 specification for all
beams and columns unless noted otherwise.
Sheet No. FP-1 and FP-2: New sprinkler heads for unfinished
ceiling areas are shown as open circles.
Sprinkler pendants shall be positioned as
required by code in the open ceiling areas.
Sheet No. E-1:
(a) Fixture type L to be an adjustable type low
voltage downlight as manufactured by Prescolite.
Catalog No. LVH4-LV2C-120-LV17.
(b) Fixture types AA and BB shall have lamp
specification changed from 400 W Metal Halide to
400 W High Pressure Sodium. Fixtures shall be
changed to Gardco
#EH19-2-Q-277-400HPS-BLA-TRS-28-PP and
#EH19-1-Q-277-400HPS-BLA-TRS-28-PP respectively.
(c) Electrical contractors pricing fixture schedule
shall price fixtures as they appear on the
fixture schedule. As this Design Development set
of documents is intended to establish quality
and price, no fixture "packaging" or
substitutions will be allowed.
Sheet No. E-2:
(a) Provide one, 20 AMP, 120 V sign circuit (wire
and conduit) to north side of entrance drive
from South Havana Street.
(b) Provide one, 20 AMP, 120 V sign circuit (wire
and conduit) to east side of entrance drive from
East Easter Avenue.
(c) Provide one, 20 AMP, 120 V sign circuit (wire
and conduit) to north side of entrance drive
from South Fulton Street.
<PAGE> 9
Page 9
Sheets No. E-3 and E-4:
(a) Alternates 1, 2, and 3 apply only to open
workstation areas, test rooms, and training
rooms. Light fixture spacing in open
workstation areas on these sheets pertains
to alternates 1, 2, and 3. For base package,
contractor shall adjust lighting layout to
8' x 10' spacing (one fixture every 80
square feet) in open workstation areas only.
(b) Under alternate 3, the standard lamps
referred to shall be G.D. F40SP35. Also,
under alternate 3, provide (2) additional
separately enclosed dimmers in each PDP-9
dimmer panel for emergency lighting.
Sheets No. E-5 and E-6:
Receptacles with a subscript "D" indicate
that receptacle is to be on a dedicated
circuit.
Sheet No. E-9: Exterior light fixtures shown on lighting
plans shall be Stonco #P63701 w/100 W A-19
incandescent lamp. (Total of 3)
Sheet No. E-10: The (3) 800 AMP circuit breakers in the
Emergency Distribution Switchboard that
serve the U.P.S. system shall be changed to
1000 A-3P circuit breakers.
The items referenced in Items (i), (ii), (iii), (iv), (v), (vi), (vii),
(viii), and (ix) of this Paragraph II.A. are made a part hereto by this
reference and are collectively defined as the Design Criteria (the "Design
Criteria").
The balance of this Paragraph II.A., commencing on Page 7 and beginning
with the paragraph, The Building and Appurtenances..., shall remain unmodified
and in full force and effect.
ITEM NUMBER TWO; Paragraph II.E. line four and five shall have the value
Twelve Million Forty-One Thousand Eight Hundred Dollars
($12,041,800.00) hereby deleted and the value Eleven Million
Four Hundred Fifty Thousand Dollars ($11,450,000.00) substituted
in both lines four and five. The balance of this Paragraph
II.E.1. shall remain unmodified and in full force and effect.
ITEM NUMBER THREE; Paragraph II.G. line five shall have the value
Eighteen Million Five Hundred Thousand Dollars ($18,500,000.00)
deleted at both locations and the value Seventeen Million Nine
Hundred Fifty Thousand Dollars ($17,950,000.00) substituted in
its place at both locations in line five. The balance of this
Paragraph II.E.1 shall remain unmodified and in full force and
effect.
<PAGE> 10
Page 10
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment To Lease as of the day and year above first written.
COVIA PARTNERSHIP,
Witness: Tenant
/s/ [illegible] By: /s/ BARRY KOTAR
- ---------------------------- -----------------------------
Barry Kotar,
President
Witness:
LINCLAY,
Landlord
By: JDP INVESTMENT CORPORATION,
general partner
/s/ DONALD S. MCKINNEY By: /s/ HERBERT E. PRINCE
- ---------------------------- -----------------------------
Donald S. McKinney Herbert E. Prince,
Vice President
<PAGE> 11
to that certain Lease dated as of the 18th day of April, 1988, by and between
Linclay, a Missouri general partnership (hereinafter called "Landlord") and
Covia Partnership, a Delaware general partnership (hereinafter called
"Tenant" or "Covia").
LEGAL DESCRIPTION
TRACT "A" OF RAMPART BUSINESS CENTER FILING NO. 1 CONTAINING 62,414 SQUARE
FEET OR 1.433 ACRES AND A PARCEL OF LAND BEING A PORTION OF TRACTS 17, 18, 31,
AND 32 AS PLATTED IN A SUBDIVISION OF SECTION 27, TP. 55.R.67W., AS RECORDED IN
BOOK 1 AT PAGE 1 ON APRIL 9, 1903, IN THE RECORDS OF ARAPAHOE COUNTY, STATE OF
COLORADO, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF TRACT "A" AS PLATTED IN RAMPART BUSINESS
CENTER FILING NO. 1 AS RECORDED AT RECEPTION NO. 2507848 OF THE RECORDS OF
ARAPAHOE COUNTY; THENCE ALONG THE WEST RIGHT-OF-WAY LINE OF SOUTH HAVANA
STREET, THE NORTH RIGHT-OF-WAY LINE OF EAST EASTER AVENUE AND THE EAST
RIGHT-OF-WAY LINE OF SOUTH FULTON STREET, THE FOLLOWING 9 COURSES:
1. S 00 DEGREES 03'32"W A DISTANCE OF 334.57 FEET TO A POINT OF CURVE;
2. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 89 DEGREES 55'51",
A RADIUS OF 20.00 FEET, AND A LENGTH OF 31.42 FEET TO A POINT OF TANGENT;
3. N 89 DEGREES 52'17"W A DISTANCE OF 234.37 FEET TO A POINT OF CURVE;
4. ALONG THE ARC OF A CURVE TO THE LEFT HAVING A DELTA OF 40 DEGREES, 55'
25", A RADIUS OF 545.00 FEET, AND A LENGTH OF 389.27 FEET TO A POINT OF
TANGENT;
5. S 49 DEGREES 12'18"W A DISTANCE OF 439.87 FEET TO A POINT OF CURVE;
6. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 40 DEGREES 55' 47",
A RADIUS OF 255.00 FEET, AND A LENGTH OF 253.60 FEET TO A POINT OF TANGENT;
7. N 89 DEGREES 51'55"W A DISTANCE OF 37.67 FEET TO A POINT OF CURVE;
8. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 90 DEGREES 15'57",
A RADIUS OF 20.01 FEET, AND A LENGTH OF 31.51 FEET TO A POINT OF TANGENT;
9. N 00 DEGREES 24'02"E A DISTANCE OF 638.96 FEET TO THE SOUTHWEST CORNER OF A
GREEN BELT TRACT.
THENCE ALONG THE SOUTH LINE OF A GREEN BELT TRACT THE FOLLOWING 16 COURSES:
1. N 72 DEGREES 11'46"E A DISTANCE OF 49.65 FEET TO A POINT OF CURVE;
2. ALONG THE ARC OF A CURVE TO THE LEFT HAVING A DELTA OF 34 DEGREES 43'47",
A RADIUS OF 105.00 FEET, AND A LENGTH OF 63.65 FEET TO A POINT OF TANGENT;
3. N 37 DEGREES 27'59"E A DISTANCE OF 29.04 FEET TO A POINT OF CURVE;
4. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 45 DEGREES 23'
14", A RADIUS OF 65.0 FEET, AND A LENGTH OF 51.49 FEET TO A POINT OF
TANGENT;
5. N 82 DEGREES 51'13"E A DISTANCE OF 19.52 FEET TO A POINT OF CURVE;
6. ALONG THE ARC OF A CURVE TO THE LEFT HAVING A DELTA OF 42 DEGREES 57'09",
A RADIUS OF 85.0 FEET, AND A LENGTH OF 63.72 FEET TO A POINT OF TANGENT;
7. W 39 DEGREES 54'04"E A DISTANCE OF 37.24 FEET TO A POINT OF CURVE;
8. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 60 DEGREES 58'
15", A RADIUS OF 65.00 FEET, AND A LENGTH OF 69.19 FEET TO A POINT OF
TANGENT;
9. S 79 DEGREES 07'41"E A DISTANCE OF 24.84 FEET TO A POINT OF CURVE;
10. ALONG THE ARC OF A CURVE TO THE LEFT HAVING A DELTA OF 46 DEGREES 08'55",
A RADIUS OF 35.00 FEET, AND A LENGTH OF 68.46 FEET TO A POINT OF TANGENT;
11. N 4 DEGREES 43'20"E A DISTANCE OF 55.66 FEET TO A POINT OF CURVE;
12. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 18 DEGREES 29'
56", A RADIUS OF 190.00 FEET, AND A LENGTH OF 61.35 FEET TO A POINT OF
TANGENT;
13. W 73 DEGREES 13'18"E A DISTANCE OF 41.61 FEET TO A POINT OF CURVE;
14. ALONG THE ARC OF A CURVE TO THE RIGHT HAVING A DELTA OF 22 DEGREES 38'44",
A RADIUS OF 125.00 FEET, AND A LENGTH OF 49.40 FEET TO A POINT OF TANGENT;
15. S 84 DEGREES 07'50"E A DISTANCE OF 28.77 FEET TO A POINT OF CURVE;
16. ALONG THE ARC OF A CURVE TO THE LEFT HAVING A DELTA OF 14 DEGREES 47'05",
A RADIUS OF 165.00 FEET, AND A LENGTH OF 42.58 FEET;
THENCE N 31 DEGREES 30'28"W A DISTANCE OF 36.43 FEET TO THE SOUTHEASTERLY
CORNER OF SAID TRACT "A"; THENCE EASTERLY ALONG THE GREENBELT LINE OF SAID
TRACT "A" THE FOLLOWING 2 COURSES:
1. N 76 DEGREES 00'00"E A DISTANCE OF 370.00 FEET;
2. S 89 DEGREES 52'08"E A DISTANCE OF 210.00 FEET TO THE POINT OF
BEGINNING, CONTAINING 760,160 SQUARE FEET ON 17.451 ACRES;
RESULTING IN A TOTAL ACREAGE OF 18.884 ACRES OR 822.574 SQUARE FEET.
<PAGE> 1
Exhibit 10.21
PROGRAM PRODUCT LICENSE AGREEMENT
Candle Corporation
4676 Admiralty Way, Suite 624
Marina del Rey, California 90291
(213) 821-2902
(VENDOR)
Agrees with
UNITED AIRLINES, DENVER TECHNOLOGICAL CENTER
5350 South Valentia Way
Englewood, Colorado 80111
(CUSTOMER)
Date May 1, 1981
-------------------
No. C02-0307
--------------------
<PAGE> 2
1. LICENSE
Vendor grants and Customer accepts on the terms and conditions
contained in this Agreement a non-assignable, non-transferable, non-exclusive
license to use the proprietary computer programs and related materials
("Products") referred to in Schedule A at the specified Customer locations.
2. TITLE
Vendor warrants and represents that it is the owner of the
Products. Title and full ownership rights to the Products shall remain the sole
property of the Vendor. Customer acknowledges, understands and agrees that the
Products constitute valuable proprietary assets and trade secrets of Vendor
embodying substantial creative efforts and confidential information.
3. SCOPE OF USE, TERMS AND FEES
Each Product may be used by the Customer only for Customer's
own use at the Customer location designated in Schedule A on the CPU for which
the Product is initially intended to be used. Customer may not change the
location of the use of any Product without the Vendor's prior written consent
(which will not be unreasonably withheld). Customer may not use any Product or
copy thereof on any CPU other than the CPU for which use of the Product was
initially intended without the prior written consent of Vendor (which will not
be unreasonably withheld) except, if the workload on that CPU is transferred to
a new CPU either temporarily as back-up or permanently, Customer may transfer
the use of that Product from the original CPU to the new CPU during the time
the workload is transferred to the new CPU; provided, however, that upon
Vendor's request, Customer shall inform Vendor in writing of the serial number
and location of the CPU upon which each Product is then being used and
thereafter shall inform Vendor in writing of the serial number and location of
any new CPU to which the use of any Product is permanently transferred. For use
of a Product on more than one CPU at the same or different locations, one copy
of the Products must be licensed for each additional CPU under the appropriate
additional copy reduced rate at the then current prices quoted by Vendor. The
term "use" in this Agreement shall mean (i) copying any portion of the
proprietary computer programs into the CPU for execution of the programs'
instructions and (ii) utilizing related materials and generated output of the
Products as contemplated by this Agreement.
4. LICENSE FEES
The license fee and the form and terms of payment for the
Products at the specified Customer location are set forth in Schedule A. The
license fee does not include personnel training, Product installation, on-site
support, fees for Product options, or alterations or enhancements to the
Products except as required to satisfy the warranty contained herein. The
license fees are payable on their specified payment dates.
5. TYPE OF LICENSE
Products may be licensed hereunder pursuant to either of the
following types of licenses:
A) Permanent License - Products are available on a permanent license basis for
a one-time fee as specified in Schedule A. The duration of a permanent license
to use the Products is perpetual.
B) Annual License - Products are available on a renewable yearly basis for the
annual fee designated in Schedule A. The usage period of the license is
specified in Schedule A.
6. RESPONSIBILITY OF CUSTOMER
Customer shall be exclusively responsible for the supervision,
management and control of its use of the Products, including but not limited to:
(a) assuming proper machine configuration, Products' installation, audit
controls and operating methods; (b) establishing adequate back-up plans; and
(c) Implementing sufficient procedures and check-points to satisfy its
requirements for restart and recovery in the event of a malfunction.
7. NON-DISCLOSURE AND NON-REPRODUCTION OF PROPRIETARY INFORMATION
A. Customer expressly acknowledges, understands, and agrees
that the Products contain confidential information and other data proprietary
to Vendor. Customer agrees not to allow any such confidential information or
data to be disclosed or reproduced except for use in accordance with Paragraph
3 or for archival or back-up purposes as provided in subparagraph D below.
B. Customer, its agents, servants, contractors, and employees,
agree to maintain all information and data contained in the Products, including
proprietary computer programs, documentation, generated output, modifications
and conversions, in strict confidence for Vendor. Customer agrees to take all
appropriate steps to insure that unauthorized persons having access to the
Products shall refrain from any unauthorized reproduction or disclosure of such
information and data, and agrees to restrict access to and display of such
information and data to such Customer personnel who (i) have a need to have
such access or see such display to enable Customer to fully utilize the
Products as contemplated by this Agreement and (ii) who have been advised
of and have agreed to treat the Products and such information and data in
accordance with this Paragraph 7.
C. Customer acknowledges that in the event of an unauthorized
reproduction or disclosure of any confidential information or data contained in
the Products. Vendor may not have an adequate remedy at law, and, therefore,
injunctive or other equitable relief may be sought to restrain such
reproduction or disclosure, threatened or actual.
D. Customer may transport or transmit a copy or the original of
any Products to another CPU for back-up use when required by CPU malfunction,
provided (i) the copy or original is destroyed or returned to the original
location when the malfunction is corrected and (ii) Customer abides by all
provisions of this Paragraph 7 Customer agrees to reproduce and include
Vendor's proprietary and copyright notice on any copies, in whole or in part,
in any form, of the Products.
E. The provisions of this Paragraph 7 shall survive the
termination of this Agreement.
<PAGE> 3
8. PATENT AND COPYRIGHT INDEMNIFICATION
Vendor warrants that the Products do not infringe upon or violate
any patent, copyright, trade secret, or any other proprietary right of any third
party. Vendor will defend at its expense any action brought against Customer to
the extent that it is based on a claim that licensed Products, used within the
scope of the license hereunder, infringe a copyright in the United States or a
United States patent, and subject to the limitation of liability stated herein.
Vendor will pay any costs and damages finally awarded against the Customer in
such action which are attributable to such claim, provided that Customer
notifies Vendor promptly in writing of the claim, allows Vendor to fully
participate in the defense of such claim and does not agree to any settlement
of such claim without Vendor's consent. Should the licensed Products become, or
in Vendor's opinion be likely to become, the subject of a claim of infringement
of a copyright or a patent, Vendor may procure for the Customer the right to
continue using the licensed Products, may replace or modify them to make them
non-infringing, or may terminate the license of them. Vendor shall have no
liability for any claim of copyright or patent infringement based on (i) use of
other than the latest unmodified release of the licensed Products from Vendor
if such infringement would have been avoided by the use of the latest release
of the licensed Products (of which Customer had notice and an opportunity to
use) or (ii) use or combination of the licensed Products with non-Vendor
programs or data if such infringement would have been avoided by the use or
combination of the licensed Products with other, or without, such programs or
data. The foregoing states the entire liability of Vendor with respect to
infringement of any copyrights or patents by the licensed Products or any parts
thereof and Vendor shall have no liability with respect to any other
proprietary rights.
9. LIABILITY
Except as specified in this Paragraph 9 or elsewhere in this
Agreement, Vendor shall not be liable for any loss or damage that may arise in
connection with the furnishing, performance or use by Customer of Products,
including, without limitation, any indirect, special, incidental or
consequential damages. The remedies of Customer set forth under Paragraph 9
hereof shall be the sole and exclusive remedies of Customer for any breach of
any obligations of Vendor hereunder or otherwise and (except as otherwise
provided in Paragraph 8 hereof) in no event shall Customer be entitled to any
monetary damages against Vendor in excess of the amounts paid to Vendor by
Customer hereunder. No action, regardless of form, arising out of the
transactions under this Agreement may be brought by either party more than two
years after the cause of action has accrued, except that an action for
non-payment may be brought within two years after the date of last payment.
10. WARRANTY
Vendor warrants that at the time of delivery of the original
Products supplied to Customer and for a period of one (1) year thereafter, the
original Products will be in substantial accordance with specifications in the
applicable technical reference manual. The extent of Vendor's liability under
this warranty shall be limited to the correction or replacement as soon as
practicable of any substantial deviation in the original Products (or any
subsequent releases of Products) from the specifications in the applicable
technical reference manual, which Vendor determines to be necessary, at
Vendor's own cost and expense, provided written notice of such substantial
deviations is received by Vendor during the warranty period. This warranty shall
not apply if: (i) the Products (or parts thereof) shall not be used in
accordance with Vendor's instructions; (ii) the Products shall have been
altered, modified or converted by Customer without the written approval of
Vendor; (iii) any of Customer's equipment shall malfunction; or (iv) any other
cause within the control of Customer shall result in any part of the Products
becoming inoperative or substantially deviating from the specifications in the
applicable technical reference manual. THE FOREGOING WARRANTY IS IN LIEU OF
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
11. MAINTENANCE AND ENHANCEMENT PLAN
A. A maintenance and enhancement plan (hereinafter referred to as
the "Plan") is available to Customer as specified in Paragraphs 11B, 11C, 11D.
The Plan includes the following provisions:
(1) Code Corrections - To supply code corrections as required to correct
substantial deviations of a Product from specifications of the current
applicable technical reference manual. However, if Customer has modified the
Product, Vendor at its discretion may require Customer to demonstrate that any
deviation of the Product was not caused by Customer's modification.
(2) Product Updates - To supply improvements, extensions, and other changes to
the Products which Vendor, at its discretion, deems to be logical improvements
or extensions to the original Products supplied to the Customer.
(3) Technical Support - To supply a reasonable amount of consulting assistance
in the event of difficulties in the use of the Products or in the
interpretation of results of Product use, to the extent of mail and telephone
contact. If on-site assistance is required and the problem is the failure of
the Product(s) to perform to specifications, no charge will be made, if the
problem is due to other causes, Vendor's standard consulting rates for such
services will be applicable.
B. If Customer has a permanent license, Customer is subscribed in
the Plan at no cost for a period of one (1) year following the delivery date of
the Products. On each anniversary date of delivery thereafter, Customer shall be
invoiced the fee for the Plan for the following year. If Customer is under an
annual license, Customer is automatically subscribed in the Plan at no
additional cost for the duration of the annual license agreement.
C. The initial fee for the Plan for each copy of Products shall
be as designated in Schedule A. The fee may be changed annually upon thirty (30)
days prior written notice to Customer. Customers with copies at additional
locations and/or with optional features having different anniversary dates than
the first installation will be invoiced for the Plan for all installations and
options on the first anniversary date of the first installation and there shall
be included in such invoice a prorated portion of the fee for the additional
location copies and/or optional features ordered after the first installation.
<PAGE> 4
cancels his subscription in the Plan may at a later time renew his subscription
and receive the benefits of the Plan upon payment of the annual fee for the
Plan in effect at the time of renewal plus a reinstatement fee equal to (i) the
difference between the permanent license fee of Products specified in Schedule A
and the permanent license fee for such Products prevailing at the time of
subscription renewal, or (ii) Five Hundred Dollars ($500), whichever is greater.
12. LIQUIDATION OF VENDOR
In the event that Vendor is liquidated, dissolved or ceases to
carry on business on a regular basis, and such business or the part thereof
pertaining to Customer and the obligations connected therewith are not assumed
by any successor or assignee of Vendor, a current copy of the source program
statements and documentation of the Products being utilized by Customer will be
made available to Customer and Customer will have a non-exclusive, perpetual,
paid-up license to the source program statements and documentation. It is
understood and agreed that such source code statements and documentation are to
be utilized solely for the internal support and maintenance of the Products and
are not to be disclosed to any person or entity except in the furtherance of
such support and maintenance.
13. DELAYS
The Vendor shall not be liable for delays in the performance of
its obligations hereunder due to causes beyond its reasonable control including
but not limited to Acts of God, strikes or inability to obtain labor or
materials.
14. NOTIFICATION
All notices which any party may be required or desire to give
to any other party shall be in writing and shall be given by personal service,
registered mail, or certified mail to the other party at his respective address
set forth at the beginning of this Agreement. Mailed notices shall be deemed to
be received on the fifth California business day following the date of
mailing.
15. SUCCESSION
This Agreement, together with all schedules or modifications
now and hereafter made a part hereof shall be binding on the respective parties
and their respective heirs, executors, administrators, legal representatives,
successors and assigns.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of
California without giving effect to the conflict of laws provisions thereof.
This Agreement constitutes the entire agreement and understanding between the
parties relating to the license and use of the Products, and all other prior
agreements, arrangements or understandings, oral or written, are merged into
and superseded by the terms of this Agreement. Title and Paragraph headings are
for convenient reference and are not a part of this Agreement.
17. INVALID PROVISIONS
No waiver of any breach of this Agreement shall constitute a
waiver of any other breach of the same or other provisions of this Agreement
and no waiver shall be effective unless made in writing. In the event that any
provisions herein shall be illegal or unenforceable, such provision shall be
covered and the entire Agreement shall not fail but the balance of the Agreement
shall continue in full force and effect.
18. TERM
This Agreement shall commence on the date of execution hereof
and it shall remain in force until all Products designated in Schedule A have
completed their specified usage periods.
19. TERMINATION
Upon completion of a specified usage period for Products
designated in Schedule A, Customer has the option to (i) agree to continue use
of the Products designated on Schedule A for an additional usage period at the
then current price of a license of the Products; or (ii) terminate usage of the
Products designated on Schedule A, and, within ten (10) days, return to Vendor
all Products supplied to Customer and destroy or delete all copies of the
Products including but not limited to any Vendor supplied information, load
modules, back-up archival information, data sets and documentation. Customer
will verify this action in writing to Vendor. Upon termination of this
Agreement or the license of any Product in any other fashion, the provisions of
option (ii) above shall apply.
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
SIGNATURE: EARL F. HADDEN SIGNATURE: /s/
--------------------- ------------------------
NAME: Earl Hadden NAME:
--------------------------- ----------------------------
TITLE: Vice President - Sales TITLE:
-------------------------- ----------------------------
DATE: May 14, 1981 DATE:
--------------------------- -----------------------------
(VENDOR) (CUSTOMER)
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
By: ______________________________ By:______________________________
KARL G. BUTTSTADT Sandra MacDonald
Name: ______________________________ Name:____________________________
Purchasing Agent Manager, Contract Admin.
Title: ______________________________ Title:___________________________
12/17/90 December 19, 1990
Date: ______________________________ Date:____________________________
Purchase Order#:________________________________
(For invoicing only) Contract Number 7
</TABLE>
ADDENDUM
This Addendum is attached to and made a part of Program Product License
Agreement No. C02-0307 (44115) ("the Agreement") commencing May 1, 1981 by and
between Candle Corporation ("Candle") and united Air Lines, Inc., Denver
Technological Center ("Licensee").
1. Candle acknowledges that Licensee has formed Covia partnership
("Covia") and has assigned Program product License agreement No.
C02-0307 (44115), with the exception of Schedule No. 4, the Permanent
License for OMEGAMON/MVS/XA commencing July 14, 1986, to Covia and the
new Licensee name is Covia partnership.
2. Consent is hereby given by Candle to transfer and assign the Agreement
and all Schedules (except Schedule No. 4) referencing the Agreement to
Covia effective January 2, 1988.
3. Covia hereby accepts the transfer and assignment of the Agreement and
all such Schedules referencing the Agreement and agrees to be bound by
all obligations and duties set forth in the Agreement and all such
Schedules referencing the Agreement.
4. Licensee shall continue to be bound by its obligations as set forth in
the Agreement.
5. There is no special or one-time fee for the transfer and assignment of
the Agreement.
6. Consent is hereby given by Candle to transfer said Schedule No. 4 to
united air Lines, Inc. ("United") Program Product License agreement No.
C02-0028 (37702) effective January 2, 1988.
7. United hereby accepts the transfer of said Schedule No. 4 to Agreement
No. C02-0028 (37702).
Agreed and Accepted: Agreed and Accepted:
CANDLE CORPORATION UNITED AIR LINES, INC.
By:_____________________________ By:__________________________________
<PAGE> 6
Agreed and Accepted: Agreed and Accepted:
Name: Fred Matsuyama Name: ROBERT B. TURNER
Title: Manager, Contracts Title: Manager of Purchasing - Electronics
Date: 05-24-90 Date: 5/15/90
Agreed and Accepted:
COVIA PARTNERSHIP
By:____________________________
Name: DANIEL G. HENDERSON
Title: Vice President, Finance/Admin - CFO
Date: May 15, 1990
<PAGE> 7
ADDENDUM
This Addendum is attached to and made a part of Program Product License
Agreement No. C02-0307 (44115) ("the Agreement") commencing May 1, 1981 by and
between Candle Corporation ("Candle") and United Air Lines, Inc., Denver
Technological Center ("Licensee").
1. Candle acknowledges that Licensee has formed Covia Partnership ("Covia") and
has assigned Program Product License Agreement No. C02-0307 (44115), with
the exception of Schedule No. 4, the Permanent License for OMEGAMON/MVS/XA
commencing July 14, 1986, to Covia and the new Licensee name is Covia
Partnership.
2. Consent is hereby given by Candle to transfer and assign the Agreement and
all Schedules (except Schedule No. 4) referencing the Agreement to Covia
effective January 2, 1988.
3. Covia hereby accepts the transfer and assignment of the Agreement and all
such Schedules referencing the Agreement and agrees to be bound by all
obligations and duties set forth in the Agreement and all such Schedules
referencing the Agreement.
4. Licensee shall continue to be bound by its obligations as set forth in the
Agreement.
5. There is no special or one-time fee for the transfer and assignment of the
Agreement.
6. Consent is hereby given by Candle to transfer said Schedule No. 4 to United
Air Lines, Inc. ("United") Program Product License Agreement No. C02-0028
(37702) effective January 2, 1988.
7. United hereby accepts the transfer of said Schedule No. 4 to Agreement No.
C02-0028 (37702).
Agreed and Accepted: Agreed and Accepted:
CANDLE CORPORATION UNITED AIR LINES, INC.
By: /s/ Fred Matsuyama By: /s/ Robert B. Turner
------------------------ -----------------------------
Name: Fred Matsuyama Name: Robert B. Turner
---------------------- ---------------------------
Title: Manager, Contracts Title: Manager of Purchasing -
--------------------- Electronics
--------------------------
Date: 05-24-90 Date: 05/15/90
---------------------- ---------------------------
Agreed and Accepted:
COVIA PARTNERSHIP
By: /s/ Daniel G. Henderson
--------------------------
Name: DANIEL G. HENDERSON
------------------------
Title: Vice President Finance/Administration
Chief Financial Officer
---------------------------------------
Date: May 15, 1990
----------------------------------------
<PAGE> 1
Exhibit 10.23
ADDENDUM
to the
Sterling Software License Agreement
for
Galileo International
This Addendum ("Addendum") supplements and amends that certain Software
License Agreement ("License Agreement") dated August 19, 1994 of which it is a
part, by and between Sterling Software (U.S. of America), Inc., a Delaware
corporation ("Sterling"), and Galileo International, a Delaware general
partnership ("Licensee"). Inconsistencies between the License Agreement and
this Addendum shall be resolved in favor of the latter. References are to
paragraphs in the License Agreement.
1. Galileo International is a Delaware general partnership, not a corporation.
2. In second "Whereas" clause on page 1, add the words "for use" after the
second "license".
3. Section 2 (Grant)
3.1 After the word "only" in the third line, add "except as provided in
Section 15 herein."
3.2 In the fifth line, add the words "except pursuant to Section 15
hereof" after "Licensee shall not".
3.3 In subsection (a), add the words "unless employed by Licensee as an
agent of Licensee and subject to Section 8 herein" after the word
"PRODUCT".
4. Section 4 (Scope of Use)
4.1 In the last line of subsection B.1., substitute the words "full
production use of the replacement computer system" for the words
"such transfer".
4.2 Change subsection B.2. to the following:
"B.2. Upgrade and Transfer Fees. Any Sterling-approved transfer of the
PRODUCT from the Computer System to a third-party's computer system
(e.g., pursuant to an outsourcing arrangement) or upgrade of the
Computer System will be subject to Sterling's prevailing terms and fees
for transfers, and if such transfer constitutes an upgrade based on
Sterling's definition of CPU group level, it shall be conditioned upon
the payment of Sterling's prevailing upgrade fees.
Current transfer fees to an approved third-party user are thirty percent
(30%) of published list price. Current upgrade fees are equal to the
published list price of the CPU group level to which the PRODUCT is
being transferred less the published list price of the CPU group level
from which the PRODUCT is being transferred. Fees are subject to change
with sixty (60) days written notice. There is no charge for Licensee's
internal transfer to a CPU in the same tier level or for Backup pursuant
to subsection C. below."
4.3 In subsection 4.C., change "backup Computer System" to "backup
computer system."
5. Section 5 (Payment)
5.1 Add the words "of receipt of invoice" at the end of the first
sentence.
5.2 Change "1-1/2 percent" to "1 percent".
<PAGE> 2
Sterling - Galileo ADDENDUM Page 2
- --------------------------------------------------------------------------------
5.3. In the third sentence, add the following after "payment terms," and
before "the entire principal": "Sterling shall provide Licensee written
notice thereof, and".
5.4 Add at the end of the section: "...provided Licensee was provided a
reasonable period (e.g., 30 days) to cure. Licensee has the right to
withhold payments which are reasonably disputed by Licensee in good
faith, and no interest shall apply with respect to such amounts until
thirty (30) days following resolution of the dispute."
6. Section 6 (Taxes). Add at the end of the section:
"Licensee shall have the right to dispute and use all legal means to
dispute tax where Licensee sees an undue tax assessment. Upon Licensee's
reasonable request, Sterling shall provide available back-up evidencing
such tax assessment."
7. Section 7 (Title and Non-Assignability)
7.1. Delete the first 12 words of the second sentence, which shall now
read as follows: "Licensee shall not transfer, sublicense, assign, rent,
lease, or deliver the PRODUCT (or any copy of the PRODUCT) or such
license to any third person or other entity without the prior written
consent of Sterling, such consent not to be unreasonably withheld,
unless the third party is an employee or agent of Licensee or pursuant
to Section 15 hereof."
7.2. Delete the beginning of the fourth sentence from "Any assignment
consented" to "extent applicable, and". The last sentence shall become:
"The assignee shall agree in writing to be bound by all the provisions
of this License Agreement as a Licensee and shall provide an executed
copy of such agreement to Sterling in a form reasonably acceptable to
Sterling."
8. Section 8 (Non-Disclosure and Non-Reproduction of Product Information)
8.1. After the words "Section 4.C. above" insert the words "and the
right for Licensee's employees and agents to have access to the PRODUCT
and documentation and except pursuant to Section 15 hereof."
8.2. In the fourth sentence, delete the word "all", resulting in
"Licensee agrees to take reasonable steps to ...."
8.3. Delete the entire sentence that begins "If the STERLING INFORMATION
will be provided or made available to the U.S. Government ...."
8.4. In the third sentence from the end, replace the word "shall" with
"may" causing the phrase to become "Sterling may be entitled to
equitable relief ...."
8.5 In the second sentence from the end, replace "five (5) days" with
"fifteen (15) days."
8.6. In the last sentence add the words "at Sterling's written request"
after "termination or cancellation".
9. Section 9 (Indemnity). In the first sentence, add "and its general partners"
after the first "Licensee". Also, add "and shall pay all costs of defense
(including reasonable attorneys' fees and expense)" after the second
"Licensee". Also in the first sentence, add "that Licensee has reasonable
access to or knowledge of" after the word "information".
<PAGE> 3
Sterling - Galileo ADDENDUM Page 3
10. Section 10 (Liability). This section shall read as follows:
FOR PURPOSES OF THIS SECTION 10, "LICENSEE" SHALL REFER TO LICENSEE, ITS
AGENTS, OR OWNERS, AND "STERLING" SHALL REFER TO STERLING, ITS
EMPLOYEES, AND ANY THIRD PARTY FROM WHOM STERLING RECEIVED MARKETING AND
LICENSING RIGHTS. EXCEPT AS EXPRESSLY SPECIFIED IN THIS SECTION OR
ELSEWHERE IN THIS LICENSE AGREEMENT, NEITHER STERLING OR LICENSEE SHALL
BE LIABLE ONE TO THE OTHER FOR ANY LOSS OR DAMAGE THAT MAY ARISE IN
CONNECTION WITH THE FURNISHING OF, PERFORMANCE OF, OR USE BY LICENSEE OF
THE PRODUCT. IN NO EVENT SHALL STERLING OR LICENSEE BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EXCEPT THAT THIS
SHALL NOT LIMIT EITHER PARTY FROM ITS OBLIGATIONS WITH RESPECT TO THE
OTHER'S INTELLECTUAL PROPERTY RIGHTS AS SET FORTH HEREIN. IN NO EVENT
SHALL LICENSEE OR STERLING BE ENTITLED TO ANY MONETARY DAMAGES AGAINST
THE OTHER IN EXCESS OF THE LICENSEE FEES PAID TO STERLING BY LICENSEE
HEREUNDER FOR THE PRODUCT TO WHICH LICENSEE'S CLAIM RELATES.
11. Section 11 (Warranty)
11.1 Delete the word "substantial" from the first sentence.
11.2 After the second sentence add the following: "If, during the
warranty period, Sterling does not use reasonable efforts to correct,
bypass, or replace, as soon as practicable, any defective item(s) in the
copy of the most current release of a PRODUCT distributed under this
License Agreement, and Licensee is in full compliance with its license
obligations, Licensee may at its option terminate the affected Schedule,
return all related STERLING INFORMATION to Sterling, and receive a full
refund of any fees and taxes paid to Sterling by Licensee with respect
to the affected PRODUCT. THE FOREGOING STATES LICENSEE'S SOLE REMEDY AND
THE ENTIRE LIABILITY OF STERLING WITH RESPECT TO WARRANTY DEFAULT."
12. Section 12 (Software Support)
12.1. Add at the end of the first paragraph: "If any change in the fee
is an increase to the fee, such increase shall not exceed ten percent
(10%) over the previous fee (net of any CPU upgrades)."
12.2. In subsection 12.A.(ii), add the following: "Current 'regular
working hours' for the purposes of Software Support are 24 hours per
day, 7 days per week. These hours are subject to change with thirty (30)
days notice, but in any event, shall not be reduced to less than 8 hours
per day (in customer's local time zone), Monday through Friday."
12.3. In subsection 12.A.(iii), delete the word "material" in the first
sentence. Change the last sentence to the following:
"Should Sterling find that a reported error is not in the PRODUCT or
that a reported error is the result of Licensee's negligence or
modification or improper use of the PRODUCT, it shall so inform Licensee
and may immediately cease any further problem resolution. If such a
determination is arrived at by Sterling only after it has expended
excessive time in the diagnostic period, Sterling reserves the right to
obtain its reasonable costs incurred at the charges specified on the
Sterling Fee Schedule in effect on the date Sterling incurs such
expense."
12.4. In subsection 12.B., add at the end of the paragraph: "Current
policy requires the payment of Software Support fees for the prior
twelve months plus the succeeding twelve months to reinstate
discontinued Software Support."
<PAGE> 4
Sterling - Galileo ADDENDUM Page 4
12.5. In subsection 12.C., change the last sentence to the following:
"However, Sterling reserves the right to cancel Software Support for the
immediately preceding release of the PRODUCT upon providing the Licensee
with no less than sixty (60) days' written notice after at least one (1)
year from the date of the new release."
13. Section 14 (Audit). Change this Section to the following:
14. CERTIFICATION. Upon Sterling's written request and not more often
than twice per twelve (12) months (unless Sterling reasonably believes
that a copying or non-disclosure violation has occurred in which case
Sterling may make a written request without regard to calendar
frequency), Licensee shall execute a certificate in a form reasonably
satisfactory to Sterling to the effect that Licensee (i) is not using
more copies of the Product than licensed hereunder, and (ii) has not
provided copies of the Product to any third parties in violation of this
Agreement. Such certificate shall be signed both by Licensee's President
and its General Counsel (or their delegates, though in the case of
delegation, at least one signature must be either the President or the
General Counsel).
14. Section 15 (NCL and Samples). Insert the following after the first sentence:
"Notwithstanding anything to the contrary herein, Licensee shall own all
such code and applications and accordingly, may provide access to third
parties, in the normal course of Licensee's business, to such code and
applications even though such access may involve remote terminal access
to the PRODUCTS. Licensee's provision of such access shall not violate
Sections 2 or 8 of this Agreement."
15. Section 16 (General)
15.1. Delete subsection 16.B.
15.2. Delete the first sentence of subsection 16.C.
15.3. Change subsection 16.D. to the following:
"The covenants and agreements of the parties under Sections 5 (Payment),
6 (Taxes), 8 (Non-Disclosure and Non-Reproduction of Product
Information), 9 (Indemnity) (except that Sterling shall have no
obligation to make a PRODUCT non-infringing if Licensee no longer
possesses a valid license), 10 (Liability), 15 (NCL and Samples) and 16
(General) hereof shall continue in full force and effect irrespective of
the termination, cancellation or expiration of this License Agreement or
any Schedule."
15.4. Add the following sentence to subsection 16.K.: "Sterling shall
promptly inform Licensee of any such assignment in writing and the
validity of such assignment shall be subject to the assumption by
Sterling's successor-in-interest of all obligations under this License
Agreement."
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their duly authorized representatives.
STERLING SOFTWARE (U.S. OF AMERICA), INC. GALILEO INTERNATIONAL
By: /s/ Maria Smith By: /s/ Barbara Johnson
---------------------------- -----------------------------
Maria Smith Barb Johnson
Title: President Title:
------------------------- --------------------------
Date Signed: Date Signed: Aug 23 1994
------------------- --------------------
<PAGE> 5
No._________
STERLING SOFTWARE (U.S. OF AMERICA), INC.
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT ("License Agreement"), entered into this 19th
day of August, 1994, (the "Effective Date"), by and between Galileo
International ("Licensee"), a Delaware general partnership conducting business
at 5350 South Valentia Way, Englewood, Colorado 80111, and Sterling Software
(U.S. of America), Inc. ("Sterling"), with its principal place of business at
1800 Alexander Bell Drive, Reston, Virginia 22091;
WITNESSETH:
WHEREAS, Sterling is the sole owner of all tangible and intangible rights and
title to, or has the rights to license, certain software products; and
WHEREAS, Licensee desires to obtain a license to use one or more computer
software products which Sterling has the rights to license (including programs,
available options and documentation);
NOW, THEREFORE, in consideration of the covenants and premises specified herein,
the parties hereto understand and agree as follows:
1. DEFINITIONS
A. The term "PRODUCT" shall mean and refer to any computer software
product or products of Sterling described on any Schedule and any attendant
documentation provided hereunder, and any new release or enhanced or modified
version of such PRODUCT(S) provided to Licensee by Sterling pursuant to Section
12 of this License Agreement.
B. The term "Product Schedule" shall mean and refer to the list of
licensed PRODUCTS and other related data attached hereto, executed by Sterling
and Licensee, and expressly made a part of this License Agreement.
C. The term "Computer System" shall mean and refer to a designated
Central Processing Unit (CPU) identified by its serial number, or as otherwise
designated, on the Product Schedule.
2. GRANT. Sterling hereby grants to Licensee a non-transferable and
non-exclusive license to use the PRODUCT for Licensee's internal business use
only, subject to the terms and conditions specified herein and the applicable
Product Schedule incorporated herein. Licensee shall not: (a) permit any third
party to use the PRODUCT, (b) use the PRODUCT in the operation of a service
bureau or (c) use the PRODUCT to process data for the benefit of any third
party. For purposes of this Section, "third party" shall include, without
limitation, subsidiaries and affiliates of Licensee. Conflicts in terms
between the Product Schedule and this License Agreement shall be resolved in
favor of the Product Schedule.
3. TERM. PRODUCT is licensed for the Term specified in the Product Schedule
subject to Licensee's payment of the fees set forth therein and Licensee's
strict compliance with the terms of this License Agreement.
4. SCOPE OF USE
A. Computer System. One copy of the PRODUCT must be licensed for each
Computer System upon which the PRODUCT is installed, regardless of the number
of Computer Systems installed at a physical location. Licensee shall be
responsible for installation of the PRODUCT on its Computer System(s).
B.1. Upgrades and Transfers. The PRODUCT shall be used only on the
Computer System designated on the Product Schedule. Licensee may change or
upgrade the Computer System on which the PRODUCT is installed by (i) providing
Sterling prior written notice specifying the model and serial number of the
Computer System on which the PRODUCT is installed and the model and serial
number of the intended replacement computer system or upgrade; (ii) obtaining
the prior written approval of Sterling regarding the requested transfer or
upgrade; and (iii) providing Sterling prior written confirmation that it will
remit the prevailing upgrade fees as set forth below in Section B.2, if
applicable. Upon the transfer of the PRODUCT to such replacement Computer
System, Licensee shall immediately cease use of the PRODUCT on the computer
system on which the PRODUCT was installed prior to such transfer.
<PAGE> 6
Sterling Software License Agreement Page 2
- --------------------------------------------------------------------------------
B.2. Upgrade and Transfer Fees. Any transfer of the PRODUCT from the
Computer System to another computer system or upgrade of the Computer System
will be subject to Sterling's prevailing terms and fees for transfers, and if
such transfer constitutes an upgrade based on Sterling's definition of CPU
group level, it shall be conditioned upon the payment of Sterling's prevailing
upgrade fees.
C. Backup. If the Computer System(s) on which Customer has installed
PRODUCT(s) are temporarily inoperable, Licensee may transfer the use of the
PRODUCT to a backup computer system until operability is restored to the
licensed Computer System(s). Licensee may make a copy of the software portion
of the PRODUCT strictly for backup purposes.
5. PAYMENT. Licensee's payment for fees hereunder are due and payable Net
Thirty (30) Days. Until paid in full, all amounts which are more than thirty
(30) days past due shall bear an additional charge of 1-1/2 percent per month,
less the sum, if any, in excess of applicable state law. In the event Licensee
becomes more than sixty (60) days in arrears on any payment due under
installment payment terms, the entire principal balance plus interest owing
shall immediately be due and payable. Sterling reserves the right to cancel any
license for non-payment.
6. TAXES. Licensee shall pay, or upon receipt of an invoice from Sterling, shall
reimburse Sterling for all sales, use, property, customs, excise or other taxes
(however designated and whether foreign or domestic) imposed on Licensee, or
required to be collected by Sterling, or imposed on the PRODUCT or the use
thereof, irrespective of whether included in any invoice sent to Licensee at any
time by Sterling; provided, however, that Licensee shall not be responsible for
any corporate income taxes or franchise fees imposed on Sterling. If Licensee is
a tax exempt organization, Licensee shall provide proof of such status to
Sterling, in a form acceptable to Sterling.
7. TITLE AND NON-ASSIGNABILITY. Title to the PRODUCT, all proprietary rights
therein and all materials supplied to Licensee under this Licensee Agreement
shall remain the sole property of Sterling and/or the party which was granted
marketing and licensing rights to Sterling for such PRODUCT. The license to use
the PRODUCT hereunder is personal to Licensee and Licensee shall not transfer,
sublicense, assign, rent, lease, or deliver the PRODUCT (or any copy of the
PRODUCT) or such license to any third person or other entity without the prior
written consent of Sterling. For purposes of this Section, "third party" shall
include, without limitation, subsidiaries and affiliates of Licensee. Any
assignment consented to by Sterling shall not release Licensee from its
obligations hereunder (except the prohibition against assignment) and, as a
condition precedent to such assignment, Licensee shall comply with the
provisions of Section 4 above, to the extent applicable, and the assignee shall
agree in writing to be bound by all the provisions of this License Agreement as
a Licensee and shall provide an executed copy of such agreement to Sterling in
the form supplied by Sterling.
8. NON-DISCLOSURE AND NON-REPRODUCTION OF PRODUCT INFORMATION. Licensee
understands and agrees that Sterling considers the PRODUCT and related
documentation (collectively "STERLING INFORMATION") to be the proprietary and
confidential information of Sterling and/or a third party which has granted
marketing and licensing rights to Sterling. Licensee agrees to maintain the
STERLING INFORMATION in strict confidence and, except for the right of Licensee
to make one (1) copy of the PRODUCT for backup purposes pursuant to Section 4.C
above, Licensee agrees not to disclose, duplicate or otherwise reproduce,
directly or indirectly, the STERLING INFORMATION in whole or in part. Licensee
agrees not to disassemble, reverse engineer, or reverse compile the PRODUCT in
whole or in part. Licensee agrees to take all reasonable steps to ensure that no
unauthorized persons shall have access to the STERLING INFORMATION and that all
authorized persons having access to the STERLING INFORMATION shall refrain from
any such disclosure, duplication or reproduction. Licensee agrees not to remove
any copyright notice or other proprietary markings from the STERLING
INFORMATION, and any copy thereof made by Licensee for backup purposes shall
contain the same copyright notice and proprietary markings contained on the copy
of the PRODUCT furnished by Sterling to Licensee hereunder. If the STERLING
INFORMATION will be provided or made available to the U.S. Government, any use,
duplication, or disclosure by the U.S. Government of the STERLING INFORMATION
shall be subject to the restrictions applicable to proprietary commercial
computer software set forth in subparagraph (c)(1)(ii) of The Rights in
Technical Data and Computer Software clause at DFARS 252.227-7013 or
subparagraphs (c)(1) and (2) of the Commercial Computer Software - Restricted
Rights clause at 48 CFR 52.227-19, as applicable. Licensee acknowledges that the
STERLING INFORMATION is unique and that Licensee's failure to comply with the
provisions of this Section 8 shall result in irreparable harm to Sterling and/or
any third party from whom Sterling has received marketing and licensing rights,
and that in the event of the breach or threatened breach by Licensee of its
obligations under this Section 7, Sterling shall be entitled to equitable relief
in the form of specific performance and/or an injunction for any such actual or
threatened breach, in addition to the exercise of any other remedies at law and
in equity. In the event that Licensee shall breach the terms of this Section 7,
and any such breach shall remain uncured for a period of five (5) days after the
receipt by Licensee of written notice from Sterling of such breach, Sterling
may, at its option, terminate all licenses granted to Licensee hereunder, in
which event Licensee shall have no further right to use any copies of
<PAGE> 7
Sterling Software License Agreement Page 3
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such PRODUCT. In the event of any such termination or cancellation, Licensee
shall, within ten (10) days after the effective date of any such termination or
cancellation, certify in writing to Sterling that such PRODUCT and all
materials relating thereto in the possession of Licensee have been destroyed.
9. INDEMNITY. Sterling shall indemnify and hold Licensee harmless from any
award of costs and damages against Licensee in any suit based on any claim that
the use of the PRODUCT by Licensee infringes any U.S. trademark, patent right,
copyright or trade secret, provided Sterling is promptly notified in writing of
any such suit or claim against Licensee and is given complete authority to
defend, compromise or settle same, and Licensee gives Sterling all available
information, reasonable assistance and authority to enable Sterling to do so.
If, as the result of any such claim of infringement, Licensee is enjoined from
using the PRODUCT, or if Sterling reasonably believes that the PRODUCT is
likely to become the subject of a claim of infringement, Sterling, at its
option and expense, may procure the right for Licensee to continue to use the
PRODUCT, or replace or modify the PRODUCT so as to make it non-infringing. If
neither of these two options is deemed reasonably practicable by Sterling,
Sterling may discontinue the license granted herein for such PRODUCT upon
thirty (30) days' written notice and refund to Licensee the unamortized
portion of the Software Support fee paid by Licensee plus (i) in the case of a
term license, the unamortized portion of the annual license fee paid by
Licensee, or (ii) in the case of a perpetual license, the unamortized portion
of the license fee paid by Licensee as amortized on a straight-line basis for a
five-year period from the Installation of the affected PRODUCT. Sterling shall
have no liability for any claim of infringement based upon the use of the
PRODUCT supplied by Sterling when such claim is based upon use of the PRODUCT
in combination with other programs or data not supplied by Sterling.
THE FOREGOING STATES LICENSEE'S SOLE REMEDY AND THE ENTIRE LIABILITY OF
STERLING WITH RESPECT TO INFRINGEMENTS OF ANY TRADEMARKS, COPYRIGHTS, PATENTS
OR TRADE SECRETS BY THE PRODUCT OR ANY PART THEREOF.
10. LIABILITY. EXCEPT AS EXPRESSLY SPECIFIED IN THIS SECTION OR ELSEWHERE IN
THIS LICENSE AGREEMENT, NEITHER STERLING NOR ANY THIRD PARTY FROM WHOM STERLING
RECEIVED MARKETING AND LICENSING RIGHTS SHALL BE LIABLE FOR ANY LOSS OR DAMAGE
THAT MAY ARISE IN CONNECTION WITH THE FURNISHING OF, PERFORMANCE OF OR USE BY
LICENSEE OF THE PRODUCT. IN NO EVENT SHALL STERLING OR ANY THIRD PARTY FROM WHOM
STERLING RECEIVES MARKETING AND LICENSING RIGHTS BE LIABLE FOR ANY INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL LICENSEE BE
ENTITLED TO ANY MONETARY DAMAGES AGAINST STERLING, OR ANY THIRD PARTY FROM WHOM
STERLING RECEIVED MARKETING AND LICENSING RIGHTS, IN EXCESS OF THE LICENSEE FEES
PAID TO STERLING BY LICENSEE HEREUNDER FOR THE PRODUCT TO WHICH LICENSEE'S CLAIM
RELATES.
11. WARRANTY. Sterling warrants that for a period of one (1) year following the
Effective Date, the PRODUCT shall function in substantial accordance with the
applicable technical manuals supplied to Licensee. Sterling's sole obligation
and liability under this warranty shall be to use reasonable efforts to correct,
bypass, or replace, as soon as practicable, any defective item(s) in the copy of
the most current release of the PRODUCT distributed under this License
Agreement, at Sterling's own cost and expense, provided written notice of such
defective item(s) is given to Sterling by Licensee during the warranty period.
This warranty shall not apply if: (a) the PRODUCT has not been used in
accordance with Sterling's instructions; (b) the PRODUCT has been altered,
modified or converted by Licensee without the prior written approval of
Sterling; (c) Licensee's operating system has been altered, modified or
converted without the prior written approval of Sterling; (d) any of Licensee's
equipment has malfunctioned; or (e) the PRODUCT, or a portion thereof, has
become inoperative due to any other causes within the control of Licensee.
THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
12. SOFTWARE SUPPORT. Provided Licensee has paid the license fees set forth in
the Product Schedule, Licensee shall receive Software Support for the PRODUCT
at no cost for a period of one (1) year following the Effective Date ("Initial
Support Period"). Unless Software Support is canceled pursuant to Section
12.B., Software Support shall automatically renew for successive annual terms
("Annual Support Period"). Sterling shall notify Licensee of any change in the
fee for the succeeding Annual Support Period at least sixty (60) days prior to
the expiration of the Initial Support Period or Annual Support Period, as
applicable.
A. Software Support for the PRODUCT shall include the following:
(i) PRODUCT updates which may result in new releases of the PRODUCT to
the extent any such releases are not priced separately by Sterling and
are generally included in the PRODUCT at the time of initial licensing.
Sterling
<PAGE> 8
Sterling Software License Agreement Page 4
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shall provide to Licensee one (1) copy of such new release of the
PRODUCT for each one (1) copy of the PRODUCT licensed, including
documentation.
(ii) Reasonable technical telephone consultation concerning the use of
the PRODUCT provided by Sterling during its regular working hours.
(iii) Sterling's reasonable efforts to correct or bypass any material
error reported by the Licensee for which Licensee provides an adequate
written description and documentation and which is determined by
Sterling to be in a portion of the PRODUCT unmodified by Licensee.
Should Sterling find that a reported error is not in the PRODUCT or that
a reported error is the result of Licensee's negligence or modification
or improper use of the PRODUCT, Licensee shall pay to Sterling
reasonable costs incurred by Sterling at the charges specified on the
Sterling Fee Schedule in effect on the date Sterling incurs such
expense.
B. Software Support may be canceled effective upon the expiration of
the Initial Support Period or Annual Support Period, as applicable, by
providing written notice to cancel Software Support no later than thirty (30)
days prior to such date. If Licensee cancels Software Support for the PRODUCT,
it may at a later time renew its subscription and receive the benefits of
Software Support if then currently and generally being made available by
Sterling for such PRODUCT, subject to the prevailing policies and reinstatement
fees of Sterling.
C. Software Support is available for the then-current release and the
immediately preceding release of the PRODUCT. However, Sterling reserves the
right to cancel Software Support for the immediately preceding release of the
PRODUCT upon providing the Licensee with no less than sixty (60) days' written
notice.
13. IMPLEMENTATION ASSISTANCE. Sterling may make available to Licensee
reasonable implementation assistance services for the PRODUCT. Implementation
assistance services by Sterling employees, consultants or agents shall be at
the charges specified on the Sterling Fee Schedule in effect on the date
Licensee orders implementation assistance.
14. AUDIT. Upon reasonable notice, Sterling shall have the right to enter
Licensee's facilities for the sole purpose of confirming the number of copies
of the PRODUCT installed and the computer system group size upon which the
PRODUCT is installed.
15. NCL AND SAMPLES. If the PRODUCT license hereunder contains access to
Network Control Language ("NCL"), Licensee shall be permitted, for its internal
purposes only, to the NCL to develop code and further applications in
accordance with the technical manuals supplied to Licensee with the PRODUCT.
However, any applications or code developed by Licensee using NCL shall not
have the benefit of any Sterling warranty, maintenance, support or indemnity
provisions contained herein, and any other terms, conditions, warranties or
indemnities that might otherwise be implied in relation to them are excluded.
Sterling shall have no liability or responsibility arising out of or related to
NCL code written by Licensee or NCL applications developed by Licensee. PRODUCT
tapes may also include examples of ways Licensee may use NCL ("Sample").
Licensee may use such Samples in accordance with this License Agreement;
however, Samples shall not be subject to any Sterling warranty, maintenance,
support or indemnity provisions, expressed or implied, and Sterling shall have
no liability with respect to Licensee's use of such Samples. Licensee
understands that it is receiving Samples "AS IS", and any use of Samples is at
Licensee's own risk. Except as provided in this Section, NCL and Samples shall
be part of the PRODUCT for purposes of this License Agreement.
16. GENERAL
A. This License Agreement and the Schedule(s) referred to herein
contain the entire understandings and agreements of Sterling and Licensee and
supersede all prior agreements or understandings, oral or written, relating to
the subject matter hereof. The terms of this License Agreement may not be
altered by any course of dealings between the parties. This License Agreement
may be amended only by a written instrument executed by Sterling and Licensee.
B. This License Agreement shall be construed and enforced in accordance
with the laws of the Commonwealth of Virginia, without giving effect to its
provisions governing conflicts of law.
C. Sterling shall be entitled to recover its costs and reasonable
attorney fees in the event any proceeding or lawsuit is brought by Sterling
against Licensee to collect amounts due under this Agreement. In the event a
dispute arising under this Agreement results in litigation, the non-prevailing
party shall pay the court costs and reasonable attorneys' fees of the
prevailing party.
D. The covenants and agreements of Licensee under Sections 5
(PAYMENT), 6 (TAXES), 8 (NON-DISCLOSURE AND NON-REPRODUCTION OF PRODUCT
INFORMATION), 9 (INDEMNITY), 10 (LIABILITY), 15 (NCL AND SAMPLES) and
16 (GENERAL) hereof shall continue in full force and effect irrespective of the
expiration of the warranty period specified herein or any termination,
cancellation or expiration of this License Agreement or any Schedule.
<PAGE> 9
Sterling Software License Agreement Page 5
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E. The remedies of Sterling set forth herein shall be in addition to,
and not in limitation of, any other rights or remedies to which Sterling is or
may be entitled at law or in equity.
F. All notices, requests and other communications hereunder shall be in
writing and shall be deemed to have been duly given if transmitted by facsimile
or mailed with postage thereon prepaid, addressed to the party for whom it is
intended at its respective address set forth in the first paragraph of this
Agreement. Such address may be changed by written notice to the other party.
G. This License Agreement shall not be deemed accepted by or binding
upon Sterling until executed by an authorized representative of Sterling.
H. The determination that any provision of this License Agreement is
invalid shall cause it to be deemed severed from the remainder of this License
Agreement and shall not cause the remainder of this License Agreement to be
invalid or unenforceable.
I. The waiver of any right or election of any remedy in one instance
shall not affect any rights or remedies in any other instance. A waiver shall
be effective only if stated in writing and signed by an authorized
representative of the waiving party.
J. Except for Licensee's payment obligations as set forth in this
License Agreement, neither party shall be liable for delays in any of its
performance hereunder due to causes beyond its reasonable control, including,
but not limited to, acts of God, strikes, or inability to timely obtain labor
or materials.
K. Sterling may assign this License Agreement or assign or subcontract
any of its rights and responsibilities under this License Agreement.
L. The parties hereto do not intend the term "license" to convey any
ownership, title or other similar rights to Licensee. In the event that any
court of law or government law or regulation interprets the term "license" with
regard to software use as conveying to Licensee any ownership, title or right
to the PRODUCTS, other than the right to use in accordance with this License
Agreement, then the term license, as used herein, shall be defined as rental
for a fixed period of time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by duly authorized parties as of the date first above written:
STERLING SOFTWARE GALILEO INTERNATIONAL
(U.S. OF AMERICA), INC. "Licensee"
By /s/ Maria Smith By /s/ Barbara Johnson
-------------------------------- --------------------------------
(Authorized Signature) (Authorized Signature)
Maria Smith Barb Johnson
- ----------------------------------- -----------------------------------
Name (print or type) Name (print or type)
Title President Title Purchasing
------------------------------ ------------------------------
Date Signed Date Signed Aug. 23, 1994
------------------------ ------------------------
<PAGE> 10
PREFERRED CUSTOMER PROGRAM (PCP) ADDENDUM
TO THE
STERLING SOFTWARE LICENSE AGREEMENT
FOR
GALILEO INTERNATIONAL PARTNERSHIP
This Preferred Customer Program Addendum ("PCP Addendum") by and
between Sterling Software (U.S. of America), Inc., a Delaware corporation
("Sterling"), and Galileo International of Englewood, Colorado, a Delaware
partnership (hereinafter "Licensee"), supplements and amends the Software
License Agreement dated August 19, 1994 ("License Agreement"), of which it is
made a part. Inconsistencies between the License Agreement and this PCP
Addendum shall be resolved in favor of the latter.
1. Effective Date. The Effective Date of this PCP Addendum is
September 30, 1995.
2. Term. The Term of this PCP Addendum is three (3) years commencing upon the
Effective Date.
3. Fee. Licensee shall pay a total License Fee of $ __________ in accordance
with the terms of payment set forth below in Section 7.
4. Scope. Licensee had previously licensed a number of software products from
Sterling and/or its corporate predecessors, as set forth in Exhibit A
(hereinafter referred to as "Existing Products"). It is the intent of the
parties that the License Agreement, this PCP Addendum, and referenced
attachments shall constitute a license contract that supplements and amends the
license(s) for the Existing Products. Payment of the License Fee in accordance
with the terms set forth below in Section 7, shall cover during the Term:
i. Software Support (maintenance) during the Term for the Existing
Products, and for any SOLVE product licenses acquired by Licensee during
the Term ("Additional Products") (cumulatively, the "Licensed
Products"); thereafter, the cost of Software Support (which is subject
to Section 12, Addendum to the Software License Agreement) shall
initially be determined by multiplying the then-prevailing license fee
times fifteen percent (15%), which represents a 25% discount off
Sterling's prevailing Software Support fee. Provided that Licensee
maintains an uninterrupted subscription to Software Support, beginning
with the fifth year following the Effective Date (i.e., the fourth
anniversary), the price of Software Support shall not increase at an
annual rate more than ten percent.
ii. Use of the Licensed Products in a processing environment at the
Installation Site of up to 1,000 MIPS; additional MIPS may be purchased
during the Term in accordance with the Variable Fee Schedule set forth
in Exhibit A, and thereafter at Sterling's then-current MIPS Pricing
Schedule.
<PAGE> 11
Sterling - Galileo PCP ADDENDUM Page 2
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iii. Additional Sterling products to compliment Licensee's existing
Netmaster suite are as follows:
SOLVE:Monitor
SOLVE:Operations for MVS
SOLVE:Attach for NetView
For the purposes of this PCP Addendum, these Sterling products shall be
deemed to be Existing Products.
iv. Upgrade fees for Licensee's transfer of the Licensed Products
from Licensee's current CPU to any higher level CPU at the Installation
Site (so long as the 1,000 MIPS cap referenced in (ii) above is
observed). Licensee shall continue to notify Sterling when an
upgrade is to be implemented, and provide Sterling with the requisite
installation information (computer system manufacturer, model and
serial numbers) when the upgrade is accomplished; and
v. 25% discount off prevailing List Price for the purchase of
Additional Products.
5. Use. Use of the Licensed Products shall be governed by the License
Agreement, the Product Schedule and this PCP Addendum. Licensee is responsible
for so informing all of its users, making such documents available to such
users, and ensuring their compliance with all the provisions thereof. Licensee
is responsible for the breach of the License Agreement and attachments by any
of its users.
6. Service Bureau. This PCP Addendum is not intended to and shall not
constitute a grant to use the Licensed Product(s) in a service bureau. However,
Licensee shall be permitted to provide data services, at no additional charge,
to Apollo Travel Services, an affiliated partnership of Licensee, using
Licensee's licensed Sterling (Operations Management Division) products. The
Provision of such services shall not cause the Licensed Products to be
transferred from Licensee's site.
7. Payment Terms. The License fee shall be paid in three installments of
each. The first installment is due and payable on the Effective Date, and the
second and third installments shall be due and payable on the first and second
anniversaries thereof, respectively.
8. Options Upon Expiration. Within one hundred twenty (120) days, but in any
event no less than thirty (30) days prior to the end of the Term, Licensee
shall notify Sterling of its decision regarding the following options.
A. Renew PCP for an additional three-year Term; or
B. Retain original license(s) for the Existing Product(s), except
that Existing Products described in Section 4(iii) above may be
licensed on a perpetual basis at a cost equal to
<PAGE> 12
Sterling - Galileo PDP ADDENDUM Page 3
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fifty percent (50%) of the then-prevailing license fee. Upgrades to
higher MIPS levels (or elevations in CPU from the tier upon which the
Licensed Products were installed on the Effective Date) shall be
permitted in accordance with the terms and conditions of the License
Agreement subject to payment of the applicable upgrade fees. Software
Support shall be provided at Licensee's request and its payment in
accordance with the Software Support Price Schedule set forth in Exhibit
A, subject in later years to the limitation on fee increase set forth in
Section 4.(i) above; or
C. Immediately terminate Licensee's license hereunder, in which case all
Licensed Products (and any copies thereof) shall be removed by Licensee
from the Licensee's site and either promptly returned to Sterling or
destroyed.
All other terms and conditions of the License Agreement not consistent
with or modified by this PCP Addendum shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this PCP Addendum to be
executed by duly authorized parties as of the Effective Date written above:
Sterling Software Galileo International Partnership
(U.S. of America), Inc. "Licensee"
By: /s/ Tom R. Hahn By: /s/ Lori M. Tobin
-------------------- ----------------------------
Name: Tom R. Hahn Name: Lori M. Tobin
------------------ --------------------------
Title: VP - Finance Title: U.S. Purchasing Manager
----------------- -------------------------
Date Signed: 9/29/95 Date Signed: 9/29/95
----------- -------------------
<PAGE> 13
AMENDMENT NO. 01
TO
AGREEMENT NO. G19400203-1
PURCHASE ORDER #US963048-EH
THIS AMENDMENT, made and entered into this 11th day of November, 1996, by and
between and GALILEO INTERNATIONAL PARTNERSHIP (Galileo), a Delaware general
partnership with offices at 9700 West Higgins Road, Rosemont, Illinois 60018
and Sterling Software, (U.S. of America), Inc., a Delaware partnership with its
principal place of business at 1800 Alexander Bell Drive, Reston, Virginia
22091.
1. Add the following Year 2000 compliance verbiage to the Software License
Schedule:
YEAR 2000 COMPLIANCE: The Seller warrants that, where applicable, the
Goods and/or Services supplied pursuant to this agreement will be year 2000
compliant.
"Year 2000 compliant" means that any software supplied hereunder or any
software utilized in connection with the provision of services supplied
hereunder will have the following capabilities:
1. Will manage and manipulate data involving dates, including single
century formulas and multi-century formulas, and will not cause an abnormally
ending scenario within the application or result in incorrect values generated
involving such dates; and
2. Will provide that all date related user interface functionalities
and all date related data interface functionalities will be clearly defined to
include the definition of century, i.e. where 2 digit year is provided clear
definition of the assumptions used for century shall be provided. For example,
years 60 through 99 assume century to be 19, while years 00 through 59 assume
century to be 20.
The Seller warrants that any software supplied hereunder and used by
the Buyer prior to, during or after the calendar year 2000 includes or shall
include, at no cost to Buyer, design and performance so Buyer shall not
experience software abending and/or invalid and/or incorrect results from
software in the operation of the business of the Buyer. The software design to
ensure Year 2000 compatibility shall include, but not be limited to, date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century.
END OF MODIFICATIONS
THE PARTIES SIGNING BELOW AGREE TO AND CONCUR WITH THE MODIFICATIONS MADE IN
THIS AMENDMENT NO. 01 TO AGREEMENT NO. US963048-EH. EXCEPT AS AMENDED HEREIN,
ALL OF THE TERMS AND CONDITIONS OF THE ORIGINAL AGREEMENT REMAIN IN FULL FORCE
AND EFFECT.
Sterling Software GALILEO INTERNATIONAL
/s/ Elaine P. Holm
- ------------------------------- -------------------------------
Signature Signature
Elaine P. Holm
- ------------------------------- -------------------------------
Name Name
Procurement Analyst
- ------------------------------- -------------------------------
Title Title
November 11, 1996
- ------------------------------- -------------------------------
Date Date
<PAGE> 1
Exhibit 10.36
GALILEO INTERNATIONAL
FLEXTRACK BENEFITS PLAN
(AS AMENDED AND RESTATED EFFECTIVE SEPTEMBER 16, 1993)
<PAGE> 2
SCHEDULE A
THE UNDERLYING PLANS:
CORE BENEFITS
Core Medical Plan
CIGNA Dental Health Plan
Employee Life Insurance
Short Term Disability
Retiree Medical Plan
OPTIONAL BENEFITS
Preferred Medical Plan
Premium Medical Plan
Health Maintenance Organization
Traditional Dental Plan
Vision Service Plan
Optional Employee Life Insurance
Dependent Life Insurance
Personal Accident Insurance
Long Term Disability
Health Care Expense Account
Dependent Care Expense Account
Savings and Investment Plan
* ELIGIBILITY FOR EACH PLAN COVERAGE IS DEFINED IN EACH
RESPECTIVE UNDERLYING PLAN DOCUMENT
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - ESTABLISHMENT AND PURPOSE.................................................................. 1
Section 1.1 Establishment................................................................. 1
Section 1.2 Purpose....................................................................... 1
Section 1.3 Applicability of Plan......................................................... 1
ARTICLE II - DEFINITIONS............................................................................... 2
Section 2.1 Definitions................................................................... 2
Section 2.2 Account....................................................................... 2
Section 2.3 Administrator................................................................. 2
Section 2.4 Base Pay...................................................................... 2
Section 2.5 Benefit(s).................................................................... 2
Section 2.6 Code ......................................................................... 2
Section 2.7 Company....................................................................... 2
Section 2.8 Core Benefit.................................................................. 3
Section 2.9 Dependent Care Expense Benefit................................................ 3
Section 2.10 Effective Date................................................................ 3
Section 2.11 Employee...................................................................... 3
Section 2.12 Employer...................................................................... 3
Section 2.13 FlexDollars................................................................... 3
Section 2.14 Health Care Expense Benefit................................................... 4
Section 2.15 Health Plan Coverage ......................................................... 4
Section 2.16 Highly Compensated Participant................................................ 4
Section 2.17 Optional Benefits............................................................. 4
Section 2.18 Participant .................................................................. 4
Section 2.19 Plan.......................................................................... 4
Section 2.20 Plan Year..................................................................... 4
Section 2.21 Required Contribution......................................................... 4
Section 2.22 Underlying Plan(s)............................................................ 5
Section 2.23 Gender and Number............................................................. 5
Section 2.24 Headings...................................................................... 5
ARTICLE III - PARTICIPATION............................................................................ 6
Section 3.1 Eligibility to Participate.................................................... 6
Section 3.2 Duration of Participation..................................................... 6
Section 3.3 Reinstatement of Former Participant........................................... 6
Section 3.4 Continuation of Participation................................................. 7
</TABLE>
<PAGE> 4
ii
<TABLE>
<S> <C>
ARTICLE IV - BENEFITS.................................................................................. 8
Section 4.1 FlexDollar Allowance.......................................................... 8
Section 4.2 Base Pay Reduction............................................................ 8
Section 4.3 Election of Benefit Choices................................................... 8
ARTICLE V - ENROLLMENT PROCESS......................................................................... 9
Section 5.1 Initial Enrollment............................................................ 9
Section 5.2 Enrollment for Subsequent Plan Years.......................................... 9
Section 5.3 Mid-Year Enrollment........................................................... 10
Section 5.4 Modifying and Revoking Elections.............................................. 10
Section 5.5 Adjustment of Election or Account............................................. 12
Section 5.6 Maximum Payroll Reduction Election............................................ 12
ARTICLE VI - HEALTH CARE EXPENSE PLAN.................................................................. 13
Section 6.1 Name and Purpose of Plan...................................................... 13
Section 6.2 Effective Date................................................................ 13
Section 6.3 Participation................................................................. 13
Section 6.4 Cessation of Participation.................................................... 13
Section 6.5 Continuation of Coverage...................................................... 13
Section 6.6 Reinstatement of Former Participant........................................... 14
Section 6.7 Election Procedure............................................................ 14
Section 6.8 Maximum Health Care Expense
Reimbursements................................................................ 14
Section 6.9 Reimbursable Expenses......................................................... 14
Section 6.10 Claim and Payment Procedures.................................................. 15
Section 6.11 Credit Balance at End of Plan Year............................................ 16
ARTICLE VII - DEPENDENT CARE EXPENSE PLAN.............................................................. 17
Section 7.1 Name and Purpose of Plan...................................................... 17
Section 7.2 Effective Date................................................................ 17
Section 7.3 Participation................................................................. 17
Section 7.4 Cessation of Participation.................................................... 17
Section 7.5 Continuation of Coverage...................................................... 17
Section 7.6 Reinstatement of Former Participant........................................... 18
Section 7.7 Election Procedure............................................................ 18
Section 7.8 Maximum Dependent Care Assistance............................................. 18
Section 7.9 Dependent Care Assistance Benefits............................................ 18
Section 7.10 Earned Income Limitation...................................................... 20
Section 7.11 Nondiscrimination Rules....................................................... 20
Section 7.12 Claim and Payment Procedures.................................................. 21
</TABLE>
<PAGE> 5
iii
<TABLE>
<S> <C>
Section 7.13 Credit Balance at End of Plan Year............................................ 21
ARTICLE VIII - ACCOUNTS................................................................................ 22
Section 8.1 Maintenance of Accounts....................................................... 22
Section 8.2 Rights of Participants........................................................ 22
Section 8.3 Forfeitures................................................................... 22
Section 8.4 Incapacity.................................................................... 23
ARTICLE IX - ADMINISTRATION............................................................................ 24
Section 9.1 Administrator................................................................. 24
Section 9.2 Powers and Authority of Administrator......................................... 24
Section 9.3 Records and Reports........................................................... 25
Section 9.4 Reliance on Information....................................................... 25
Section 9.5 Indemnification of Administrator.............................................. 25
ARTICLE X - AMENDMENT AND TERMINATION.................................................................. 26
Section 10.1 Amendment of the Plan......................................................... 26
Section 10.2 Termination of the Plan....................................................... 26
ARTICLE XI - MISCELLANEOUS PROVISIONS.................................................................. 27
Section 11.1 Limitation of Rights.......................................................... 27
Section 11.2 Rights to Employer Assets..................................................... 27
Section 11.3 No Assignments................................................................ 27
Section 11.4 Severability.................................................................. 27
Section 11.5 No Guarantee of Tax Consequences.............................................. 27
Section 11.6 Governing Law................................................................. 28
</TABLE>
<PAGE> 6
GALILEO INTERNATIONAL
FLEXTRACK BENEFITS PLAN
(As Amended and Restated Effective September 16, 1993
ARTICLE I
ESTABLISHMENT AND PURPOSE
Section 1.1 Establishment. Galileo international Partnership (formerly
known as Covia Partnership) (the "Company") previously established the Covia
Partnership FlexTrack Benefits Plan (now known as the Galileo International
FlexTrack Benefits Plan) (the "Plan") effective as of January 1, 1987 for
eligible employees of the Company and its affiliates that adopt the Plan with
the consent of the Company. The Company hereby amends and restates the Plan, as
set forth in this document, effective as of September 16, 1993.
Section 1.2 Purpose. The purpose of the Plan is to offer eligible
employees an opportunity to:
(i) obtain certain health, dental, vision, employee group life
insurance, short-term disability and retirement plan coverages;
(ii) to fund certain unreimbursed health care expenses; and
(iii) to fund certain qualifying dependent care expenses
with pre-tax dollars under a payroll reduction arrangement and with FlexDollars
provided by the Employer. The Plan also offers eligible employees the
opportunity to obtain dependent life insurance and long-term disability plan
coverage with after-tax dollars.
This Plan is intended to qualify as a "cafeteria plan" under Section 125
of the Internal Revenue Code of 1986, as amended (the "Code"); as a "self-funded
medical expense reimbursement plan" under Section 105(h) of the Code; and as a
"dependent care assistance program" under Section 129 of the Code. The Plan is
to be interpreted in a manner consistent with the requirements of Sections 105,
125 and 129, and any other applicable provisions of the Code, and the
regulations thereunder.
Section 1.3 Applicability of Plan. The Plan shall apply only to eligible
individuals who are employees of an Employer on or after September 16, 1993.
<PAGE> 7
2
ARTICLE II
DEFINITIONS
Section 2.1 Definitions. Whenever used in the Plan, the following
words and phrases shall have the respective meanings specified Section unless
the context plainly requires a different meaning, and when the defined meaning
is intended the term shall be capitalized in the Plan.
Section 2.2 Account means a bookkeeping record maintained with respect
to each Participant that reflects from time to time the amounts attributable to
payroll reduction contributions made on the Participant's behalf under the Plan
and the amount of FlexDollars awarded to the Participant by his or her Employer
that are available (i) to pay the Participant's share of the cost of certain
Benefits funded through this Plan, or (ii) to reimburse the Participant for
certain expenses that are covered as Benefits funded through this Plan, subject
to any forfeitures incurred under this Plan. A separate Account shall be
maintained with respect to each type of Benefit elected by the Participant from
time to time under this Plan.
Section 2.3 Administrator means the committee of one or more persons
(which may include employees, officers or directors of the Company) as may be
designated from time to time by the Board of Supervisors of the Company to
supervise the administration of the Plan in accordance with Article IX. The
Administrator shall be the "named fiduciary" of the Plan, within the meaning of
29 U.S.C. S 1102(a).
Section 2.4 Base Pay means a Participant's W-2 earnings received from
the Employer for personal services rendered as an Employee of such entity with
respect to the period during which the Employee is a Participant of this Plan
for any Plan Year; excluding imputed income, unreimbursed expenses and any
other forms of cash remuneration or fringe benefits. For purposes of this Plan,
Base Pay shall include amounts which the Participant elects as a reduction of
salary or wages under this Plan and any plan of deferred compensation
maintained by the Employer.
Section 2.5 Benefit(s) means the type(s) of benefit coverages from
time to time available to be purchased or provided through this Plan, which may
consist of Core Benefits, Optional Benefits (including Health Care Expense
Benefits and Dependent Care Expense Benefits) and cash.
Section 2.6 Code means the Internal Revenue Code of 1986, as amended
from time to time, and applicable regulations issued and effective thereunder.
Section 2.7 Company means Galileo International Partnership, the
sponsoring Employer of this Plan.
<PAGE> 8
3
Section 2.8 Core Benefit means a Benefit by the Company under the Plan
at no cost to the Employee who elects the Benefit.
Section 2.9 Dependent Care Expense Benefit means the Plan Benefit
offered for reimbursement of dependent care expenses as provided in Article VII.
Section 2.10 Effective Date means September 16, 1993, the date on
which this amended and restated plan become effective.
Section 2.11 Employee means any person (i) who is an active full-time
or part-time employee of an Employer on the regular payroll of the Employer;
(ii) who is eligible for one or more of the Benefits and (iii) who is not on an
unpaid leave of absence from the Employer; excluding any independent
contractors, any seasonal or temporary employee and any employee of an Employer
whose terms and conditions of employment are governed by a collective
bargaining agreement between the Employer and employee representatives if
benefits of the type offered under this Plan were the subject of good faith
bargaining, unless such agreement specifies that covered employees are eligible
for this Plan. Notwithstanding the preceding sentence, an Employee who is on an
unpaid leave of absence under the Family and Medical Leave Act shall not be
excluded from participation in any one or more of the Benefits offered under
this Plan. A regular part-time employee is an employee who is regularly
scheduled to work at least twenty (20) hours per week for the Employer.
Section 2.12 Employer means the Company and
(i) any corporation or other entity which is a member of a
controlled or affiliated service group of businesses
(within the meaning of Sections 414(b), (c) or (m) of the
Code) of which the Company is also a member;
(ii) any other entity required to be aggregated with the
Company pursuant to Section 414(o) of the Code; or
(iii) any other entity designated by the Company;
provided that any such corporation or other entity adopts the Plan with the
written consent of the Company, and offers the Plan to its eligible employees.
Section 2.13 FlexDollars means an annual amount, as determined in the
sole discretion of the Company before the start of each Plan Year,
(i) that is designated by the Company for each Employee who
elects to participate in the Plan; and
(ii) that each such Employee can (a) apply toward the cost of
Optional Benefits
<PAGE> 9
4
elected by the Employee under the Plan, (b) elect to have
credited to his or her Health Care Expense Account or
Dependent Care Expense Account in accordance with Article
VI and/or VII or (c) receive as cash in equal installments
throughout the Plan Year.
FlexDollars that are applied toward the cost of Optional Benefits shall
be considered Employer contributions to the Plan. Notwithstanding anything
contained herein to the contrary, FlexDollars shall not be applied toward the
cost of Optional Benefits that provide long-term disability coverage or
dependent life insurance coverage.
Section 2.14 Health Care Expense Benefit means the Benefit offered for
reimbursement of health care expenses as provided in Article VI.
Section 2.15 Health Plan Coverage means the election by an Employee of
a Core Benefit or Optional Benefit under the Plan, through which election the
Employee obtains group health plan coverage.
Section 2.16 Highly Compensated Participant. A Participant who is:
(i) an officer; or
(ii) a shareholder owning more than five percent (5%) of the
voting power or value of all classes of stock of the
Employer; or
(iii) highly compensated (as determined on a facts and
circumstances basis); or
(iv) a spouse or dependent of a person described in (i), (ii)
or (iii) above.
Section 2.17 Optional Benefits means a Benefit offered by the Company
under the Plan, for which an Employee who elects the Benefit pays the entire
cost through Base Pay reductions or with FlexDollars.
Section 2.18 Participant means any Employee who participates in the
Plan in accordance with Article III.
Section 2.19 Plan means Galileo international FlexTrack Benefits Plan,
as set forth herein, together with any and all amendments and supplements
hereto.
Section 2.20 Plan Year means the calendar year, consisting of the
twelve (12) consecutive month period commencing on January 1 and ending on the
next following December 31.
Section 2.21 Required Contribution means the cost of Dependent Care
Expense Benefit and/or Health Care Expense Benefit elected by the Participant
for the Plan Year under Article VI and/or VII for the Plan Year, divided by
twelve (12) (or, if greater than twelve
<PAGE> 10
5
(12), the number of regular compensation payments, if any, currently received
by the Participant per year).
Section 2.22 Underlying Plan(s) means the plan document(s) that govern
the benefit rights of eligible employees with respect to each of the Benefits
(other than cash). In this regard, the Health Care Expense Plan set forth in
Article VI and Dependent Care Expense Plan set forth in Article VII in this Plan
shall be considered separate Underlying Plans.
Section 2.23 Gender and Number. Except as otherwise clearly indicated
by the context, whenever used in the Plan a masculine pronoun shall be deemed
to include the feminine and neuter genders, words used in the singular shall be
deemed to include the plural and words used in the plural shall be deemed to
include the singular, as circumstances make such meanings applicable.
Section 2.24 Headings. All headings and captions used in this Plan are
used as a matter of convenience and for reference only, and in no way shall
they be considered in determining the scope or intent of the Plan or in
interpreting or construing any Plan provisions.
<PAGE> 11
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ARTICLE III
PARTICIPATION
Section 3.1 Eligibility to Participate. Each Employee shall become
eligible to become a Participant as of the latest of: (i) the Effective Date;
(ii) the date on which he or she becomes an Employee, and (iii) the date on
which the Employee executes a valid election to participate. Nothing in this
Plan shall be construed to confer on any Employee eligibility for a Benefit
provided through any of the Underlying Plans before such Employee actually
becomes eligible for such Benefit in accordance with the terms of the
applicable Underlying Plan.
Section 3.2 Duration of Participation. An Employee who is eligible to
participate in the Plan will become a Participant as of the first day for which
a valid election to participate is in effect under the Plan for that Employee,
in accordance with Article V. A Participant remains a Participant under the
Plan until the earliest of:
(i) the date the Participant ceases to be an Employee;
(ii) the last day for which the Participant's election to participate
remains in effect;
(iii) the date on which the Participant ceases to be eligible for
each and every Benefit that he or she has elected to fund
through this Plan;
(iv) the date on which this Plan terminates; subject to the
requirement that a Participant shall continue to be a Participant
in the Health Care Expense Plan and the Dependent Care Expense
Plan, in accordance with Section 3.4, for the remainder of the
Plan Year in which participation in the Plan has otherwise
terminated due to a termination of employment with the Employer;
(v) the date on which the Participant fails to make any Required
Contributions under the Plan.
A Participant who terminates employment as an Employee may revoke his
or her Benefit elections and terminate his or her eligibility for Benefits with
respect to expenses incurred after the date of such employment termination. If
he or she revokes his or her Benefit elections and later in the same Plan Year
resumes employment as an Employee, he or she shall be prohibited from
participating in the Plan for the remainder of that Plan Year.
Section 3.3 Reinstatement of Former Participant. A reemployed former
Participant shall be eligible to resume participation in the Plan on the same
basis as any newly hired Employee; subject, however, to any applicable limits
under Section 3.1 and Article V.
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Section 3.4 Continuation of Participation. Notwithstanding anything
herein to the contrary, a Participant who terminates employment with the
Employer shall be permitted to contribute monthly to the Plan cash equal to the
amount of his or her most recent monthly Base Pay reduction election for the
Health Care Expense Plan and/or the Dependent Care Expense Plan and thereby
continue to participate for the balance of the Plan Year in which his or her
employment terminated, in the case of the Dependent Care Expense Plan, and for
the balance of the continuation period required by the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"), in the case of the Health Care Expense
Plan. Such Health Care Expense Plan contributions shall be made only in
accordance with the COBRA provisions of Article IX, and only if such provisions
are applicable to the affected Participant.
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ARTICLE IV
BENEFITS
Section 4.1 FlexDollar Allowance. For each Plan Year, each Participant
shall be awarded FlexDollars in an amount determined by the Employer prior to
the first day of the Plan Year; provided that the Administrator, in its
discretion, may reduce the FlexDollars awarded to Highly Compensated
Participants for any Plan Year if it determines that such reduction is
necessary to avoid discrimination prohibited by any applicable provisions of
the Code. Any such reduction shall be made on a pro rata basis unless a
sufficient number of Highly Compensated Participants voluntarily agree to such
individual reductions as will make a pro rata reduction unnecessary.
FlexDollars can be (i) allocated to the Optional Benefits, (ii) allocated to
the Health Care Expense Account, (iii) allocated to the Dependent Care Expense
Account or (iv) distributed to the Employee as a cash benefit.
Section 4.2 Base Pay Reduction. An eligible Employee may choose under
this Plan to receive his or her unreduced Base Pay for any Plan Year in cash or
to have a portion of it applied by the Employer on a pre-tax basis toward any
one or more of the Benefits for which the Employee is eligible for the Plan
Year.
Section 4.3 Election of Benefit Choices. An eligible Employee may
elect under this Plan to obtain coverage under the Benefits for which he or she
is eligible in accordance with the procedures described in Articles V, VI and
VII.
For every Benefit, except cash, that the Participant elects, the
Participant's Base Pay reduction amounts shall be available to cover the
Participant's share of the cost of such elected benefits or coverage as
determined by the Employer or otherwise determined in accordance with the
applicable Underlying Plan. For purposes of the Health Care Expense Plan and
the Dependent Care Expense Plan, the Participant's cost of coverage is the
amount of FlexDollar allowance and Base Pay reduction he or she elects to
allocate towards that respective Plan for the Plan Year, and no other amount
shall be contributed to those Plans by the Employer.
While a Participant's election to receive and pay for certain benefits
may be made under this Plan, the benefits will be provided not by this Plan but
by the applicable Underlying Plan. The types and amount of benefits available
under the Underlying Plans, the requirements for participating in the
Underlying Plans and the other terms and conditions of coverage and benefits
are as set forth form time to time in the respective underlying Plan documents.
The benefit descriptions in such Underlying Plan documents, as in effect from
time to time, are hereby incorporated by reference into this Plan. Solely for
purposes of more fully describing the Benefits available through this Plan, the
benefit descriptions in such plans and contracts, as in effect from time to
time, are hereby incorporated by this reference into this Plan.
<PAGE> 14
9
ARTICLE V
ENROLLMENT PROCESS
Section 5.1 Initial Enrollment. Prior to the first Plan Year for which
an Employee is eligible to participate in the Plan, such Employee shall be
furnished with an enrollment form and given the opportunity to elect to
participate in the Plan for such Plan Year. A current description of the
Benefits for which the Employee would be eligible if he or she elected to
participate shall also be furnished to him, in the form of the Summary Plan
Description for this Plan or in any other form selected by the Administrator,
prior to or at the start of the election period.
The enrollment form must be completed, signed and returned to the
Administrator during the election period in order to be valid. The election
period shall be a period of not less than two (2) weeks during the final
calendar quarter of the Plan Year which precedes the Plan Year for which the
enrollment form will take effect, and shall be designated by the Administrator
in advance from year to year.
On the enrollment form, the Employee shall elect either to participate
in the Plan for the next Plan Year or to waive participation in the Plan for
that Plan Year. The failure of an Employee to complete or return his or her
enrollment form during the enrollment period shall be deemed an automatic
waiver of his or her right to participate in the Plan for that Plan Year,
subject to any rights he or she may have to later elect to participate for a
portion of that Plan Year under Section 5.4.
If participation is elected, the Employee must designate on his or her
enrollment form the Base Pay reduction amounts and FlexDollars for each pay
period to be allocated toward his or her Benefits for the applicable Plan Year.
The enrollment form shall take effect as of the first day of the first
Plan Year and shall remain in effect throughout that Plan Year unless modified
or revoked in accordance with Section 5.4.
Section 5.2 Enrollment for Subsequent Plan Years. Each Participant's
enrollment shall be valid for one Plan Year and must be renewed before the
start of each new Plan Year, in such manner as shall be determined, by the
Administrator in its sole discretion, including a telephone enrollment
system.
Any Employee who is eligible to participate but who waived or revoked
participation previously, may commence participation in the Plan as of the
start of a subsequent Plan Year by filing with the Administrator, within thirty
(30) days before the start of such Plan Year, a completed and signed enrollment
form by which he or she elects (in the manner provided in Section 5.1) to
participate for such Plan Year.
<PAGE> 15
10
<PAGE> 16
11
Section 5.3 Mid-Year Enrollment. Any individual who was not eligible
to participate as of the first day of a Plan Year but who becomes eligible to
participate in the Plan during that Plan Year shall be given the opportunity to
elect to participate in the Plan by completing, signing and returning to the
Administrator an enrollment form (after receiving the written description of
the Benefits for which he or she is eligible and in the manner provided in
Section 5.1) before or during the first thirty (30) days of his or her initial
period of eligibility to participate in the Plan for such Plan Year. Failure of
the individual to file the completed and signed enrollment form within that
time shall constitute a waiver by the individual of his or her right to
participate in the Plan for any portion of such Plan Year, subject to Section
5.4.
Mid-year enrollment under this Section shall be effective with respect
to claims incurred on or after the date the individual first becomes eligible
to participate in the Plan for such Plan Year, if he or she has completed and
filed the enrollment form before the eligibility date, but his or her Base Pay
reduction election shall not take effect until the first payroll period
beginning on or after the date his or her enrollment form is filed with the
Administrator. If a mid-year enrollee files his or her completed enrollment
form after becoming eligible, then both Base Pay reductions and claims
eligibility shall commence on the start of the calendar month on or after the
date the enrollment form was filed with the Administrator.
Section 5.4 Modifying and Revoking Elections.
(a) Change in Family Status. Any Participant, as well as any Employee
who would be eligible to participate had he or she not waived his or her right
to participate for the Plan Year, shall be permitted to modify or revoke his or
her previous waiver or election for the Plan Year if a change occurs in his or
her family status.
For this purpose, a "change in family status" includes:
(i) the marriage or divorce of the Employee;
(ii) the death of the Employee's spouse or a dependent of the Employee;
(iii) the birth, foster placement, temporary adoptive custody or
adoption of a dependent child;
(iv) the commencement or termination of employment of the Employee's
spouse;
(v) the switching from part-time to full-time or from full-time to
part-time employment status by the Employee or his or her spouse;
(vi) the taking of an unpaid leave of absence by the Employee or his or
her spouse;
<PAGE> 17
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(vii) a significant change in the health coverage of the Employee or
his or her spouse attributable to the spouse's employment; or
(viii) any other event recognized for this purpose under applicable
law and regulations.
An election or waiver may be modified or revoked due to a change in family
status under this Section only if: (i) such modification or revocation is made
in writing on a new enrollment form, (ii) the new enrollment form is filed with
the Administrator within thirty (30) days after such change, and (iii) the new
enrollment form reflects elections which are necessary and appropriate as a
result of the particular change in family status that occurred. The coverage
elections made on the new enrollment form shall take effect as of the date the
change in family status occurs, but any pre-tax salary reductions reflecting
the new enrollment election shall not begin to be made before the first payroll
period commencing on or after the later of the date the enrollment form is
filed or the date such change in family status occurs.
(b) Change in Cost or Level of Health Plan Coverage. If health care
coverage is provided by an independent, third-party provider, a Participant
shall be permitted to modify or revoke his or her Health Plan Coverage
elections for the Plan Year if the following occurs to him during the Plan Year:
(i) his or her cost of coverage increases by a significant amount;
or
(ii) the health care coverage under a health plan is significantly
curtailed or ceases during a period.
The right to modify or revoke elections mid-year due to an increase in the
cost of coverage under (i) or (ii) above shall apply only where the affected
Benefits are provided by a third party unrelated to the Employer and such third
party determines the premium cost or level of coverage. If, with respect to a
Benefit subject to (i) or (ii) above, the cost of Health Plan Coverage to a
Participant increases or decreases by less than a significant amount, then the
Participant's designated level of Base Pay reduction contributions to his or
her Account for the affected Benefits shall automatically increase or decrease
by a corresponding amount and any portion of his or her Base Pay the
Participant has designated to be received as cash shall be reciprocally
adjusted by the same amount.
(c) Election changes under this Section shall be made by the
individual filing a new enrollment form with the Administrator not later than
thirty (30) days (or such longer time as the Administrator may allow) after the
date the triggering event described in (a) or (b) above occurs. The elections
made on the new enrollment form shall take effect as of the first payroll
period beginning on or after the later of the date the form is filed or the
date such triggering event occurs.
<PAGE> 18
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Section 5.5 Adjustment of Election or Account. (a) The Administrator
has the right to adjust any Participant's Base Pay reduction election made
under this Plan at any time and from time to time, as well as to adjust any
Participant's Account, to ensure that the Plan complies with any applicable
nondiscrimination requirements with respect to Code Sections 105, 125, and 129
and to rectify erroneous Base Pay reductions and credits not otherwise
corrected under Sections 6.1 or 7.11. The Administrator may periodically
conduct such testing as it deems necessary with respect to such
nondiscrimination requirements.
(b) The Plan shall not provide any qualified benefits as defined in
Section 125(f) of the Code in a Plan Year to key employees as defined in
Section 416(i)(1) of the Code in excess of twenty-five percent (25%) of the
aggregate of such benefits provided to all Employees under the Plan. For
purposes of the preceding sentence, qualified benefits shall not include
benefits which (without regard to this paragraph) are includable in the gross
income.
(c) The Company will take whatever steps are necessary to prevent the
Plan from discriminating in favor of Highly Compensated Participants.
Section 5.6 Maximum Payroll Reduction Election. No Participant shall
be permitted to elect a Base Pay reduction under this Plan for any Plan Year in
excess of the maximum aggregate cost to any Employee of the broadest coverage
available for such Plan Year with respect to every Benefit other than cash. The
maximum cost for Benefits provided by the Plan shall be determined, in
accordance with this Section, from time to time by the Administrator.
No cash benefit elected from any portion of a Participant's Base Pay
reduction election under Article IV shall exceed the Participant's Base Pay for
the Plan Year. Except for FlexDollars that an Employee receives as cash, no
election shall cause an increase in the Participant's Base Pay for the Plan
Year. The only source of Benefit payments under the Plan shall be:
(i) Base Pay reductions elected under Sections 5.1 through 5.3;
(ii) FlexDollars applied by the Participant toward the cost of Optional
Benefits; and
(iii) Any Required Contributions made under Article VI and VII.
The Employer shall not be required to make any contributions toward
Benefits except under Sections 5.1 through 5.4, nor shall the Employer be
liable for any Benefits in excess of amounts elected under those Sections,
subject also to forfeitures arising under the Plan.
<PAGE> 19
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ARTICLE VI
HEALTH CARE EXPENSE PLAN
Section 6.1 Name and Purpose of Plan. The Health Care Expense Plan set
forth principally in this Article VI is intended to be a "self-insured medical
reimbursement plan" within the meaning of Section l05(h) of the Code. The
Company and the Administrator will take whatever steps, as Plan sponsor and
fiduciary respectively, as are necessary to maintain and operate the Health
Care Expense Plan as a "nondiscriminatory" plan within the meaning of Section
l05(h) of the Code. The other Articles of the Plan document (except Article
VII) shall apply, as needed, to complete the terms of the Health Care Expense
Plan.
Section 6.2 Effective Date. The Effective Date of the Health Care
Expense Plan is September 16, 1993.
Section 6.3 Participation. Each eligible Employee will become a
Participant upon the execution of a valid election and Base Pay reduction
agreement.
Section 6.4 Cessation of Participation. A Participant will cease to be
a Participant in this Health Care Expense Plan as of the earliest of:
(i) the date on which the Health Care Expense Plan terminates
subject to the requirement that a Participant shall continue to
be a Participant in the Health Care Expense Plan, in accordance
with Section 3.4, for the remainder of the Plan year in which
participation in the Plan has otherwise terminated due to
termination of employment with the Employer;
(ii) the date on which the Participant's election to receive health
care benefits expires or is terminated under this Health Care
Expense Plan;
(iii) the date on which the Participant ceases to be eligible for the
Health Care Expense Plan;
(iv) the date on which the Participant ceases to be an Employee; or
(v) the date on which the Participant fails to make any Required
Contributions to the Health Care Expense Plan under Section 3.4
or 6.5 of the Plan.
Section 6.5 Continuation of Coverage. If and to the extent required by
law (including without limitation, Sections 105, 125, and 4980B and regulations
thereunder) in the
<PAGE> 20
15
event a Participant ceases to be an Employee and undertakes to pay Required
Contributions to the Employer on a monthly basis (or within such other time
limit as maybe provided for by law), coverage under the Health Care Expense
Plan shall continue so long as such Required Contributions are paid, but not
beyond the end of the period for which such coverage is required by law. In
addition, the former Participant shall be treated as a Participant under the
Plan to such extent as is required by law, and shall be entitled to
reimbursement for qualifying medical expenses incurred during such period of
continued coverage. Alternatively, a Participant who terminates employment as
an Employee may revoke his or her Benefit elections and terminate his or her
eligibility for Benefit with respect to expenses incurred after the date of
such employment termination. If he or she revokes his or her Benefit elections
and later in the same Plan Year resumes employment as an Employee, he or she
shall be prohibited from participating in the Plan for the remainder of that
Plan Year. If a Participant neither elects to revoke his or her elections or
continue contributions for Health Care Expense Benefits under the Health Care
Expense Plan, he or she will continue to be eligible to claim reimbursement for
expenses incurred prior to his or her ceasing to be an Employee to the same
extent as other Participants, but he or she shall not be eligible to claim
reimbursement for expenses incurred after his or her termination of employment
as an Employee.
Section 6.6 Reinstatement of Former Participant. Subject to Section
6.5, a former Employee who is rehired as an Employee by an Employer shall be
eligible to participate in the Health Care Expense Plan on the same basis as a
newly hired Employee.
Section 6.7 Election Procedure. A Participant may elect to participate
in this Plan by filing an election and Base Pay reduction agreement in
accordance with the procedures established under the Plan. Such an election to
participate shall be irrevocable during the Plan Year, subject to the
Participant's termination of employment or a change in family status, as
provided in Section 5.4 of the Plan.
Section 6.8 Maximum Health Care Expense Reimbursements. Each Employee
may elect to have all or a portion of the FlexDollars awarded to him allocated,
and the Base Pay otherwise payable to him for each applicable period during the
Plan Year reduced, so that the Employer shall make contributions in the form of
credits to the Participant's Health Care Expense Account equal to the total of
(i) the amount of FlexDollars allocated to such Account by the Participant and
(ii) the amount by which the Employee elected to have his or her salary
reduced. The maximum Employer contribution allowed to be allocated and credited
to a Participant's Account for Health Care Expenses shall not exceed the
maximum amount designated in advance for each Plan by the Company.
Section 6.9 Reimbursable Expenses. Participants shall be entitled to
reimbursement for eligible health care expenses they incur during the Plan Year
for the health care of themselves and their eligible dependents. The maximum
benefits payable to any Participant under the Health Care Expense Plan for any
Plan Year shall not exceed the lesser of:
<PAGE> 21
16
<PAGE> 22
17
(i) the total Employer contributions designated by the Participant
as allocable to the Account for Health Care Expenses for the
Plan Year; and
(ii) the valid and reimbursable claims made on such Account for the
Plan Year.
Benefits up to that maximum shall be payable for proper claims, without regard
to the Participant's Account balance at such time, even if the claim deduction
exceeds the amount credited to that date under such Account and thereby causes
a negative Account balance.
A Participant who either terminates employment as an Employee or
ceases to be on the Company's payroll shall be permitted to contribute monthly
to the Plan cash equal to the amount of his or her most recent monthly Base Pay
reduction election for Health Care Expenses. Such Health Care Expense
contributions shall be made only in accordance with the provisions for elective
continuation of coverage under COBRA, and only if such provisions are
applicable to the affected Participant.
For purposes of this Health Care Expense Plan, the term "Health Care"
shall have the same meaning as "medical care" in Sections 213(d)(1)(A) and (B)
of the Code. The term "dependent" shall include any individual who is
considered a dependent of the Participant within the meaning of Section 152 of
the Code. Health Care Expenses reimbursable from any other source are not
reimbursable under the Health Care Expense Plan.
Subject to any limitations or exclusions under the Plan, reimbursable
expenses under the Health Care Expense Plan include, but are not limited to,
such expenses as the following:
(a) Medical expenses for hospital, physician, dental and vision care to
the extent that they are not reimbursed from any other source;
(b) Uncovered medical services such as prescription glasses and hearing
aids;
(c) Routine checkups and physicals;
(d) Physical fitness programs, stop-smoking clinics and weight loss
institutions only when prescribed by a physician for a specified
illness; and
(e) Other expenses for medical care within the scope of Section 213 of
the Code, regardless of any dollar limits on deductions under that
statute.
Section 6.10 Claim and Payment Procedures. Claims for reimbursement
shall be made on the appropriate form or forms furnished by the Administrator
for purposes of the Plan and shall be submitted to the Administrator. Claims
shall be reimbursed only if they are:
<PAGE> 23
18
(1) incurred for medical care treatment of the Participant or his or
her eligible dependents;
(2) incurred for treatment rendered while the recipient was covered by
the Health Care Expense Plan; and
(3) substantiated by (i) a written statement from an independent third
party (such as the service provider) stating that the expense was
incurred, identifying the treatment or service provided and giving
the amount of the expense; and (ii) a written statement from the
Participant that the expense has not been reimbursed and is not
reimbursable from any other source of coverage.
The Participant may be required to furnish additional information, such as
receipts, insurance company explanations of benefits, and statements from the
health care service provider.
Benefits shall be payable as often as biweekly, but in minimum amounts
of not less than $25.
Payments pursuant to this Section 6.10 shall be made only to
Participants; no payment shall be made directly to the provider of the medical
care services, treatment or supplies.
Section 6.11 Credit Balance at End of Plan Year. Claims received by
the Administrator more than ninety (90) days after the close of a Plan Year for
expenses incurred during that closed Plan Year will be considered untimely and
not eligible for reimbursement under the Plan or the Health Care Expense Plan.
A Participant or former Participant shall not be entitled to receive cash or
any other form of compensation or benefits with respect to any unused credit
balance in his or her Health Care Expense Account after all timely claims have
been processed as of the end of a Plan Year. Similarly, no credit balance
remaining after the expiration of the period for submitting claims for one Plan
Year will be carried forward into any succeeding Plan Year. Such unused credit
balance, if any, shall be forfeited to the Company and used to defray the
administrative costs of the Plan in future years.
<PAGE> 24
19
ARTICLE VII
DEPENDENT CARE EXPENSE PLAN
Section 7.1 Name and Purpose of Plan. The Dependent Care Expense Plan
set forth principally in this Article VII is intended to be a "dependent care
assistance plan" within the meaning of Section 129 of the Code. The Company and
the Administrator will take whatever steps, as Plan sponsor and fiduciary
respectively, as are necessary to maintain and operate the Dependent Care
Expense Plan as a "nondiscriminatory" plan within the meaning of Section 129 of
the Code. The other Articles of the Plan document (except Article VI) shall
apply, as needed, to complete the terms of the Dependent Care Expense Plan.
Section 7.2 Effective Date. The Effective Date of this Dependent Care
Assistance Plan is September 16, 1993.
Section 7.3 Participation. Each eligible Employee will become a
Participant upon the execution of a valid election and Base Pay reduction
agreement.
Section 7.4 Cessation of Participation. A Participant will cease to be
a Participant in this Dependent Care Expense Plan as of the earliest of:
(i) the date on which the Dependent Care Expense Plan
terminates, subject to the requirement that a Participant
shall continue to be a Participant in this Dependent Care
Expense Plan, in accordance with Section 3.4, for the
remainder of the Plan Year in which participation in the
Plan has otherwise terminated due to termination of
employment with the Employer;
(ii) the date on which the Participant's election to receive
dependent care benefits expires or is terminated under
this Dependent Care Expense Plan;
(iii) the date on which the Participant ceases to be eligible
for the Dependent Care Expense Plan;
(iv) the date on which the Participant ceases to be an
Employee; or
(v) the date on which the Participant fails to make any
Required Contributions to the Dependent Care Expense Plan
under Sections 3.4 or 7.5 of the Plan.
Section 7.5 Continuation of Coverage. In the event that a Participant
ceases to be a Participant in this Dependent Care Assistance Plan for any reason
during a Plan Year, the
<PAGE> 25
20
Participant's Base Pay reduction agreement relating to dependent care
assistance shall terminate. The Participant shall be entitled to reimbursement
only for dependent care expenses incurred within the same Plan Year (whether
incurred before or after the date participation terminates), and only if the
Participant applies for such reimbursement in accordance with Section 7.12. No
such reimbursement shall exceed the remaining balance, if any, in the
Participant's Dependent Care Expense Account for the Plan Year in which the
expenses were incurred. Notwithstanding the foregoing, in the event an Employee
is on an unpaid leave of absence under the Family and Medical Leave Act, such
Employee shall continue to be a Participant so long as such Employee pays the
Required Contribution during such leave of absence. In the event of the
Participant's death, the Participant's spouse, (or, if none, the Participant's
executor or administrator) may apply on the Participant's behalf for
reimbursements permitted under this Section 7.5).
Section 7.6 Reinstatement of Former Participant. A former Employee who
is rehired as an Employee by an Employer shall be eligible to participate in
the Dependent Care Expense Plan on the same basis as a newly hired Employee.
Section 7.7 Election Procedure. A Participant may elect to participate
in this Dependent Care Expense Plan by filing an election and Base Pay
reduction agreement in accordance with the procedures established under the
Plan. Such an election to participate shall be irrevocable during the Plan
Year, subject to a change in family status, as provided in Section 5.4 of the
Plan.
Section 7.8 Maximum Dependent Care Assistance. Each Employee may elect
to have a portion of the FlexDollars awarded to him allocated, and the Base Pay
otherwise payable to him for each applicable period during the Plan Year
reduced, so that the Employer shall make contributions in the form of credits
to the Participant's Dependent Care Expense Account equal to the total of (i)
the amount of FlexDollars allocated to such Account by the Participant and (ii)
the amount by which the Employee elected to have his or her salary reduced. The
maximum Employer contribution allowed to be allocated and credited to a
Participant's Dependent Care Expense Account for dependent care expenses shall
not exceed $5,000 per Plan Year ($2,500 per year for a single taxpayer or a
married taxpayer filing as a single individual). The total reduction in Base
Pay for any Participant in a Plan Year shall not exceed the amount of his or
her Base Pay.
Section 7.9 Dependent Care Assistance Benefits. Each Participant shall
be entitled to reimbursement for those Dependent Care Expenses incurred during
a Plan Year which are considered eligible employment-related expenses under the
child and dependent care credit provisions of Section 21(b)(2) of the Code (and
applicable regulations thereunder) and which do not exceed the earned income
limitations specified below, but only to the extent of the credit balance in
the Participant's Dependent Care Expense Account from time to time. The
Participant may not assign the right to receive benefit payments from the
Dependent Care Expense Account for Dependent Care Expenses. Not more than
$5,000 ($2,500 for a single
<PAGE> 26
21
Participant or a married Participant filing federal income tax returns as a
single individual) in total benefits may be paid to any one Participant under
this Dependent Care Expense Plan with respect to Dependent Care Expenses
incurred during any one Plan Year.
The following rules (and any other applicable rules of Sections 21(b)
and 129 of the Code) apply in determining whether the expenses of the
Participant are for reimbursable Dependent Care Expenses under the Plan:
(a) The expenses must be for household services or for the care of a
"qualifying individual", which expenses are incurred to enable the Participant
(or the Participant's spouse) to be gainfully employed during the period in
which there is a "qualifying individual" with respect to the Participant.
Education expenses for a child in the first or higher grade level are not
payments for the care of a qualifying individual eligible for reimbursement.
(b) Qualifying individuals are any of the following persons who live
in the household maintained by the Participant (or by the Participant and
spouse):
(1) A Participant's child under the age of 13 if the Participant
can claim the child as an exemption for Federal income tax
purposes. The requirement that the Participant be able to
claim the child as an exemption is not applicable if the
Participant is divorced, legally separated under a decree of
divorce or separate maintenance, or separated under a
written separation agreement, and the Participant had
custody of the child for a longer period during the Plan
Year than the other parent. The child also must have been
under age 13 or unable to care for himself, have been in the
custody of one or both parents more than half of the Plan
Year, and have received more than half of his or her support
from one or both parents;
(2) A dependent of the Participant for whom the Participant can
claim an exemption (or could claim such exemption but for
the fact that the person has gross income for the Plan Year
of $1,000 or more) and who is physically or mentally not
able to care for himself; and
(3) The spouse of the Participant if the spouse is physically or
mentally not able to care for himself.
(c) The Dependent Care Expense Plan will not reimburse a Participant
for: (i) payments made to a child of the Participant if the child was under age
19 at the end of the Plan Year; (ii) payments made to a person the Participant
or the Participant's spouse can claim as a dependent; or (iii) any other
expenses which do not qualify as "employment-related expenses" with respect to
the Participant as taxpayer within the scope of Section 21(b) of the Code.
<PAGE> 27
22
Section 7.10 Earned Income Limitation. For any Plan Year, the payments
made to any Participant under the Dependent Care Expense Plan shall not exceed
the earned income limitation calculated under the following rules:
(a) In case of a Participant who is not married at the close
of the Plan Year, this limitation is the earned income of
the Participant. "Earned income" means the total wages,
salary, and other employee compensation and any net
earnings from self-employment for the Plan Year.
(b) In the case of a Participant who is married at the close
of the Plan Year, this limitation is the lesser of the
earned income of the Participant or the earned income of
the Participant's spouse.
(c) During any month in the Plan Year, if the Participant's
spouse is either a full-time student at an educational
institution or physically or mentally not able to take
care of himself, the spouse shall be deemed to have
"earned income" for each month of $200.00 (or $400.00 if
there are at least two qualifying individuals with respect
to the Participant).
(d) Married Participants who are legally separated or living
apart will be considered not married if they are treated
as not married under the rules of Sections 21(e)(3) and
(4) of the Code.
Section 7.11 Nondiscrimination Rules. To the extent such rules are
required and applicable in order to qualify for the Dependent Care Expense
Plan, in pertinent part, as a "dependent care assistance program" under Section
129 of the Code, the following additional rules shall apply:
(i) Not more than 25% of all Benefits for Dependent Care
Expenses paid under the Dependent Care Expense Plan for
any Plan Year shall be made from the Dependent Care
Expense Accounts of 5% or more owners (or the spouse or
other dependant of such an owner) as described in Section
129(d)(4) of the Code.
(ii) A statement of the total Dependent Care Expense
reimbursements made to the Participant for the Plan Year
shall be furnished to him by January 31 of the next Plan
Year.
(iii) The average Benefit for Dependent Care Expenses provided
to Employees who are not highly compensated (within the
meaning of Section 414(q) of the Code) under the Dependent
Care Expense Plan for any Plan Year shall not be less than
55% of the average Benefit for Dependent Care Expenses
provided to highly compensated Employees. For purposes of
this item (iii),
<PAGE> 28
23
Employees whose annual compensation (under Section
414(q)(7) of the Code) is less than $25,000 may be
excluded.
Section 7.12 Claim and Payment Procedures. Claims for reimbursement
shall be made on the appropriate form or forms furnished by the Administrator
for purposes of the Plan and shall be submitted to the Administrator. The
Participant will be required to furnish receipts and statements from the
providers of dependent care, but the Participants will complete the provider
information section of the claim form and certify that this information is
true.
All claims submitted by a Participant during a reimbursement period
shall be processed as of the end of that reimbursement period on the basis of
the balance in the Participant's Account for Dependent Care Expenses at the end
of such reimbursement period. To the extent that any claims cannot be paid in
full because of an insufficiency in the Participant's Account for Dependent
Care Expenses, they shall be held for payment in the next succeeding
reimbursement period(s) of such Plan Year, but shall not be carried over or
charged against the balance of any subsequent Plan Year.
Benefits shall be payable as often as biweekly (referred to herein as
the "reimbursement period"), but in minimum amounts of not less than $25.
Payments pursuant to this Section 7.12 shall be made only to Participants, and
no payment shall be made directly to the provider of the dependent care.
To minimize administrative expense, the Administrator may establish
rules governing the minimum benefit requests that will be honored for payments
referred to in Section 7.12.
Section 7.13 Credit Balance at End of Plan Year. Claims received by
the Administrator more than ninety (90) days after the close of a Plan Year for
expenses incurred during that closed Plan Year will be considered untimely and
not eligible for reimbursement under the Plan or the Dependent Care Expense
Plan. A Participant or former Participant shall not be entitled to receive cash
or any other form of compensation or benefits with respect to any unused credit
balance in his or her Account for Dependent Care Expenses after all timely
claims have been processed as of the end of a Plan Year. Similarly, no credit
balance remaining after the expiration of the period for submitting claims for
one Plan Year will be carried forward into any succeeding Plan Year. Such
unused credit balance, if any, shall be forfeited to the Company and used to
defray the future administrative costs of the Plan.
<PAGE> 29
24
ARTICLE VIII
ACCOUNTS
Section 8.1 Maintenance of Accounts. The Administrator or its
delegatee shall maintain a bookkeeping Account for each Benefit elected by each
Participant for the Plan Year. The Account shall be credited periodically with
such Base Pay reduction amounts and FlexDollars as the Participant has
designated for allocation toward such Benefits with respect to the pay periods
since the last such credit was made. Claims for reimbursement shall be made on
such forms and accompanied by such substantiation as the Administrator shall
require. The Administrator shall deduct from the applicable Account the amount
necessary to pay the Participant's share of costs for the applicable Benefit.
Benefit payments shall be directed and made solely to the Participant, or to an
insurance carrier or to an Underlying Plan as determined by the Plan
Administrator. Total deductions from any Account for a Plan Year shall not
exceed the total amount designated by the Participant to be credited to the
Account for such Plan Year. Benefit payments under this Plan shall equal, but
not exceed, the deductions made under this Plan from the Accounts of their
respective participating Employees. Benefit payments shall be made with the same
frequency as the Account deductions are made. Such payments shall be made no
later than the end of the calendar month following the month in which the
deduction is made, unless nondiscrimination testing necessitates a longer delay
in making payments. The Accounts shall not be funded and shall not earn or
accrue any interest for the benefit of any Participant.
Section 8.2 Rights of Participants. No Participant shall have any
right to any amount credited to his or her Account at any time, except: (i) the
right to have such credits applied toward his or her Benefits in accordance
with this Plan; and (ii) the right to have any excess amounts which were taken
from his or her Base Pay and credited to his or her Account by mistake of the
Employer or Administrator restored to him as though part of his or her Base
Pay. Such restoration shall be made only if: (i) he or she so requests in
writing received by the Administrator within one (1) year after the mistaken
credit was made; and (ii) the mistaken amount has not already been applied
toward his or her designated Benefits. If such restoration cannot be made
solely due to (ii) above, then the Administrator may direct the Employer to
adjust the Participant's future Base Pay reductions under the Plan to rectify
the prior mistake. No interest shall accrue or be owed to any Participant with
respect to any restoration of Base Pay under this Section.
Section 8.3 Forfeitures. As of the last day of the Plan Year, any
amounts credited to a Participant's Account which remain after making
deductions for such Plan Year pursuant to Section 8.1 shall be forfeited to the
Company and his or her Account balance for the next Plan Year shall start again
at zero. No carry over of unused Account balances shall be permitted from one
Plan Year to the next.
<PAGE> 30
25
If a Participant terminates Benefits under one or more of his or her
Accounts due to his or her termination of employment as an Employee, then he or
she shall forfeit any unused amounts remaining credited to such Account after
claims and deductions with respect to the period prior to such termination of
employment have been satisfied in accordance with the Plan.
The Company shall determine the aggregate forfeitures for any
particular Plan Year and shall apply such forfeitures, insofar as possible, to
the reasonable expenses of maintaining and administering the Plan for the Plan
Year in which the forfeiture is claimed by the Company.
Section 8.4 Incapacity. Whenever a Participant is, in the
Administrator's opinion, under a legal disability or incapacitated in any way
so as to be unable to manage his or her personal financial affairs, the
Administrator may direct the Employer to make any Benefit payment to which such
Participant is then entitled to the Participant's legal representative, or to a
friend or relative of the Participant, or in such other manner (including
direct deposit to a bank account in the name of the Participant) as the
Administrator considers appropriate for the benefit of such Participant. Any
such payment shall constitute a complete discharge of any liability of the Plan
and the Employer with respect to, and to the extent of, the Benefit payment so
made.
<PAGE> 31
26
ARTICLE IX
ADMINISTRATION
Section 9.1 Administrator. By action of its Board of Supervisors or
the designee of such Board, the Company shall appoint any person or entity, or
a committee of not less than one (1) nor more than five (5) employees, to serve
as the Administrator of the Plan.
It shall be the principal duty of the Administrator to see that the
Plan is carried out, in accordance with its terms, for the exclusive benefit of
the Participants and by operating the Plan uniformly, from time to time, for
similarly situated individuals.
The Company shall have the authority to remove the Administrator and
appoint a new Administrator (or to replace one or more employees serving as
Administrator) from time to time by action of the Board of Supervisors of the
Company or its designee.
Section 9.2 Powers and Authority of Administrator. The Administrator
will have full power to administer the Plan in all of its details, subject to
applicable requirements of law. For this purpose, the Administrator's powers
will include, but will not be limited to, unilateral discretion to do the
following, in addition to any other powers provided by this Plan:
(a) To make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan,
including (i) the establishment of claim and review procedures in
accordance with 29 U.S.C. S 1133 and regulations thereunder or
other applicable law and regulations, and (ii) rules and
regulations for the conduct of business by the Administrator;
(b) To interpret the Plan and to determine all questions arising under
or in connection with the Plan, including all questions of fact and
questions of eligibility to participate and obtain benefits under
the Plan, its interpretation thereof in good faith to be final and
conclusive on all interested persons;
(c) To appoint such agents, counsel, accountants, consultants and
other persons (regardless of whether they also provide services
to the Company) as may be required to assist in administering the
Plan;
(d) To allocate and delegate its responsibilities under the Plan and
to designate other persons from time to time to carry out any of
its responsibilities under the Plan, any such allocation,
delegation or designation to be in writing;
(e) To request of and obtain from any Employee or the Company such
information and records as deemed necessary and proper; and
<PAGE> 32
27
(f) To develop enrollment and any other forms necessary for Plan
administration.
All actions and determinations of the Administrator shall be final and
binding upon all Employees, Participants, beneficiaries, Employers, and any
other parties. Notwithstanding the foregoing, any claim which arises solely
under an Underlying Plan shall not be subject to review under this Plan, so
that the Administrator's authority shall not extend to any matter which the
administrator of the Underlying Plan is empowered to decide.
Section 9.3 Records and Reports. The Administrator shall maintain such
records of its activities and of Plan Participants and operations as it deems
necessary and appropriate. Plan records pertaining to the Employer or its
Employees (subject to any confidentiality protections required by law or
established by the Administrator's rules) shall be available for examination by
the Employer at reasonable times during normal business hours. The
Administrator's Plan records pertaining to a Participant shall be available for
examination by such Participant upon written request at reasonable times during
normal business hours.
The Administrator shall issue to each Participant in writing at the
conclusion of each Plan Year a statement describing the total credits to his or
her Account for such Plan Year and the type and amount of debits from his or
her Account for such Plan Year. To the extent required by applicable law, the
Administrator shall provide each eligible Employee from time to time with a
written explanation of the Plan in form and substance sufficient to satisfy the
summary plan description requirements of 29 C.F.R. SS 2520.102-2 through
2520.102-4.
The Administrator shall make such reports to the Company and the
Underlying Plans as the Company or the Underlying Plan fiduciaries shall
reasonably request, and such reports to government authorities as applicable
law shall require.
Section 9.4 Reliance on Information. The Administrator, and any person
authorized to act on its behalf, shall be entitled to rely on the accuracy and
genuineness of any written materials, directions or documents furnished by or
on behalf of any Employee or Employer (unless the Administrator has actual
knowledge that such written item is inaccurate or is not genuine) and shall be
fully protected in acting or relying in good faith thereon. The Administrator
shall have no obligation to take any action upon the occurrence of any event
unless and until it has received proper and satisfactory evidence of such
occurrence.
Section 9.5 Indemnification of Administrator. The Administrator shall
be indemnified by the Company against any and all liabilities, damages, costs
and expenses (including reasonable attorney's fees) incurred by it by reason of
any act or failure to act made in good faith and consistent with the provisions
of the Plan, including costs and expenses incurred in defense or settlement of
any claim relating thereto. The Company may require contribution towards this
indemnification obligation by any other Employer as a condition for such
Employer's initial or ongoing participation in the Plan.
ARTICLE X
<PAGE> 33
28
AMENDMENT AND TERMINATION
Section 10.1 Amendment of the Plan. The Company reserves the sole
discretionary right to modify or amend the Plan in any respect, at any time and
from time to time, retroactively or otherwise, by a written instrument executed
by the President or a Vice President of the Company. No Plan amendment shall be
valid which would cause the Plan to fail any applicable qualification
requirements of Code Sections 105, 125, or 129 or any successors thereto.
Section 10.2 Termination of the Plan. The Company reserves the right
to terminate the Plan at any time as designated by a written instrument adopted
by its Board of Supervisors or its designee and duly executed on behalf of the
Company. Upon termination of the Plan, all elections and reductions in Base Pay
shall terminate and reimbursements shall be made only in accordance with
Sections 3.4, 6.9 and 7.5.
The Plan shall terminate automatically upon the dissolution, merger,
consolidation or reorganization of the Company, or the sale of substantially
all of its operating assets, unless the Plan is duly adopted and continued by a
successor to the Company.
<PAGE> 34
29
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Limitation of Rights. The establishment, maintenance and
provisions of the Plan shall not be considered or construed:
(i) as giving to any Employee any right to be continued in the
employment of an Employer;
(ii) as limiting the right of an Employer to discipline or discharge
any of its Employees;
(iii) as creating any contract of employment between an Employer and any
Employee; or
(iv) as conferring any legal or equitable right against the
Administrator or an Employer.
Section 11.2 Rights to Employer Assets. All Account balances reflect
general assets of the Employer, and all payments made under this Plan are made
from Employer assets. No Participant shall have any right to or interest in any
assets of the Employer except as specifically provided in this Plan. The
Administrator shall have no liability to any Participant or an Employer for
making any payment or providing any benefit pursuant to this Plan, and shall
merely direct such payments to be made by the Employer in accordance with the
Plan.
Section 11.3 No Assignments. The right of any Participant to receive
any reimbursement under the Plan shall not be subject to any claims by any
creditor of or claimant against the Participant; and any attempt to reach such
amounts by any such creditor or claimant, or any attempt by the Participant to
confer on any such creditor or claimant any right or interest with respect to
such amounts, shall be null and void. No Base Pay reduction elections or other
contributions under this Plan shall cause an Employer to be liable for, or
subject to, any manner of debt or liability of any Participant.
Section 11.4 Severability. Any provision of the Plan shall be
severable, so that if any Plan provision is held invalid or unenforceable such
invalid or unenforceable provision shall be severed from the Plan and the Plan
shall operate without regard to such severed provision. In such event, the Plan
will be construed and enforced as if such severed provision had not been
included herein, to the extent necessary to preserve the status of the Plan as
qualified cafeteria plan under Section 125 of the Code.
Section 11.5 No Guarantee of Tax Consequences. The Company makes no
commitment or guarantee that any amounts paid to or for the benefit of a
Participant under this
<PAGE> 35
30
Plan will be excludable from the Participant's gross income for federal or
state income tax purposes, or that any other federal or state tax treatment
will apply to or be available to any Participant. It shall be the obligation
of each Participant to determine whether each payment under this Plan is
excludable from the Participant's gross income for federal and state income tax
purposes, and to notify the Company if the Participant has reason to believe
that any such payment is not so excludable.
Section 11.6 Governing Law. The Plan shall be construed in accordance
with the laws of the State of Illinois, to the extent not preempted by federal
law.
IN WITNESS WHEREOF, the Company has caused this duly amended and
restated Plan to be executed below by its duly authorized officer or
representative on this _____ day of ____________ 1995, to be effective as of
the Effective Date stated herein.
GALILEO INTERNATIONAL PARTNERSHIP
By: ______________________________
Its:______________________________
<PAGE> 1
Exhibit 10.44
[GUARDIAN HEALTH LETTERHEAD]
EXCLUSIONS
1. AIDS This POLICY does not cover MEDICAL TREATMENT
directly or indirectly related to Human
Immunodeficiency Virus (HIV) or Acquired
Immune Deficiency Syndrome (AIDS) or
any syndrome or condition of a similar kind
whatever it is called.
2. APPLIANCES This POLICY does not cover the provision of
surgical or medical appliances, aids or
equipment, including spectacles, contact
lenses, hearing aids, dentures or dental
appliances.
3. CARE OF THE AGED This POLICY does not cover MEDICAL TREATMENT in
any establishment for care of the aged,
including the geriatric ward of a HOSPITAL.
4. CLAIM FORMS AND REPORTS This POLICY does not cover any charges or fees
for the completion of claim forms or for
medical reports needed on or before applying
for insurance under this POLICY or any other
insurance cover or enrolment in any insurance
scheme.
5. COSMETIC TREATMENT This POLICY does not cover cosmetic treatment,
whether or not for psychological reasons,
unless necessary as a result of an accident
which happens while YOU are covered by this
POLICY.
6. DENTISTRY This POLICY does not cover dental, orthodontic
and periodontal treatment except SPECIFIED
OROSURGICAL PROCEDURES - see definitions.
7. DRUGS AND DRESSINGS This POLICY does not cover the cost of drugs
and dressings prescribed when YOU are receiving
MEDICAL TREATMENT as an OUT-PATIENT unless
used in the course of chemotherapy or
radiotherapy.
8. GP AND ROUTINE This POLICY does not cover the services of a GP,
EXAMINATIONS eye tests, hearing tests or medical
examinations of a routine or preventative
nature.
9. HEALTH-HYDROS AND This POLICY does not cover MEDICAL TREATMENT
NATURE CURE CLINICS in any health-hydro or nature cure clinic or
similar establishment, or occupying private
beds in a HOSPITAL attached to one of these
establishments.
10. HOME NURSING This POLICY does not cover MEDICAL TREATMENT
CHARGES for home nursing for mental or
psychiatric illness or wholly or partly arranged
for domestic reasons.
11. HORMONE REPLACEMENT This POLICY does not cover Hormone Replacement
THERAPY Therapy (HRT) unless it follows the removal of
both ovaries, when the treatment will be
limited to a maximum of two years from
the date of removal.
12. KIDNEY FAILURE This POLICY does not cover supportive treatment
for renal failure including dialysis. YOU are
covered for dialysis immediately before and
after a kidney transplant or in connection
with acute secondary failure when the dialysis
is part of intensive care.
<PAGE> 2
[GUARDIAN HEALTH LETTERHEAD]
EXCLUSIONS (continued)
13. MENTAL AND PSYCHIATRIC This POLICY does not cover MEDICAL TREATMENT as
ILLNESS, ALCOHOLISM, DRUG an IN-PATIENT or DAY-PATIENT for mental or
AND SUBSTANCE ABUSE psychiatric illness and for alcoholism, drug
or substance abuse or addiction or
conditions which may be directly attributed to
alcoholism or drug or substance abuse or
addiction for any period in excess of 28 days
per INSURED PERSON in any one POLICY YEAR.
14. ORGAN TRANSPLANT This POLICY does not cover any amount in EXCESS
of Pound 50,000 for each INSURED PERSON in a
POLICY YEAR relating to organ transplant. Any
MEDICAL TREATMENT CHARGES relating to a live
donor will be incorporated within this amount.
15. PREGNANCY a) This POLICY does not cover MEDICAL TREATMENT
for pregnancy or childbirth unless it
is either complicated by a MEDICAL
CONDITION needing MEDICAL TREATMENT during
the ante-natal stages of pregnancy or
needing a SPECIFIED OBSTETRIC PROCEDURE -
see definitions.
b) This POLICY does not cover intentional
termination of pregnancy unless medically
necessary during MEDICAL TREATMENT that is
insured under this POLICY.
c) This POLICY does not cover MEDICAL TREATMENT
for infertility or for inability to
conceive, other than investigations into
the cause of infertility, provided that YOU
and YOUR spouse:
i) have been insured by US under this
POLICY for a continuous period
of two years at the start of the
investigations and
ii) were unaware of YOUR infertility or
inability to conceive before
YOUR insurance started under this
POLICY.
d) This POLICY does not cover MEDICAL TREATMENT
related to any form of assisted reproduction
and/or any subsequent pregnancy,
delivery and, within three months of the
birth, post-natal care of the mother and
child or children.
e) This POLICY does not cover foetal surgery,
which is surgery performed on an unborn
child, or MEDICAL TREATMENT in connection
with such surgery whether undergone by the
mother or the unborn child.
16. RADIOACTIVITY This POLICY does not cover MEDICAL CONDITIONS
caused by, or attributed to radioactive
contamination.
17. REFERRAL WITHIN PRACTICE This POLICY does not cover MEDICAL TREATMENT
from a chiropractor, osteopath or homeopath in
the same practice as the GP who referred YOU.
18. SELF-INFLICTED This POLICY does not cover intentional self-
CONDITIONS inflicted MEDICAL CONDITIONS.
19. SEX CHANGE This POLICY does not cover MEDICAL TREATMENT
in connection with sexual reassignment, whether
or not for psychological reasons.
20. SHORT-SIGHTEDNESS, This POLICY does not cover MEDICAL TREATMENT
LONG-SIGHTEDNESS for myopia (short-sightedness) or hyperopia
(long-sightedness).
<PAGE> 3
[GUARDIAN HEALTH LETTERHEAD]
EXCLUSIONS (continued)
21. TREATMENT ABROAD This POLICY does not cover MEDICAL TREATMENT
outside the UK, if YOU are outside the UK
either against medical advice or specifically
to:
a) Obtain MEDICAL TREATMENT
b) Take up a permanent appointment to work
outside the UK
22. WAR This POLICY does not cover MEDICAL TREATMENT
for any MEDICAL CONDITIONS arising out of war,
invasion, act of foreign enemy, hostilities
(whether war is declared or not), civil war,
riot, civil commotion, acts of terrorism,
rebellion, revolution, insurrection, or
military or usurped power.
NOTE: THE HEADINGS USED IN THIS SECTION
OF THE POLICY ARE FOR CONVENIENCE OF REFERENCE
ONLY AND DO NOT AFFECT ITS CONSTRUCTION.
<PAGE> 4
[GUARDIAN HEALTH LETTERHEAD]
CONDITIONS
1. CANCELLATION a) WE may cancel or alter the terms of this
POLICY for the following reasons after
giving seven days notice in writing to
the INSURED:
i) non-payment of the premium by the INSURED;
ii) the INSURED'S failure to observe the terms
of this POLICY or failure to act with
utmost good faith.
b) WE may cancel or alter the terms of cover for
an INSURED PERSON if the INSURED PERSON has:
i) mis-led US by mis-statement or concealment;
ii) agreed to any attempt by a third party to
obtain money unreasonably to OUR cost;
iii) failed to observe the terms of this POLICY
or failed to act with utmost good faith.
2. CHILDREN If a child is born during a POLICY YEAR and
YOU want him or her to qualify as an INSURED
PERSON without providing evidence of health,
YOU must ask US for this in writing within
three months of the birth.
3. CLAIMS If there is a claim under this POLICY, WE will
only pay BENEFIT if:
a) Written details on OUR claim form are sent
to US as soon as possible with original
bills or accounts (not copies). The claim
form must be sent no later than two months
after the start of the MEDICAL TREATMENT;
and
b) WE can ask for medical information from any
GP, SPECIALIST or other physician as often
as WE may reasonably require; and
c) WE are told as soon as reasonably possible
of any circumstances which may lead to a
claim against a third party; and
d) Premiums have been paid for the appropriate
POLICY YEAR; and
e) The MEDICAL TREATMENT takes place during
the POLICY YEAR.
4. FRAUD If there is or has been any fraud, hiding of
facts or untrue statement made whether before
the POLICY started or afterwards, WE will
cancel this POLICY. YOU must pay back any
BENEFIT we have already paid.
5. MATERIAL CHANGES WE must be informed as soon as possible of any
material change affecting the INSURED or an
INSURED PERSON. WE reserve the right to alter
the terms of the POLICY following a material
change.
6. OTHER INSURANCE If MEDICAL TREATMENT CHARGES claimed under this
POLICY are or may be covered by any other
insurance or indemnity, WE will not pay BENEFIT
or contribute towards that claim. If the other
insurance or indemnity does not cover all of
the MEDICAL TREATMENT CHARGES, WE will pay the
balance, but only up to our limit of BENEFIT.
7. PAYMENT OF BENEFITS WE will pay the BENEFITS directly to the person
or organisation who provides the MEDICAL
TREATMENT.
For MEDICAL TREATMENT outside the UK WE will
pay all BENEFITS to YOU in Sterling at the
rate of exchange in use when the claim is
settled.
<PAGE> 5
[GUARDIAN HEALTH LETTERHEAD]
CONDITIONS
8. PAYMENT OF PREMIUM Premium is payable in advance of any cover
being provided by this POLICY and must be paid
in the manner agreed by US.
9. SUBROGATION If YOU have a right to claim payment from
another person in respect of anything covered
by this POLICY WE may take over YOUR rights
against that person.
10. WAIVER OF TERMS If WE do not at any time apply or enforce any
of the terms of this POLICY this will not
prevent US from doing so at a later date.
NOTE: THE HEADINGS USED IN THIS SECTION OF THE
POLICY ARE FOR CONVENIENCE OF REFERENCE ONLY
AND DO NOT AFFECT ITS CONSTRUCTION.
<PAGE> 6
[GUARDIAN HEALTH LETTERHEAD]
CLASSIC
WHEN YOU REQUIRE TREATMENT
1. VISIT YOUR GP If your GP can provide treatment, YOU need not
inform us, as consultations and treatments
carried out by a GP are not covered under this
POLICY.
If YOUR GP recommends that YOU should see a
specialist, explain that YOU have private
health insurance with Guardian Health. YOUR GP
will pass YOUR details to a SPECIALIST in order
that an appointment can be made.
2. CALL THE GUARDIAN Before YOU go to see the SPECIALIST YOU must
HEALTH HELPLINE BEFORE YOU call the helpline. Either the member or the
SEE YOUR SPECIALIST patient may call, whichever YOU
prefer. The helpline will check the name and
address of the patient against OUR records
using the POLICY number. YOU will need to
provide the POLICY number which YOU will find
on YOUR certificate of insurance and membership
card. The helpline will already know the
details of the cover. YOU will then need to
supply details of the condition being treated
so that WE can check this information against
the cover provided.
3. TAKE YOUR YOU will be sent a claim form together with an
PRE-AUTHORISED CLAIM FORM explanatory letter by the helpline which will
TO THE SPECIALIST contain YOUR policy number, name and address
etc. Please check that this information is
correct and complete any missing details on the
front of the form, then sign and date the form.
The REVERSE of the form must be completed by
YOUR GP or the SPECIALIST in charge of
treatment.
Please note: the GP signing the form can make
a small charge for this service which is not
covered by the POLICY.
4. WHEN AND WHERE TO SEND Once the form is fully completed PLEASE send it
YOUR CLAIM FORM to Guardian Health. The form should be sent to
US within two months of the start of the
treatment.
5. WHEN YOU RECEIVE THE When YOU have received treatment and start to
ACCOUNTS receive the accounts, please check them
carefully and make sure YOU have received all
the treatments for which YOU are being charged.
Once YOU are happy with the bill, sign and
forward it to Guardian Health. WE will pay the
bill and send YOU a statement telling YOU what
payments have been made on YOUR behalf.
6. ADDITIONAL TREATMENT After the initial treatment YOU will probably
need to see YOUR SPECIALIST for a routine
post-treatment check-up. However, if YOUR
SPECIALIST recommends any additional treatment
call the Guardian Health helpline before going
for further treatment. They will help YOU and
advise whether an additional claim form needs
to be completed.
<PAGE> 7
[GUARDIAN HEALTH LETTERHEAD]
CLASSIC
7. ANY QUESTIONS? Remember the helpline is there for YOU. The
people who take YOUR call will understand YOUR
needs and be able to answer YOUR questions.
They are there for YOUR benefit to provide
advice, guidance and information, so do make
use of their experience. Using the helpline
will assist YOU to get the best value-for-money
treatment and consequently help to keep down
costs. Above all the helpline is completely
confidential so YOU can discuss YOUR needs
without reserve.
Our helpline number is 01303 853400.
<PAGE> 8
[GUARDIAN HEALTH LETTERHEAD]
CLASSIC
YOUR QUESTIONS ANSWERED
1. ARE THERE ANY FINANCIAl There is no overall maximum amount that YOU may
LIMITS TO THE AMOUNT I MAy claim in the UK. However, some parts of the
CLAIM? cover, such as private ambulance usage do have
a maximum amount which YOU may claim in any one
POLICY YEAR. Overseas treatment also has an
annual maximum amount that YOU may claim.
Please check YOUR table of benefits for further
details.
2. CAN I SEE MY GP No. WE do not cover the costs of private
PRIVATELY? consultations or treatment with YOUR GP.
3. CAN I GO STRAIGHT TO a No. YOUR GP must refer YOU to the SPECIALIST.
SPECIALIST? If YOU go directly to a SPECIALIST without
referral from YOUR GP it will not be covered,
except in the case of an emergency.
4. WHICH HOSPITALS CAN I Go If YOU are covered on A scale you may use any
TO? HOSPITAL on the Hospital List. If you are
covered on the B scale YOU may use any
HOSPITAL on the Hospital List providing B or C
accommodation. If YOU ARE covered on C scale
YOU may only use A HOSPITAL providing C
accommodation. To ensure correct room
allocation and charges YOU must advise the
HOSPITAL of YOUR level of cover before
treatment. Should YOU wish to use a HOSPITAL
which is not on the Hospital List please
telephone OUR helpline on 01303 853400 who will
be able to advise YOU.
5. IS PREGNANCY COVERED? No. Pregnancy or childbirth is not covered
unless it is complicated by a MEDICAL CONDITION
requiring MEDICAL TREATMENT during pregnancy or
requiring a SPECIFIED OBSTETRIC PROCEDURE.
Details of SPECIFIED OBSTETRIC PROCEDURES may
be found in the definitions section of this
documentation.
6. IS DENTAL TREATMENt Dental treatment is not covered. However,
COVERED? certain procedures, referred to as SPECIFIED
OROSURGICAL PROCEDURES, are covered. Details
of these may be found in the definitions
section of this documentation.
7. IS EYE TESTING COVERED? No. Eye testing of a routine or preventative
nature is not covered. Neither is the supply
of spectacles.
8. AS I AM COVERED By No. YOU do not lose the benefit of the NHS.
GUARDIAN HEALTH, DOES Indeed, if YOU ARE treated as an IN-PATIENT in
THIS MEAN I CANNOT BE a NHS HOSPITAL YOU will receive a cash benefit
TREATED UNDER THE NHS? for each night YOU stay.
9. IS PRIVATE NURSING At Yes. YOU can receive private nursing at home as
HOME COVERED? long as YOUR SPECIALIST considers it medically
necessary and it is not in any way for
domestic reasons or for mental or psychiatric
illness. It must be carried out by a QUALIFIED
NURSE. Where home nursing for more than 14 days
is required, we may need to request a medical
report from YOUR SPECIALIST to establish YOUR
entitlement to further nursing care.
<PAGE> 9
[GUARDIAN HEALTH LETTERHEAD]
CLASSIC
10. AM I COVERED WHILE I Yes. YOU are covered while YOU are abroad on
AM ABROAD? holiday or business. This cover applies in
every country in the world and in addition WE
provide an overseas helpline (details on YOUR
membership card) to help arrange emergency
treatment or repatriation where necessary.
REMEMBER, IF YOU HAVE ANY QUESTlONS PLEASE DO
NOT HESITATE TO CONTACT OUR HELPLINE ON 01303
853400.
<PAGE> 10
[GUARDIAN HEALTH LETTERHEAD]
COMPLAINTS PROCEDURE
Any complaint you may have regarding
YOUR POLICY should be addressed in the first
instance, to the intermediary who arranged the
POLICY. If for any reason YOU are dissatisfied,
please contact the General Manager at the
company's office, Bouverie House, Bouverie Road
West, Folkestone, Kent CT20 2RW. The POLICY or
claim number should be quoted.
If a complaint remains unresolved it
may be referred either to the Insurance
Ombudsman Bureau, City Gate One, 135 Park
Street, London SE1 9EA. Tel: 0171 928 7600, Fax:
0171 401 8700 (which provides independent
complaints settlement facilities) or to the
Consumer Information Department. Association of
British Insurers, 51 Gresham Street, London
EC2V 7HQ.
In the case of a complaint relating to
an insurance broker (registered in accordance
with the provisions of the Insurance Brokers
(Registration) Act), you can approach the
Insurance Brokers Registration Council, 15 St.
Helen's Place, London EC3A 6DS. Tel: 0171 588
4387.
Referring YOUR complaint to either of
the above will not affect YOUR right to take
legal action.
Under the law of England, the parties are
free to choose the law which will govern the
contract. In the absence of agreement to the
contrary, the contract, will be subject to the
law of England.
<PAGE> 11
[GUARDIAN HEALTH LETTERHEAD]
INTRODUCTION
This POLICY is made up of the following
pages of definitions, conditions and exclusions
together with the schedule, any specification,
certificates, endorsements, tables of benefits
and hospital lists. Any words or expressions
explained under the definitions section carry
the same meaning throughout.
In return for the payment of the premium,
WE will provide insurance as detailed
in this POLICY on the understanding that the
applications and declarations form the basis of
and are a part of this POLICY.
Signed for and on behalf of Guardian Health
Limited.
James Estall
James Estall
General Manager
<PAGE> 12
[GUARDIAN HEALTH LETTERHEAD]
SCHEDULE
POLICY NUMBER HL HCC 6065325
INSURED THE GALILEO COMPANY LIMITED
ADDRESS GALILEO CENTRE EUROPE
WINDMILL HILL
SWINDON
WILTS
SN5 9NX
INSURED PERSON Any member named in the specification to the
POLICY and if insured as denoted by the
following categories, his or her spouse and
DEPENDENT CHILDREN
S The member only
M The member and spouse
F The member, spouse and DEPENDENT CHILDREN
SPF The member and DEPENDENT CHILDREN
PERIOD OF INSURANCE from 1 September 1995 to 31 August 1996
BENEFITS In accordance with the benefit plan detailed
in the specification to this POLICY
ENDORSEMENTS None
AGENCY NUMBER HW 01 0001637
AGENCY MANAGED HEALTHCARE LTD
WOODLANDS
HILLVIEW
OFF NEW ROAD
CHURCHILL AVON
BS19 5NR
ANNUAL PREMIUM Pound 177225.27 RENEWABLE 1 September 1996
FIRST PREMIUM Pound 177225.27
PLUS IPT Pound 4432.16
TOTAL DUE Pound 181657.43 PAYABLE By instalments
PLEASE NOTIFY US IMMEDIATELY ON 01303 853400 IF
THERE ARE ANY ALTERATIONS TO THE ABOVE DETAILS
<PAGE> 13
[GUARDIAN HEALTH LETTERHEAD]
CLASSIC TABLE OF BENEFITS
<TABLE>
<CAPTION>
MAXIMUM BENEFIT EACH POLICY
BENEFIT PLAN COM95 YEAR FOR EACH INSURED PERSON
<S> <C> <C>
BENEFIT WITHIN THE UK Total amount of BENEFIT payable Unlimited
for MEDICAL TREATMENT CHARGES
within the UK for each INSURED
PERSON
BENEFIT OUTSIDE THE UK Total amount of BENEFIT payable Pound 100,000
for MEDICAL TREATMENT CHARGES
outside the UK for each INSURED
PERSON
HOSPITAL OR NURSING HOME Nursing & accommodation charges Full refund
Operating theatre & recovery room within scale
Prescribed medicines & drugs of cover
HOME NURSING Full refund
SURGEONS' AND For each operation including Full refund
ANAESTHETISTS' FEES aftercare
IN-PATIENT Consultations, diagnostic Full refund
procedures & physiotherapy
DAY AND OUT-PATIENT Consultations, diagnostic Full refund
procedures & physiotherapy
Osteopathic, chiropractic + Pound 550
homeopathic treatment, acupuncture,
psycho-sexual medicine, orthopaedic
medicine + manipulative + sports
medicine, on GP referral
SPECIALISTS' FEES For radiotherapy & oncology Full refund
SPECIALIST PHYSICIANS' FEES For regular attendance in a hospital Full refund
NHS HOSPITALISATION OR WE will pay for each night spent as an Pound 50 per night
HOSPICE CARE IN-PATIENT in a NHS HOSPITAL without maximum
charge. For each night spent as an total Pound 5,000
IN-PATIENT in a hospice we will make a
donation to the hospice.
</TABLE>
<PAGE> 14
[GUARDIAN HEALTH LETTERHEAD]
CLASSIC TABLE OF BENEFITS (continued)
<TABLE>
<CAPTION>
MAXIMUM BENEFIT EACH POLICY
BENEFIT PLAN COM95 YEAR FOR EACH INSURED PERSON
<S> <C> <C>
PRIVATE AMBULANCE Arranged on the instructions of a GP or Pound 200
SPECIALIST for medical reasons
ADDITIONAL We will pay accommodation costs for Full refund
ACCOMMODATION COSTS an adult to accompany an insured
child of 11 years or under who is an
IN-PATIENT, should the adult wish to do
so.
REPATRIATION OR URGENT Assistance and/or repatriation where Full refund
MEDICAL TREATMENT OUTSIDE medically necessary (see notes)
THE UK
</TABLE>
NOTES REPATRIATION OR URGENT MEDICAL TREATMENT OUTSIDE
THE UK
Guardian Health's Classic policy
features assistance and/or repatriation services
where urgent MEDICAL TREATMENT is required
outside the UK. This facility is available
through a special 24 hour helpline number
detailed on membership cards.
If urgent MEDICAL TREATMENT is required
WE will arrange an appointment with a
local medical practitioner or a local
HOSPITAL. WE will settle amounts for MEDICAL
TREATMENT over Pound 100 directly with the
medical practitioner or HOSPITAL. Any bills
of Pound 100 or less must be settled by YOU
and YOU may claim these amounts back from US
on YOUR return to the UK.
If a relative or colleague has to remain
with YOU while urgent MEDICAL TREATMENT is
carried out WE will arrange and pay for the
additional cost of travel and accommodation
for up to five days beyond the scheduled
return date.
If a relative or colleague has to join
YOU while urgent MEDICAL TREATMENT is
received abroad WE will arrange and pay for
the cost of travel and accommodation for up
to five days.
or
If OUR medical adviser decides YOU
require MEDICAL TREATMENT which cannot be
provided by a local medical practitioner or
HOSPITAL and YOU are not well enough to return
as planned, WE will organise and pay for
suitable transport and medical escorts to an
appropriate HOSPITAL.
or
If the worst should happen and YOU die
while abroad, WE will organise and pay for the
remains to be brought back to an agreed location
near YOUR home.
<PAGE> 15
[GUARDIAN HEALTH LETTERHEAD]
HOSPITAL SCALES
HOSPITALS are classified into scales A, B and C. To ensure a full refund
of charges you must check that the HOSPITAL YOU propose to use corresponds with
YOUR level of cover. Where the HOSPITAL has more than one category it is
important that YOU specify YOUR level of cover to the HOSPITAL prior to
treatment to ensure correct room allocation and charges.
If YOU choose scale A cover YOU may use any HOSPITAL on this list. Scale
B members may only use a HOSPITAL providing B and C accommodation and scale C
members may only use a HOSPITAL providing C accommodation.
Where the HOSPITAL has more than one scale of accommodation it is important
that YOU specify YOUR level of cover to the HOSPITAL prior to treatment to
ensure correct room allocation and charges.
If YOU wish to use a HOSPITAL which is not listed YOU must telephone OUR
Helpline on 01303 853400 who will check that the HOSPITAL falls within YOUR
level of cover.
HOSPITALS OUTSIDE YOUR LEVEL OF COVER
If YOU wish to receive treatment in a HOSPITAL or occupy a room in a
HOSPITAL which is in a higher scale than YOUR level of cover allows, WE will
only pay a portion of the total HOSPITAL costs as below. In this situation WE
should always be contacted before treatment is arranged.
<TABLE>
<CAPTION>
HOSPITAL SCALE USED
MEMBER'S SCALE A B C
<S> <C> <C> <C>
A 100% refund 100% refund 100% refund
B 65% refund 100% refund 100% refund
C 50% refund 65% refund 100% refund
</TABLE>
The HOSPITAL scale applies only to IN-PATIENT and OUT-PATIENT treatment.
DAY-PATIENT treatment may be undertaken at any HOSPITAL regardless of scale.
Members may only change from one HOSPITAL scale to another at the renewal date
of the policy.
PLEASE NOTE THAT PAY BEDS IN NHS HOSPITALS ARE SUBJECT TO AVAILABILITY.
<PAGE> 16
[GUARDIAN HEALTH LETTERHEAD]
HOSPITAL LIST
This list includes most private HOSPITALS and NHS HOSPITALS which treat
private patients. HOSPITALS on the list are classified into categories A, B and
C. The categories are based on cost alone and do not necessarily reflect the
quality or range of facilities available at each HOSPITAL. NHS HOSPITALS who
have a dedicated private patient unit are marked 'PPU'.
AVON
Bath, The Bath Clinic B
Bristol, Bristol Eye Hospital C
Bristol, Bristol Royal Infirmary C
Bristol, BUPA Hospital Bristol BC
Bristol, Frenchay Hospital C
Bristol, St Mary's Private Hospital C
Bristol, The Chesterfield Hospital BC
Weston-Super-Mare Weston General
Hospital - PPU C
BEDFORDSHIRE
Bedford, Bedford General
Hospital (South Wing) - PPU C
Biddenham, The Manor Hospital B
Luton, Luton & Dunstable Hospital,
The Cobham Clinic - PPU C
BERKSHIRE
Newbury, Newbury District Hospital C
Reading, BUPA Dunedin Hospital BC
Reading, IBH Berkshire Hospital BC
Reading, Royal Berkshire Hospital - PPU C
Slough, The Thames Valley Nuffield Hospital BC
Slough, Wexham Park Hospital - PPU C
Windsor, HRH Princess Christian's Hospital C
Windsor, The Hand Clinic C
Windsor, The Princess Margaret Hospital ABC
BUCKINGHAMSHIRE
Aylesbury, Stoke Mardeville Hospital C
Beaconsfield, Bon Secours Hospital C
Great Missenden, Children Hospital ABC
High Wycombe, Wycombe General Hospital - PPU C
Milton Keynes, Milton Keynes General Hospital C
Milton Keynes, The Saxon Clinic B
Princess Risborough, Paddocks Hospital AB
CAMBRIDGESHIRE
Cambridge, Addenbrookes Hospital C
Cambridge, BUPA Cambridge Lea Hospital BC
Cambridge, The Evelyn Hospital C
Huntingdon, Cromwell Clinic C
Huntingdon, Hinchingbrooke Hospital - PPU C
Huntingdon, Papworth Hospital - PPU C
Peterborough, Fitzwilliam Hospital C
Peterborough, Peterborough Hospital C
CHESHIRE
Cheadle, Alexandra Hospital ABC
Chester, The Grosvenor Nuffield Hospital BC
Crewe, South Cheshire Private Hospital BC
Macclesfield, The Regency Hospital BC
Runcorn, Halton General Hospital C
Warrington, BUPA North Cheshire Hospital BC
Warrington, Warrington District General
Hospital C
CLEVELAND
Hartlepool, Hartlepool General Hospital C
Middlesbrough, Middlesbrough
General Hospital C
Middlesbrough, South Cleveland Hospital C
Stockton-on-Tees, The Cleveland
Nuffield Hospital BC
CORNWALL
Hayle, St Michael's Hospital C
Truro, Royal Cornwall Hospital
(City & Treliske) C
Truro, The Duchy Hospital C
CUMBRIA
Barrow-in-Furness, IBH Abbey Park Hospital BC
Carlisle, Cumberland Infirmary C
Carlisle, IBH Caldew Hospital BC
Workington, IBH Cumbrian Hospital BC
DERBYSHIRE
Buxton, Devonshire Royal Hospital C
Chesterfield, Alexandra Private Hospital C
Chesterfield, Chesterfield & North
Derbyshire Royal Hospital, Chatsworth
Suite - PPU C
Derby, Derbyshire Royal Infirmary - PPU C
Derby, The East Midlands Nuffield Hospital BC
DEVON
Collumpton, Woodmill Hospital C
Exeter, Royal Devon & Exeter Hospital
(Wanford) C
Exeter, The Exeter Nuffield Hospital C
Plymouth, Royal Eye Infirmary C
Plymouth, The Plymouth Nuffield Hospital BC
Torquay, Mount Stuart Hospital C
Torquay, Torbay Hospital C
DORSET
Bournemouth, Bournemouth General
Hospital C
Bournemouth, The Bournemouth
Nuffield Hospital C
Dorchester, Winterbourne Hospital B
Poole, Poole General Hospital C
DURHAM
Durham, Dryburn Hospital C
Darlington, Memorial Hospital C
ESSEX
Basildon, Basildon Hospital C
Braintree, Black Notley Hospital C
Brentwood, BUPA Hartwood Hospital ABC
Brentwood, The Essex Nuffield Hospital BC
Buckhurst Hill, Holly House Hospital ABC
Chelmsford, Broomfield Hospital C
Chelmsford, Springfield Medical Centre C
Colchester, The Essex County Hospital C
<PAGE> 17
[GUARDIAN HEALTH LETTERHEAD]
ESSEX (continued)
Colchester, The Oaks Hospital C
Harlow, Princess Alexandra Hospital C
Harwich, Harwich & District Hospital C
Ilford, BUPA Roding Hospital A
Orsett, Orsett Hospital C
Romford, Harold Wood Hospital C
Romford, Oldchurch Hospital C
Southend, BUPA Wellesley Hospital BC
Westcliff-on-Sea, Southend Hospital C
GLOUCESTERSHIRE
Cheltenham, Cheltenham General
Hospital - PPU C
Cheltenham, The Corswold Nuffield Hospital BC
Gloucester, Gloucestershire Royal
Hospital - PPU C
Gloucester, Winfield Hospital C
HAMPSHIRE AND THE ISLE OF WIGHT
Alton, Lord Mayor Treloar Hospital - PPU C
Basingstoke, Basingstoke District General Hospital C
Basingstoke, The Hampshire Clinic B
Chandlers Ford, The Wessex Nuffield Hospital C
Havant, BUPA Hospital Portsmouth BC
Newport, Orchard Hospital BC
Newport, St Mary's Hospital C
Portsmouth, St Mary's Hospital - PPU C
Southampton, BUPA Chalyotate Hospital BC
Southampton, Royal South Hants Hospital C
Southampton, Southampton General Hospital C
Winchester, Royal Hampshire County Hospital C
Winchester, Sarum Road Private Hospital BC
HEREFORD & WORCESTER
Droitwich, Droitwich Private Hospital B
Hereford, The Wye Valley Nuffield Hospital BC
Kidderminster, Kidderminster General Hospital C
Worcester, BUPA South Bank Hospital BC
Worcester, Worcester Royal Infirmary C
HERTFORDSHIRE
Bishops Stortford, Herts & Essex General Hospital C
Bushey, BUPA Hospital Bushey ABC
Harpenden, BUPA Hospital Harpenden ABC
Hemel Hempstead, Hemel Hempstead
General Hospital - PPU C
Hertford, Hertford County Hospital C
Hitchin, Pinehill Hospital C
St. Albans, St. Albans City Hospital C
Sawbridgeworth, The Rivers Hospital C
Stevenage, Lister Hospital C
HERTFORDSHIRE (continued)
Watford, Watford General Hospital C
Welwyn Garden City, Queen Elizabeth II
Hospital - PPU C
HUMBERSIDE
Goole, Goole Hospital C
Grimsby, St. Hugh's Hospital C
Hull, BUPA Hull & East Riding Hospital BC
Hull, Castle Hill Hospital C
Hull, Hull Royal Infirmary C
Hull, Kingston General Hospital - PPU C
Hull, Princess Royal Hospital C
Hull, The Hull Nuffield Hospital C
Scunthorpe, Scunthorpe General Hospital - PPU C
ISLE OF MAN
Ramsey, Ramsey Cottage Hospital C
Douglas, Noble's Hospital C
KENT
Ashford, William Harvey Hospital C
Beckenham, Sloane Hospital AB
Bromley, Bromley Hospital C
Canterbury, Chaucer Hospital ABC
Canterbury, Kent & Canterbury Hospital C
Chelsfield, Chelsfield Park Hospital ABC
Dartford, Fawkham Manor Hospital BC
Dartford, Joyce Green Hospital C
Gillingham, Medway Hospital C
Hythe, BUPA St Saviour's Hospital BC
Maidstone, Somerfield Hospital BC
Margate, Thanet General Hospital C
Sevenoaks, Sevenoaks Hospital C
Tunbridge Wells, IBH Tunbridge Wells
Hospital BC
Tunbridge Wells, Kent & Sussex Hospital - PPU C
Tunbridge Wells, The Tunbridge Wells
Nuffield Hospital BC
Walderslade, BUPA Alexandra Hospital BC
LANCASHIRE
Blackburn, Beardwood Hospital BC
Blackpool, BUPA Fylde Coast Hospital BC
Blackpool, Victoria Hospital C
Clitheroe, Gisburne Park Private Hospital C
Euxton, IBH Euxton Hall Hospital BC
Halsall, IBH Renacres Hall Hospital BC
Lancaster, The Lancaster & Lakeland Nuffield
Hospital BC
LANCASHIRE (continued)
Preston, IBH Fulwood Hall Hospital BC
Preston, Royal Preston Hospital C
Wigan, Royal Albert Edward Infirmary C
Wigan, Wrightington Hospital C
LEICESTERSHIRE
Leicester, BUPA Hospital Leicester BC
Leicester, Leicester General Hospital C
Leicester, Leicester Royal Infirmary C
Leicester, The Nuffield Hospital Leicester C
LINCOLNSHIRE
Boston, Pilgrim Hospital - PPU C
Grantham, Grantham & Kesteven General
Hospital C
Lincoln, Lincoln County Hospital C
Lincoln, The Bromhead Hospital C
LONDON
Barnet, Barnet General Hospital C
Carshalton, St. Helier Hospital - PPU C
Croydon, Mayday University Hospital C
Edgware, Edgware General Hospital C
Enfield, Kings Oak Hospital BC
Enfield, The North London Nuffield Hospital BC
Harefield, Harefield Hospital - PPU B
Harrow, Northwick Park Hospital - PPU C
Harrow, The Clementine Churchill Hospital ABC
Northwood, Bishopwood Private Hospital BC
Pinner, St. Vincent's Orthopaedic Hospital C
Stanmore, Royal National Orthopaedic
Hospital - PPU BC
E1, The London Independent Hospital AB
E1, The Royal London Hospital
(Whitechapel) - PPU AB
EC1, Moorfield Eye Hospital B
EC1, St Marks Hospital B
N6, Highgate Private Clinic B
N18, North Middlesex Hospital - PPU C
N19, Whittington Hospital C
NW3, The Royal Free Hospital - PPU AB
NW4, The Garden Hospital AB
NW6, West Hampstead Clinic B
NW8, Hospital of St John & St Elizabeth AB
NW8, Wellington Hospital A
SE1, Churchill Clinic AB
SE1, Guys Nuffield House A
SE1, St Thomas' Hospital - PPU BC
SE1, The London Bridge Hospital A
SE3, Blackheath Hospital AB
SE5, King's College Hospital - PPU C
<PAGE> 18
[GUARDIAN HEALTH LETTERHEAD]
LONDON (CONTINUED)
SW1, The Lister Hospital A
SW3, Royal Brompton National Heart & Lung
Hospital - PPU B
SW3, The Royal Marsden Hospital AB
SW5, Cromwell Hospital A
SW10, Chelsea & Westminster Hospital - PPU C
SW15, Queen Mary's University Hospital C
SW17, St. George's Hospital C
SW19, Parkside Hospital ABC
W1, Harley Street Clinic A
W1, King Edward VII Hospital for Officers A
W1, Middlesex Hospital - PPU A
W1, Portland Hospital A
W1, The Devonshire Day Surgery Unit ABC
W1, The Fitzroy Nuffield Hospital AB
W1, The London Clinic AB
W1, The Princess Grace Hospital A
W1, Wellington Day Surgery Centre ABC
W1, 108 Day Surgery Centre ABC
W2, Lindo Wing, St. Mary's Hospital - PPU B
W5, Hillside Hospital ABC
W5, Old Court Hospital B
W6, Charing Cross Hospital - PPU B
W6, The Royal Masonic Hospital ABC
W12, Hammersmith Hospital - PPU AB
WC1, National Hospital for Neurology
& Neurosurgery - PPU A
WC1, The Hospital for Sick Children,
Great Ormond Street - PPU A
WC1, University College Hospital - PPU AB
MANCHESTER (GREATER)
Bolton, Beaumont Hospital BC
Bury, Bury General Hospital - PPU C
Manchester, BUPA Hospital Manchester BC
Manchester, Christie Hospital & Holt Radium
Institute - PPU C
Manchester, IBH Victoria Park Hospital BC
Manchester, Royal Eye Hospital C
Manchester, The Manchester Clinic - PPU C
Manchester, Withington Hospital C
Manchester, Wythenshawe Hospital - PPU C
Oldham, Royal Oldham Hospital C
Pendlebury, Royal Manchester Children's
Hospital C
Rochdale, Birch Hill Hospital C
Rochdale, Highfield Hospital BC
Salford, Hope Hospital C
Salford, IBH Oakland Hospital BC
Stockport, Stepping Hill Hospital C
Trafford, Trafford General Hospital C
MERSEYSIDE
Liverpool, Broad Green Hospital - PPU C
Liverpool, Fazakerley Hospital C
Liverpool, Lourdes Hospital C
Liverpool, Park House Nursing Home C
Liverpool, Royal Liverpool Children's Hospital C
Liverpool, Royal Liverpool Hospital C
Prescot, Whiston Hospital C
St. Helens, Fairfield Independent Hospital C
Thingwall, BUPA Wirral Hospital BC
Upton, Arrowe Park Hospital - PPU C
NORFOLK
Cromer, Cromer & District Hospital C
Great Yarmouth, James Paget Hospital - PPU C
King's Lynn, Sandringham Private Hospital BC
Norwich, BUPA Hospital Norwich BC
Norwich, Norfolk & Norwich Hospital - PPU C
NORTHAMPTON
Kettering, IBH Woodlands Hospital BC
Kettering, Kettering General Hospital - PPU C
Northampton, Northampton General Hospital C
Northampton, St. Matthew's Hospital BC
Northampton, Three Shires Hospital C
NORTHUMBERLAND
Ashington, Ashington Hospital C
Hexham, Hexham General Hospital C
NOTTINGHAMSHIRE
Nottingham, Nottingham City Hospital C
Nottingham, Park Hospital ABC
Nottingham, The Convent Hospital C
Nottingham, University Hospital C
Sutton-in-Ashfield, Kings Mill Hospital C
OXFORDSHIRE
Banbury, Foxcote Private Hospital C
Banbury, Horton General Hospital C
Oxford, Churchill Day Surgery Unit C
Oxford, John Radcliffe Hospital - PPU C
Oxford, Nuffield Orthopaedic Centre - PPU C
Oxford, The Acland Hospital BC
SHROPSHIRE
Oswestry, Robert Jones & Agnes Hunt
Hospital - PPU C
Shrewsbury, Royal Shrewsbury Hospital C
Shrewsbury, Shropshire Nuffield Hospital C
SOMERSET
Taunton, Parkside Wing Musgrove
Park Hospital - PPU C
Taunton, The Somerset Nuffield Hospital C
Yeovil, Yeovil District Hospital
(Kingston Wing) - PPU C
STAFFORDSHIRE
Burton-upon-Trent, Burton General
Hospital - PPU C
Newcastle-under-Lyme, The North
Staffordshire Nuffield Hospital C
Stafford, IBH Rowley Hall Hospital BC
Stafford, Stafford Clinic - PPU C
Stoke-on-Trent, North Staffordshire
Royal Infirmary C
SUFFOLK
Bury St. Edmunds, St. Edmunds Hospital
& Nursing Home C
Bury St. Edmunds, West Suffolk Hospital - PPU C
Ipswich, Christchurch Park Hospital C
Ipswich, Ipswich Hospital - PPU C
SURREY
Ashtead, Ashtead Hospital C
Camberley, Frimley Park Hospital - PPU C
Caterham, IBH North Downs Hospital BC
Cheam, St. Anthony's Hospital AB
Chertsey, Runnymede Hospital BC
Croydon, Shirley Oaks Hospital AB
Epsom, Epsom District Hospital - PPU C
Farnham, BUPA Clare Park Hospital BC
Guildford Mount Alvernia Hospital BC
Guildford, Royal Surrey County Hospital - PPU C
Guildford, St. Lukes Hospital - PPU C
Harley, BUPA Gatwick Park Hospital ABC
Kingston-upon-Thames, Kingston Hospital - PPU C
Kingston-upon-Thames, New Victoria Hospital ABC
Redhill, East Surrey Hospital C
Woking, The Woking Nuffield Hospital BC
SUSSEX - EAST
Brighton, Brighton General Hospital C
Brighton, Royal Sussex County Hospital - PPU C
Eastbourne, Eastbourne District
General Hospital - PPU C
Eastbourne, Esperance Private Hospital B
Hastings, Conquest Hospital C
Hove, Avenue Private Clinic C
Hove, The Sussex Nuffield Hospital BC
Lewes, Victoria Hospital C
St. Leonards-on-Sea, Sussex Private Clinic C
<PAGE> 19
[GUARDIAN HEALTH LETTERHEAD]
SUSSEX - WEST
Chichester, Sherburne Hospital BC
Crawley, Crawley Hospital C
East Grinstead, Queen Victoria Hospital C
Haywards Heath, Ashdown Hospital BC
Haywards Heath, Hurstwood Park Hospital C
Haywards Heath, Princess Royal Hospital C
Littlehampton, St. Francis Nursing Home C
Midhurst, King Edward VII Hospital BC
Shoreham-by-Sea, Southlands Hospital C
Worthing, The Goring Hall Hospital B
Worthing, Worthing Hospital C
TYNE & WEAR
Newcastle-upon-Tyne, Freeman Hospital C
Newcastle-upon-Tyne, Royal Victoria Infirmary - PPU C
Newcastle-upon-Tyne, The Newcastle Nuffield Hospital C
North Shields, North Tyneside General Hospital C
Sunderland, City Hospitals C
Washington, Washington Independent Hospital BC
WARWICKSHIRE
Leamington Spa, The Warwickshire Nuffield Hospital C
Nuncaton, George Eliot Hospital C
Nuncaton, Nuncaton Private Hospital B
Rugby, Hospital of St Cross - PPU C
Warwick, South Warwickshire Hospital C
WEST MIDLANDS
Birmingham, General Hospital C
Birmingham, Priory Hospital ABC
Birmingham, Queen Elizabeth Hospital - PPU C
Birmingham, Royal Orthopaedic Hospital C
Coventry, Walsgrave General Hospital C
Dudley, Russells Hall Hospital C
Edgbaston, The Birmingham Nuffield Hospital BC
Halesowen, IBH West Midlands Hospital BC
Solihull, BUPA Parkway Hospital ABC
Sutton Coldfield, BUPA Hospital Little Aston BC
Sutton Coldfield, Good Hope District General Hospital C
Wolverhampton, The Wolverhampton Nuffield Hospital BC
WILTSHIRE
Salisbury, New Hall Hospital B
Salisbury, Salisbury District Hospital C
Swindon, Princess Margaret Hospital - PPU C
Swindon, Ridgeway Hospital B
YORKSHIRE NORTH
Harrogate, The Duchy Nuffield Hospital C
Harrogate, Harrogate District Hospital C
Richmond, St John of God Hospital C
Scarborough, BUPA Belvedere Hospital BC
Scarborough, Scarborough Hospital C
York, The Purey Cust Nuffield Hospital C
York, York District Hospital C
YORKSHIRE SOUTH
Doncaster, IBH Doncaster Hospital BC
Rotherham, Parkfield Private Hospital C
Sheffield, Claremont Hospital C
Sheffield, Royal Hallamshire Hospital C
Sheffield, Thornsbury Hospital ABC
YORKSHIRE WEST
Bingley, The Yorkshire Clinic C
Bradford, Bradford Royal Infirmary C
Elland, BUPA Hospital Elland BC
Halifax, Royal Halifax Infirmary C
Huddersfield, The Huddersfield Nuffield Hospital C
Huddersfield, The Royal Infirmary C
Keighley, Airedale General Hospital - PPU C
Leeds, BUPA Hospital Leeds BC
Leeds, Fulford Grange Hospital BC
Leeds, Methley Park Hospital BC
Leeds, The General Infirmary - PPU C
Leeds, The Mid-Yorkshire Nuffield Hospital BC
Otley, Wharfedale General Hospital - PPU C
Wakefield, Pinderfields General Hospital C
CHANNEL ISLANDS
Alderney, Mignot Memorial Hospital C
Guernsey, Princess Elizabeth Hospital C
Jersey, Bon Air Nursing Home C
Jersey, General Hospital C
NORTHERN IRELAND
Bally Kelly, North West Independent Clinic C
Bangor, Bangor Hospital C
Belfast, Belfast City Hospital C
Belfast, Musgrave Park Hospital C
Belfast, Royal Victoria Hospital C
Belfast, The Ulster Hospital C
Belfast, The Ulster Independent Clinic C
Craigavon, Craigavon Area Hospital C
Lisburn, Lagan Valley Hospital C
Londonderry, Altnagelvin Hospital C
Newry, St John of God Hospital C
Newtownards, Ards Hospital C
SCOTLAND
Aberdeen, Aberdeen Royal Infirmary C
Aberdeen, St John Hospital B
Ayr, IBH Carrick Glen Hospital BC
Dumfries, Moat Brae Nursing Home C
Dundee, Fernbrae Private Clinic B
Edinburgh, BUPA Hospital Edinburgh BC
Edinburgh, Western General Hospital C
Glasgow, Bon Secours Hospital C
Glasgow, Ross Hall Hospital ABC
Glasgow, The Glasgow Nuffield Hospital BC
Glasgow, Victoria Infirmary C
Greenock, Inverclyde Royal Hospital C
Kilmarnock, Crosshouse Hospital C
Stirling, IBH King's Park Hospital BC
WALES
Aberystwyth, Bronglais General Hospital C
Bangor, Ysbyty Gwynedd C
Bodelwyddan, Ysbyty Glan Clwyd C
Cardiff, BUPA Hospital Cardiff BC
Cardiff, University Hospital of Wales C
Carmarthen, The Werndale Hospital B
Carmarthen, West Wales General Hospital C
Llandudoo, North Wales Medical Centre C
Newport, St Joseph's Private Hospital C
Swansea, Sancta Maria Hospital C
Wrexham, The Yale Hospital BC
Wrexham, Ysbyty Maelor Wresclam C
<PAGE> 20
[GUARDIAN HEALTH LETTERHEAD]
DEFINITIONS
In this POLICY the following words are
taken to have these meanings. These words are
shown in bold print throughout
1. BENEFIT a benefit that WE will pay under this POLICY
for MEDICAL TREATMENT incurred during the
POLICY YEAR.
2. DAY-PATIENT a patient who occupies a HOSPITAL bed or is
charged for HOSPITAL accommodation in the
course of MEDICAL TREATMENT but does not
remain overnight.
3. DEPENDENT CHILD, an unmarried child who lives with YOU and is
CHILDREN aged under 21 years or under 25 years
if in full time education. This shall include
children who live away from home for the
purpose of attending their place of full-time
education.
4. GENERAL PRACTITIONER, a medical or dental practitioner registered in
GP the UK in general practice.
5. HOSPITAL a hospital run by the NHS or
a private hospital or nursing home registered
under the Nursing Home Acts or equivalent
hospital or nursing home abroad.
6. HOSPITAL COSTS charges for accommodation, nursing, operating
theatres, drugs and dressings and any other
charges made by the HOSPITAL for MEDICAL
TREATMENT.
7. IN-PATIENT a patient who occupies a HOSPITAL bed overnight
during the course of MEDICAL TREATMENT.
8. INSURED PERSON, YOU, one described as an insured person in the
YOUR certificate, schedule or specification.
(Please note for the purposes of this
insurance, the definition of spouse includes
same sex partners)
9. MEDICAL CONDITION injury, illness or disease and/or associated
symptoms, not excluded by this POLICY,
10. MEDICAL TREATMENT surgical or medical procedures solely to cure
an acute MEDICAL CONDITION or to relieve acute
episodes of a chronic or incurable MEDICAL
CONDITION. Medical treatment does not include
the management of a chronic or incurable MEDICAL
CONDITION.
Medical treatment must be given by, or under
the control of, a SPECIALIST that YOUR GP has
referred YOU to. In an emergency where it is
not possible to consult YOUR GP YOU may go
directly to a SPECIALIST.
Medical treatment may be given by a
chiropractor, osteopath or homeopath that YOUR
GP has referred YOU to, up to the BENEFIT limit
stated in the table of benefits.
<PAGE> 21
[GUARDIAN HEALTH LETTERHEAD]
DEFINITIONS (continued)
11. MEDICAL TREATMENT reasonable and necessary charges and fees for:
CHARGES
a) HOSPITAL accommodation, nursing and
operating theatres
b) SPECIALISTS, including surgeons,
physicians, anaesthetists or other
SPECIALISTS
c) Diagnostic tests carried out by a SPECIALIST
d) Blood, blood derivatives, dressings and
drugs used while YOU are an IN-PATIENT or
DAY-PATIENT
e) Home nursing services provided by a
QUALIFIED NURSE and under the supervision
of a SPECIALIST required solely to provide
medical assistance to YOU.
f) Physiotherapy from a State Registered
Physiotherapist under the direction of a
SPECIALIST or GP
12. NHS National Health Service or National Health
Service Trust.
13. OUT-PATIENT a patient who is not charged for HOSPITAL
accommodation in connection with MEDICAL
TREATMENT.
14. POLICY the application forms, declarations and the
definitions, conditions and exclusions together
with the schedule, certificates and
specification, any endorsements, the table
of benefits and hospital list.
15. POLICY YEAR the period between insurance cover beginning
or being renewed and the expiry date.
16. QUALIFIED NURSE a nurse whose name is on any current register
or roll of nurses kept by any statutory nursing
registration body within the UK.
17. SPECIALIST a registered medical or dental practitioner
who holds or has held a substantive consultant
post in a NHS HOSPITAL or who holds a
certificate of specialist accreditation that is
recognised by US or who holds alternative
qualifications that are accepted by US and is
personally approved by US for the MEDICAL
TREATMENT involved. This does not include any
practitioner who has been advised in writing by
us that he or she is not recognised by US as a
specialist.
18. SPECIFIED OBSTETRIC see exclusions, Pregnancy.
PROCEDURES
The following are specific procedures
relating to childbirth and conditions occurring
either before or afterwards.
a) Delivery - abnormal presentation
b) Caesarean section
c) Ectopic pregnancy
d) Hydatidiform mole
e) Intra-uterine foetal transfusion
f) Evacuation of retained products
g) Removal of the retained placenta or products
of gestation
h) External cephalic version for a breech
presentation
i) Induction of abortion for foetal abnormality
j) Shirodkar suture.
<PAGE> 22
[GUARDIAN HEALTH LETTERHEAD]
DEFINITIONS (continued)
19. SPECIFIED OROSURGICAL see exclusions, Dentistry.
PROCEDURES
The following are specific procedures relating
to the teeth, jaws and other parts of the
mouth or face.
a) Treatment of bone cysts
b) Treatment of mandibular, zygomatic or other
maxillary fractures
c) Removal of impacted, buried or unerupted
teeth
d) Removal of roots from antrum - Caldwell Luc
e) Removal of solid odontomes
f) Transplantation of teeth
g) Mandibular or maxillary fractures involving
alveolus only
h) Removal of buried roots
i) Removal of roots from antrum - oral approach
j) Cleft lip or cleft palate repair
k) Excision or resection of mandible
l) Excision or resection of maxilla
m) Mandibular or maxillary fractures - open
reduction with direct wiring or pinning or
plating
n) Mandibular or maxillary resection for
malignancy
o) Mandibular osteotomy for prognathism
p) Maxillary osteotomy
q) Open operation including the
temporo-mandibular joint
r) Bimaxillary osteotomy
s) Apicectomy
t) Coronoidectomy
u) Pre-prosthetic surgery - including removal
of exostoses, reduction of mylohyoid ridge.
20. UNITED KINGDOM, UK England, Scotland, Wales, Northern Ireland, the
Isle of Man and the Channel Islands.
21. YOU, YOUR, anyone described as an insured person in the
INSURED PERSONS certificate, schedule or specification.
22. WE, US, OUR Guardian Health Limited.
<PAGE> 23
[PHOENIX ASSURANCE LETTERHEAD]
Policy No. G.9788
GROUP PERMANENT HEALTH INSURANCE POLICY
THIS POLICY is issued to THE GALILEO COMPANY LIMITED whose registered office is
at Galileo House, Windmill Hill Business Park, Whitehall Way, Swindon SN5 9NX
(hereinafter called "the Grantees").
WHEREAS the Grantees have made to the PHOENIX ASSURANCE PUBLIC LIMITED COMPANY
(hereinafter called "the Company") a written proposal and declaration dated
10th May 1988 which together with any information or particulars from time to
time supplied to the Company in accordance with the First Schedule shall be the
basis of this contract and be considered as incorporated herein,
NOW THIS POLICY WITNESSETH that in consideration of the payment to the Company
of premiums as provided in the First Schedule and subject to the Provisions
set forth in the First Schedule the Company will pay to the Grantees the
appropriate monthly benefit in respect of any member who is disabled to the
extent described in the First Schedule.
IN WITNESS WHEREOF the undersigned has for and on behalf of the Company
hereunto set his hand this 12th day of July 1991
R. Street
----------------------------
Authorised Signatory
Exd.
P11(1)(1980)
ASSIGNMENTS- Notice of any assignment must be given to the Head Office of the
Company
<PAGE> 24
Phoenix Assurance Public Limited Company
Policy No. G.9788
FIRST SCHEDULE
PROVISIONS OF THE POLICY
1. In this Policy the following words and phrases shall have the
meanings hereby assigned to them.
"the Grantees" shall mean the Grantees named in DEFINITIONS
the preceding page or any assignees of the Grantees under or by
virtue of an assignment of which the Company shall have notice.
"the Scheme" shall mean Galileo Group Permanent
Health Insurance Scheme (see also Provision No. 3).
"the Policy" shall mean Policy No. G.9788 together with any Memoranda
issued by the Company for attachment thereto.
"the Date of Commencement" shall mean 26th May 1988.
"the Annual Revision Date" shall mean any 26th May.
"Policy Year" shall mean any period of twelve months commencing on an
Annual Revision Date during which the Policy is in full force.
"Periodic Review Date" means the Annual Revision Date in the year 1991
and in every subsequent third year.
"the Terminating Date" in respect of a member shall mean the date on
which he attains the age of 60.
"the Waiting Period" shall mean a period of 6 months commencing on the
date of commencement of the member's Disablement. Any period prior to a
member's Date of Entry, or prior to 3 months after the date of conclusion of
pregnancy in the case of a Disablement which is caused by pregnancy or
childbirth, shall be excluded when calculating the Waiting Period (see also
Provision No.13).
"the Employers" shall mean The Galileo Company Limited and such of its
subsidiary and/or associated companies (if any) as may from time to time be
included in the Policy with the agreement of the Company. In respect of any
employee "the Employer" shall mean that one of the Employers by which he is for
the time being employed provided that for the purposes of the Policy an employee
shall not be regarded as leaving the
P11(1980)2a
<PAGE> 25
Phoenix Assurance Public Limited Company
Employer's service if he transfers from one to another of DEFINITIONS
the Employers. (continued)
"an employee" shall mean a person employed by one of the Employers.
"a member" shall mean an employee who is included in the Policy in
accordance with the provisions thereof.
"eligible employment" and "Normal Inclusion Date" shall have the
meanings ascribed to these expressions in the Second Schedule and Provision No.
5.
"the Date of Entry" shall mean the date on which an employee is first
included in the Policy.
"Scheme Salary" and "Benefit Insured" shall have the meanings ascribed
to these expressions in the Third Schedule (Part I).
"a Disablement" in respect of a member shall mean a continuous period
of illness or disablement in respect of which evidence has been produced to the
Company to show to the Company's satisfaction that throughout such period the
member has been totally unable because of his illness or disablement to perform
his normal occupation (as hereinafter defined) and has not engaged in any other
gainful occupation or employment.
"normal occupation" in respect of a member shall mean the
occupation in which he was employed by the Employer immediately before the
beginning of the Disablement.
"Maternity Leave" shall mean the period of a female member's
absence which immediately precedes and follows the conclusion of her pregnancy
and
(i) during which, having complied with the provisions of the
Employment Protection (Consolidation) Act 1978, she has
the right under that Act to return to work for the
Employer or
(ii) which the Employer has decided shall be treated as
Maternity Leave whichever is the longer.
P11(3)(1981)
<PAGE> 26
Phoenix Assurance Public Limited Company
In the Policy, where the context admits, words DEFINITIONS
importing the masculine gender shall include the feminine and (continued)
words importing the singular number shall include the plural
and vice versa. In the construction and interpretation of the
Policy the marginal notes shall be disregarded.
2. Every notice or communication to be given or made NOTICES
to the Company under the Policy shall be given or made to
the Company in writing. Notice of any assignment of the Policy
must be given to the Head Office of the Company. Any agreement
by the Company to vary the terms or provisions of the Policy
shall be made in writing.
3. The terms of the Scheme shall be as agreed upon TERMS OF
between the Grantees and the Company. The Grantees shall notify SCHEME
the Company of any intention to amend the Scheme and any such
amendment shall affect the Policy only to the extent agreed upon
by the Company. Relevant details of the Scheme shall be given
to members but nothing contained in such details or any amendment
thereof shall affect the Company's liability under the Policy.
4. The Grantees shall supply the Company with all PROVISION
particulars and information necessary to give effect to the OF
provisions of the Policy. Such particulars shall include a INFORMATION
statement to be given to the Company within one month (or
such longer period as the Company may allow) of each Annual
Revision Date setting out such details of the membership of
the Scheme as the Company may require.
5. An employee shall be regarded as being in ELIGIBILITY
eligible employment and shall qualify for membership in FOR
accordance with the conditions set out in the Second Schedule. MEMBERSHIP
The date on which an employee qualifies for
membership as aforesaid is hereinafter called "the Normal
Inclusion Date".
The Grantees shall notify the Company if at any time
there is a change in the nature of the business conducted
by any of the Employers. If in the opinion of the Company the
work undertaken by any members becomes more hazardous as a
result of the change the Company, notwithstanding the terms of
Provision No. 21 reserves the right to make such amendments to
the Policy as it considers to be appropriate.
P11(4)(1980)
<PAGE> 27
Phoenix Assurance Public Limited Company
6. (A) The inclusion in the Policy of an employee INCLUSION IN
for his Benefit Insured at the Normal Inclusion Date POLICY AND
and for any increase in Benefit Insured thereafter EVIDENCE OF
shall be subject to acceptance by the Company. Acceptance INSURABILITY
by the Company shall be subject to the production to the
Company of such evidence (if any) of the employee's
insurability as the Company may require in accordance with
the terms notified to the Grantees from time to time by
the Company. An employee may with the agreement of the Company
be included in the Policy before or after the Normal Inclusion
Date subject to such additional evidence of insurability as
the Company may require.
(B) If the evidence of the employee's insurability is such
that the Company decides that the Benefit Insured (or a part
of the Benefit Insured) is acceptable only on special terms
the employee will be included in the Policy for the Benefit
Insured (or that part of it to which special terms apply, as the
case may be) on such terms and with effect from such date as
shall be specified by the Company in a written notice to the
Grantees. If after being notified of the special terms the
Grantees give notice to the Company that the insurance of the
Benefit Insured to which those terms apply is not required the said
insurance will terminate when such notice is given by the Grantees
or will never come into force if such notice is given before the
effective date of the insurance. A premium in respect of a
terminated insurance shall be payable of the amount required
(on the basis of the special terms) to cover the period during which
that insurance has been in force.
(C) If the inclusion in the Policy of an employee
for his Benefit Insured (or a part of his Benefit Insured) is
subject to evidence of his insurability and he suffers a Disabling
Accident (as hereinafter defined) while such evidence is being
obtained he shall be deemed to have been included in the Policy for
the benefit to which this section (C) applies as though such evidence
had not been required, provided that such benefit shall not become
payable in respect of any Disablement other than one which results
directly from the Disabling Accident and provided further that
Disabling Accident cover will not apply
(i) if the Disabling Accident occurs more than 60 days after
the date on which the employee would have been included in
the Policy for the Benefit Insured or part of the Benefit
Insured, as appropriate, if no evidence of his insurability
had been required or
<PAGE> 28
Phoenix Assurance Public Limited Company
(ii) to the insurance of any benefit in respect of the INCLUSION IN
employee at the Date of Commencement if he is absent POLICY AND
from the Employer's normal place of business on account EVIDENCE OF
of ill-health or disablement on that date or the last INSURABILITY
working day before the Date of Commencement if the (continued)
Date of Commencement is not a normal working day or
(iii) to any increase in Benefit Insured if, on the basis
of any evidence of the employee's insurability
previously supplied to the Company the Grantees have
been notified that the employee is not acceptable on
normal terms or
(iv) to any part of the Benefit Insured which exceeds Pound
50,000 (or such other amount as the Company may from
time to time determine).
No premium shall be payable in respect of the Disabling
Accident cover unless a benefit becomes payable as a result
of such cover, in which event the premium payable shall be
calculated as though the employee had been accepted on
normal terms at the beginning of that cover, but the option
under Provision No. 15 shall not apply to such cover.
For the purposes of this section (C) "Disabling Accident"
means an accident which causes bodily injury to the employee
of such an extent as to prevent him from continuing to perform
the occupation in which he was employed by the Employer
immediately prior to such accident.
7. Premiums shall be payable under the Policy in PREMIUMS
accordance with the Fourth Schedule.
Thirty days of grace are allowed for the payment
of premiums and if any premium is not paid within that
period or such longer period as the Company may allow
the payment of premiums shall be deemed to have been
discontinued and the terms of Provision No. 17 shall
apply. In that event the Grantees shall not be entitled
to resume the payment of premiums without the agreement
of the Company.
If any premiums are paid after the end of the days
of grace the Company reserves the right to charge such
additional amount in respect of the premiums as the Company
considers to be appropriate having regard to the period from
the due date to the date of payment.
8. (A) A benefit (hereinafter referred to as the BENEFITS
"Benefit Insured") determined in accordance with the Third
Schedule
<PAGE> 29
Phoenix Assurance Public Limited Company
(Part I) shall be payable under the Policy in respect of any BENEFITS
part of a member's Disablement that occurs after the end (continued)
of the Waiting Period and before the Terminating Date.
The Benefit Insured shall be payable by monthly instalments
in arrears commencing one month after the end of the Waiting
Period. The last monthly instalment shall be paid on the last
monthly payment date preceding or coincident with the end of
the Disablement or the Terminating Date, if earlier, with a
final proportionate payment for any remaining period of less
than one month.
(B) (i) If the Disablement in respect of which a benefit is
being paid under section (A) above ceases because the member engages
in a gainful occupation (with the Employer or otherwise) the Company
shall pay a reduced benefit in accordance with the Third Schedule
(Part II) in respect of any continuous period immediately following
the end of the Disablement and before the Terminating Date during
which the member's earnings from such occupation(s) are, as a result
of the ill-health or disablement which gave rise to the Disablement,
below the level determined in accordance with the said Part II. The
first monthly instalment of reduced benefit will be paid one month
after the last monthly instalment of full benefit under section (A)
above provided that if the member's engagement in the gainful
occupation referred to above commences on a date other than the
monthly payment date applicable to his benefits under section (A)
above the first such instalment of reduced benefit shall be calculated
on a proportionate basis by reference to the period from the end of
the Disablement until the due date of payment of the first monthly
instalment of reduced benefit.
(ii) If a member's Disablement ceases during the Waiting Period
because he engages in a gainful occupation or employment the Company
will, at the Grantees' request, consider the payment of a benefit,
similar to that described in subsection (i) above, in respect of any
continuous period immediately following the end of the Waiting Period
during which the member's earnings continue to be at a reduced level
because of the illness or disablement which gave rise to the
Disablement.
(C) If within twelve months of the cessation of a benefit in
respect of a member under section (A) or (B) above a further period of
Disablement of at least one month commences as a result of a
recurrence of the illness or disablement which gave rise to the
previous Disablement a benefit will at the request of the Grantees be
payable under section (A). The amount of the monthly benefit in
respect of the further Disablement shall be determined from the
P11(6) (1986)
<PAGE> 30
Phoenix Assurance Public Limited Company
Third Schedule (Part I) as though the previous Disablement had BENEFITS
never ceased. The first payment shall be made on the monthly (continued)
payment date which is at least one month but less than two months
after the resumption of the Disablement and where appropriate
shall include a proportionate amount to cover any fraction of a
month.
(D) The Grantees shall notify the Company of any member who is
absent from work on account of illness or disablement for a continuous
period of 13 weeks or of 7 weeks if the Waiting Period is less than 6
months.
The payment of any benefit under the Policy shall be subject
to the production to the Company, free of expense to the Company,
of such information and medical evidence as the Company may from
time to time require; the amount of benefit shall be subject to
any restriction required under Provision No.9.
Any benefit in respect of a member who is outside the United
Kingdom, the Channel Islands, the Isle of Man or the Republic of
Ireland shall be payable for a maximum period of six months
unless the member returns to and remains in the United Kingdom,
the Channel Islands, the Isle of man or the republic of Ireland
not later than the end of that period and provides such medical
evidence as the Company may require.
9. For the purposes of this Provision LIMITATION
(a) "Maximum Aggregate Benefit" means three- OF
quarters of the member's Remuneration, less BENEFITS
52 times the weekly rate of the basic
National Insurance Invalidity Pension for
a single person in force when the member's
benefit under the Policy commences
(b) "Remuneration" means
(i) a member's Scheme Salary immediately
before the beginning of his Disablement or
(ii) his total earned income from all sources
(including in addition to salary or wages
P11(7) (1987)
<PAGE> 31
Phoenix Assurance Public Limited Company
any commission, bonuses, overtime, LIMITATION
director's fees and any other such OF
emoluments) in respect of the twelve BENEFITS
months immediately before the beginning (continued)
of the Disablement
whichever is the greater provided that, in
any case where evidence is produced which
satisfies the Company that the amount so
calculated does not adequately represent the level
of the member's earnings before the Disablement,
Remuneration shall be such larger amount as
the Company considers to be appropriate.
(c) "Other Benefits" means benefits expressed as
a monthly rate payable to the member under
any other scheme(s) including any retirement
benefit scheme(s) or under any individual
policy(ies) effected by the member to provide
an income during his ill-health or disablement.
The maximum monthly benefit payable under the Policy in
respect of a member shall be one twelfth of the amount of his
Maximum Aggregate Benefit less the total of any Other Benefits.
In applying this Provision any amount by which the benefit in
respect of a member is increased in accordance with the Third
Schedule (Part I) after its commencement and any which is
referred to as a Supplementary Benefit in that Schedule shall be
excluded from the member's monthly benefit.
The maximum monthly benefit in respect of a member shall be
calculated for the purposes of this Provision at the date when
the benefit commences to be payable under the Policy and at any
subsequent date on which any Other Benefits commence or cease to
be payable.
The payment of a benefit under the Policy shall be subject
to the Company being supplied with such information as it may
require to calculate the maximum benefit. If the operation of
this Provision causes a reduction in the benefit the amount of
the reduction shall be applied towards the payment of premiums
under the Policy.
P11(8)(1981)
<PAGE> 32
Phoenix Assurance Public Limited Company
10. Any benefit payable under the Policy in respect of a PAYMENT OF
member shall be paid to the Grantees to be applied in accordance BENEFITS
with the Scheme; the Company shall not be bound to see to the
application of any money so paid.
11. The age of a member shall be proved to the satis- EVIDENCE
faction of the Company when required by the Company and in any OF AGE
case before the payment hereunder of any benefit in respect
of the member. If the age of a member shall have been incorrectly
stated the Company reserves the right to make such adjustment
to the benefits and/or premiums in respect of him as it considers
to be appropriate.
12. A member shall cease to be included in the Policy CESSATION OF
(i) on the Terminating Date or MEMBERSHIP
(ii) on ceasing to be in the Employer's service or
(iii) on ceasing to be in eligible employment
subject to Provision No. 14 or
(iv) on commencing Maternity Leave subject to
Provision No. 13
whichever occurs first. The Grantees shall notify the Company
of the happening of any of the events referred to in
sections (ii), (iii) and (iv) above.
No benefit shall be payable under the Policy in respect of a
member after he has ceased to be included in the Policy.
13. A member (other than one to whom the next following MATERNITY
paragraph applies) shall cease to be included in the
Policy at the commencement of her Maternity Leave LEAVE
but shall be included again on returning to work for
the Employer at the end of that leave.
At the request of the Grantees the member shall continue to
be included in the Policy throughout her Maternity Leave subject
to the special conditions applicable to her Waiting Period as set
out in the definition of that expression in Provision No. 1. Any
benefit that becomes payable in respect of such a member shall be
based on her Scheme Salary immediately before the commencement of
her Maternity Leave.
Any request by the Grantees under this Provision shall be
made to the Company at the commencement of the member's Maternity
Leave.
P11(9)(1981)
<PAGE> 33
Phoenix Assurance Public Limited Company
14. Subject to the continued payment of any premiums TEMPORARY
applicable to him, a member who was in eligible employment ABSENCE
immediately before becoming absent shall continue to
be included in the Policy
(i) during any period in which he is absent
because of illness or disablement
(ii) during any period in which he is temporarily
absent for a reason other than illness or
disablement: provided that a member's
continued inclusion under this section
(ii) for a period of absence of more than
one month shall be subject to the agreement
of the Grantees and the Company in each
case and to such special terms and conditions
as the Company may require,
provided that a member's inclusion in the Policy shall
in any event cease if section (i) or (ii) of Provision
No. 12 applies or if it ceases in accordance with
Provision No. 13.
15. A member who ceases to be included in the Policy in OPTION TO
accordance with Provision No. 12 or 17 shall have the option, to EFFECT POLICY
be exercised within one month after such cessation and subject to
the terms of this Provision, of effecting with the Company an
individual permanent health insurance policy without supplying any
evidence of his state of health. A member who in accordance with
Provision No. 13 ceases to be included in the Policy because she
is on Maternity Leave shall not be entitled to exercise the option
under this Provision on such cessation. Any such member shall,
for the purposes of this Provision, be regarded as ceasing to be
included in the Policy at the end of her Maternity Leave if she
does not then return to work for the Employer.
Under the individual policy
(i) the maximum benefit shall be the Benefit
Insured (or the Basic Benefit in any case where
the Third Schedule makes provision for a
Supplementary Benefit) for which the member
was included in the Policy on normal terms
immediately before the cessation of his cover
under the Policy (or such maximum amount as
P11(10)(1980)
<PAGE> 34
Phoenix Assurance Public Limited Company
is available under an individual policy OPTION TO
whichever is the lesser) and EFFECT POLICY
(ii) the Waiting Period shall not be less than (continued)
that applicable to the member under the Policy
and
(iii) the rate of premium shall be according to the
member's age and occupation when the option is
exercised.
Any individual policy shall be subject to the terms
conditions and rates which apply to permanent health insurance
policies then being issued to the general public.
The option described in this Provision shall not apply to
a member
(a) who is within five years of the Terminating Date or
(b) who, on ceasing to be a member, becomes insured by the Company under
another similar scheme of the Employer or of any company or firm
associated with the Employer or
(c) who is resident or is taking up residence outside the United
Kingdom, the Channel Islands or the Isle of Man or
(d) who on ceasing to be a member does not engage in another full-time
occupation or takes up an occupation which is not acceptable to
the Company for this type of insurance or
(e) who leaves the Employer's service on being dismissed for fraud or
misconduct or
(f) who leaves the Employer's service or ceases to be in
eligible employment because of or after a period of
absence arising from intentional self-inflicted injury
or any criminal act, intemperance or the taking of drugs
(except as prescribed by a Registered Medical
Practitioner).
If a member, in respect of whom a benefit under the Policy is already
in course of payment, ceases to be in the Employer's
<PAGE> 35
Phoenix Assurance Public Limited Company
service the terms of this Provision shall be modified in OPTION TO
such manner as the Company considers to be appropriate. EFFECT POLICY
The benefits under any policy effected by such a (continued)
member shall be payable direct to the member and
shall be in lieu of any further benefits under the Policy.
Similar arrangements shall apply to a member who ceases to be in
the Employer's service during the Waiting Period and in that case
any policy effected by the member will provide benefits if his
Disablement continues after the end of the Waiting Period.
16. (A) The Policy and the terms and conditions TERMS AND
thereof shall attach and take effect in all respects as if CONDITIONS
they had been in full force and effect on and after the OF POLICY
Date of Commencement and the rights and liabilities of
the parties hereof shall be construed and take effect accordingly.
(B) If the Grantees fail to observe and comply with
any of the terms and conditions of the Policy the Company
shall not be bound to accept any further premiums and in the
event of a premium not being accepted the payment of premiums
under the Policy shall be deemed to have been discontinued.
17. (A) If the payment of premiums under the Policy DISCONTINUANCE
is discontinued the insurances hereunder in respect of members OF PREMIUMS
then included in the Policy shall thereupon cease provided that,
in respect of any member whose Disablement commenced before and
continues after the discontinuance, the terms of the Policy shall
continue to apply until the end of such Disablement except as
provided for in section (B) below. For the purposes of this
Provision a member's Disablement shall include any period during
which a reduced benefit is payable in accordance with Provision
No. 8(B).
If the payment of premiums in respect of members
employed by one or more (but not all) of the Employers is
discontinued the foregoing terms of this section (A) shall
apply (mutatis mutandis) to such members.
(B) If the Employer of any members ceases to carry
on business (by reason of liquidation or otherwise) other
than in the course of reconstruction or amalgamation, such members
shall thereupon cease to be included in the Policy. In any case
where, on the Employer ceasing to carry on business as aforesaid,
the Disablement of the member has already commenced the arrangements
described in Provision No. 15 in respect of a member whose service
with the Employer ceases after the commencement of benefit or
during the Waiting Period shall apply.
<PAGE> 36
Phoenix Assurance Public Limited Company
18. If any difference or dispute of any kind whatsoever ARBITRATION
shall arise between the Grantees and the Company in
respect of this Policy or in respect of any claim or of any
matter or thing or any liability arising or alleged to have
arisen hereunder or otherwise connected herewith directly or
indirectly the same shall be referred to the decision of two
Arbitrators, one to be chosen by the Company and the other by the
Grantees, with power to the said Arbitrators to appoint an
Umpire.
The costs of and connected with the Arbitration shall be in
the discretion of the Arbitrators or Umpire, who shall also have
the power to take evidence and compel production or exhibition of
documents.
The obtaining of an award in such an Arbitration shall be a
condition precedent to any right of action against or any
liability of the Company.
l9. Notwithstanding anything to the contrary contained AUGMENTATION
in the Policy and subject in each case to the consent
of the Company and to the application of such special terms,
conditions and restrictions as may be stipulated by the Company
a member may be included in the Policy for a benefit greater
than his Benefit Insured the amount of such benefit being as
agreed in each case between the Company and the Grantees.
20. (A) The construction validity and performance of GOVERNING
this Policy shall be governed by English Law. LAW AND
Any reference to or relating to money in the Policy shall CURRENCY
be taken as referring to sterling and the premiums and benefits
shall be calculated accordingly. Premiums and benefits shall
be payable in sterling at the Company's Head Office.
(B) The receipt of the Grantees (or of any person RECEIPTS
to whom a benefit is paid direct in accordance with the
provisions of the Policy) for any payment made by the Company
under the Policy shall be a full and sufficient discharge to the
Company in respect of that payment.
P11(13)(1980)
<PAGE> 37
Phoenix Assurance Public Limited Company
21. The Company shall have the right at any Periodic AMENDMENT
Review Date to amend the Policy by revising or adding OF POLICY
to the Schedules thereto provided that an amendment may
be made at any time
(i) if there is a change in the basis used for
calculating the benefits under the Policy
or
(ii) if there is a change in the eligibility
conditions for inclusion in the Policy
or
(iii) if an additional Employer is admitted to
the Policy or
(iv) if the number of members included in the
Policy becomes less than 75 per cent. of
the number of members included in the
Policy on the last preceding Periodic
Review Date. (For this purpose the Date
of Commencement shall be regarded as a
Periodic Review Date.)
P11(14b)FR(1980)
<PAGE> 38
Phoenix Assurance Public Limited Company
Policy No. G.9788
SECOND SCHEDULE
An employee shall for the purposes of the Policy be regarded as being in
eligible employment if he is normally resident in the United Kingdom, the
Channel Islands, the Isle of Man or the Republic of Ireland and is employed by
the Employer as a full time permanent employee of the Employer.
An employee in eligible employment will qualify for membership on the first day
during the currency of the Policy on which he satisfies the following age and
service conditions:
TABLE
Attained age Minimum length of continuous
At least Less than service with the Employer
Males 16 60 NIL
Females 16 60 NIL
P11(15)(1980)
<PAGE> 39
Phoenix Assurance Public Limited Company
Policy No. G.9788
THIRD SCHEDULE
PART I
The annual rate of Benefit Insured in respect of a member at any time shall be
sixty per cent. of his Scheme Salary provided that in no case shall the Benefit
Insured exceed
(a) Pound 50,000 plus 40 per cent. of the amount by which the member's
Scheme Salary exceeds Pound 75,000
or
(b) Pound 100,000
or
(c) such other maximum amount as is applicable at the time in accordance
with the Company's then current standard terms and conditions and which
has been notified to the Grantees in writing or
(d) the amount for which the member has been accepted for inclusion in
the Policy in accordance with Provision No.6.
P11(16a)(1987)
<PAGE> 40
Phoenix Assurance Public Limited Company
Policy No. G.9788
THIRD SCHEDULE
PART I
(continued)
Provisions affecting the calculation and payment of the Benefit Insured.
1. Scheme Salary in respect of a member at any given date means his annual
rate of basic salary or wages from the Employer at that date excluding any
other earnings such as overtime, bonus or commission and, in the case of a
director, excluding director's fees.
The National Insurance Deduction at any time during a Policy Year is 52
times the weekly basic National Insurance Invalidity Pension for a single
person at such time.
In the event of a benefit becoming payable the Scheme Salary and National
Insurance Deduction shall be the amounts in force immediately prior to the date
on which the member's Disablement commences.
2. The Benefit Insured shall be payable by level monthly instalments in
accordance with Provision No. 8.
The annual rate of Benefit Insured shall be increased on each anniversary
of its commencement by 5 per cent. of the annual rate of such benefit in force
immediately before that anniversary.
3. The payment of a benefit shall be subject to any limitation required
by Provision No. 9.
P11(16b)(1987)
<PAGE> 41
Phoenix Assurance Public Limited Company
Policy No. G.9788
THIRD SCHEDULE
PART II
(A) For the purposes of calculating the amount (if any) of reduced benefit
under sub-section (B)(i) of Provision No. 8 a member's earnings after his
return to work shall be adjusted to take account of changes in the Retail
Prices Index since the commencement of the full benefit under section
(A) of that Provision. A reduced benefit shall be payable if the annual
rate of the member's adjusted earnings for any month is less than the
amount of his Scheme Salary at the commencement of his Disablement.
The annual rate of the adjusted earnings (hereinafter referred to as
"AE") shall be calculated as follows:-
AE = E X RPI (i)
-------------
RPI (ii)
where E is the annual rate of the member's earnings from the
Employer and from any other source at the relevant date.
"Relevant date" is the date of the member's return to
work or a subsequent anniversary of the commencement of
the full benefit or such other date at which the amount of
reduced benefit is required to be calculated by the Company
RPI (i) is the Retail Prices Index when the full benefit in
respect of the member commenced
RPI (ii) is the Retail Prices Index at the relevant date.
The Retail Prices Index at any date shall be as published by the
Department of Employment in respect of the month preceding that in
which the date occurs. If there is a change in the nature
of the Retail Prices Index or if it ceases to exist the Company
shall adjust the member's earnings on such comparable basis as
it considers to be appropriate.
P11(17) (1981)
<PAGE> 42
Phoenix Assurance Public Limited Company
Policy No. G.9788
THIRD SCHEDULE
PART II
(continued)
(B) The amount of reduced benefit in respect of any month shall be
calculated as follows subject to section (C) below.
Monthly reduced benefit = (1 - AE ) FB
--
SS
where AE is as defined in section (A) above
SS is the member's Scheme Salary at the commencement of his
Disablement
FB is the full amount of the monthly benefit in respect of the
member which would have been payable under the Policy for
that month if the member's Disablement had continued and if
the Benefit Insured in respect of him at the date of
commencement of his Disablement had been increased by an
amount equal to the National Insurance Deduction at that
date
provided that the benefit payable in respect of a member for any month
in accordance with this section (B) shall in no event exceed the full
amount of the monthly benefit in respect of him which would have been
payable under the Policy for that month if his Disablement had
continued.
(C) (i) The Grantees shall notify the Company of the annual rate of a
member's earnings on his return to work and on each subsequent
anniversary of the commencement of the member's full benefit and
the monthly reduced benefit in the period up to the next
anniversary shall be calculated accordingly: provided that the
Company reserves the right to obtain details of earnings received
by the member from the Employer or otherwise at any time and to
make such adjustment to the level of the reduced benefits in the
period up to the next anniversary as the Company considers
necessary by reference to the amount of earnings actually
received.
(ii) If the annual rate of a member's earnings cannot be determined as
aforesaid because of frequent fluctuations in the amount of
earnings or for any other reason the arrangements set out above
in this Schedule for the calculation of reduced benefits shall
P11(18) NID(1986)
<PAGE> 43
Phoenix Assurance Public Limited Company
Policy No. G.9788
THIRD SCHEDULE
PART II
(continued)
be modified in such manner as the Company considers necessary
with a view to arriving at an appropriate and equitable level of
reduced benefit and to keeping the number of changes in the
monthly amount of such benefit to a minimum.
(iii) The payment of reduced benefits shall be subject to the Company
being supplied from time to time with such evidence of the
member's health and with such details of his earnings as it may
require: details of the member's earnings shall, if the Company
considers it necessary, include a declaration by the member
of his earnings from all sources in the period for which the
reduced benefit is payable.
The payment of reduced benefits will cease if it is not shown to the Company's
satisfaction that the reduction in the member's earnings continues to be
attributable to the ill-health or disablement which gave rise to the Disablement
in respect of which the full benefit under Provision No. 8(A) was paid.
P11(19)(1980)
<PAGE> 44
Phoenix Assurance Public Limited Company
Policy No. G.9788
FOURTH SCHEDULE
(A) At each Annual Revision Date the annual premium in respect of the Policy
Year commencing on that date shall be calculated by applying the premium
rate referred to below in this section (A) to the total Scheme Salaries in
respect of all members included in the Policy on that Annual Revision Date
other than those in respect of whom benefits are in course of payment on
such date in accordance with Provision No. 8. For these purposes the Date
of Commencement shall be treated as an Annual Revision Date except in a
case where section (B) below applies. The total annual premium in respect
of any Policy Year shall be payable by equal quarterly instalments in
advance the first instalment falling due at the beginning of that Policy
Year.
Premium rate per Pound 100 Scheme Salary: Pound 0.429
The premium rate specified above shall be applicable until (but excluding)
the Periodic Review Date in the year 1991. On each Periodic Review Date the
Company shall determine the premium rate to apply during the ensuing period
up to the next following Periodic Review Date subject always to Provision
No. 21.
(B) If the period from the Date of Commencement to the next following Annual
Revision Date is less than one year the premium payable in respect of that
period shall be as determined by the Company having regard to the terms of
section (A) above.
(C) At each Annual Revision Date there shall be an adjustment of premium in
respect of changes in membership and Scheme Salary during the previous
Policy Year (or since the Date of Commencement if that occurred less than
one year before the said Annual Revision Date) and such adjustment shall be
a payment by the Grantees to the Company or by the Company to the Grantees
according to whether the total Scheme Salary has increased or decreased
during such Policy Year (or since the Date of Commencement as the case may
be). If during such Policy Year (or since the Date of Commencement as the
case may be) a benefit either commenced or ceased to be payable in respect
of a member in accordance with Provision No.8 an appropriate further
adjustment shall be made so that a proportionate premium is payable in
respect of any part of the relevant period during which the member was
included in the Policy other than when a benefit was payable in respect of
him under Provision No. 8.
Exd
<PAGE> 45
Phoenix Assurance Public Limited Company
Policy No. G.9788
Issued to : The Galileo Company Limited
MEMORANDUM NO.1
It is hereby declared that the Policy is amended in the following manner:
(A) With effect from 26th May 1989
(i) the premium rate of "0.499" in section (A) of the Fourth Schedule is
deleted and replaced by "0.241".
(ii) the year "1991" in section (A) of the Fourth Schedule is deleted and
replaced by "1990".
(B) With effect from 26th May 1990
(i) the following Provision is added to the First Schedule.
"22. In addition to its rights to require medical examination,
information or evidence in accordance with the terms of the other
Provisions of the Policy the Company shall have the right under this
Provision in relation to any person in eligible employment said to
be or have been suffering from an illness or disablement, and at any
time before and/or after paying or continuing to pay a benefit under
the Policy in respect of such person, and as a pre-condition to any
or any further payments on account of any past, present or future
period of illness or disability suffered by such person, to require
such person
(i) to undergo any medical examination and/or tests including blood
and saliva tests for infection by (including sero-positivity to)
Human Immunodeficieny Virus (HIV), Acquired Immune Deficiency
Syndrome (AIDS) or any similar or related condition or syndrome,
and
(ii) to sign the Company's standard consent form and any other
consent and any form necessary for that purpose and necessary
to enable the results of such examination and/or tests to be
provided direct to the Company for use for the purposes of the
Policy.
<PAGE> 46
Phoenix Assurance Public Limited Company
Policy No. G.9788
MEMORANDUM NO.1 (continued)
If any person has been or is at any time found by medical
examination, testing or otherwise to be infected (which
includes sero-positive to) any HIV or AIDS or other similar
or related condition or syndrome then notwithstanding
anything to the contrary contained in the Policy:
(a) such person shall not be included in the Policy (or,
where he has already been included in the Policy shall
immediately cease to be so included)
(b) no benefit (or where a benefit has already been paid, no
further benefit) shall be payable under the Policy in
respect of such person
(c) the option described in the Provision 'Option to Effect
Policy' shall not be available to such person.
The terms of this amendment shall not apply to a member who
on the effective date is in a period of Disablement until
such time as the Disablement ceases."
(ii) the premium rate of "0.241" in section (A) of the Fourth Schedule is
deleted and replaced by "0.270".
(iii) the year "1990" in section (A) of the Fourth Schedule is deleted and
replaced by "1992".
(C) With effect from 9th May 1991 the first paragraph of the Second Sohedule
is deleted and replaced by the following:
"An employee shall for the purposes of the Policy be regarded as being in
eligible employment if he is normally resident in the United Kingdom, the
Channel Islands, the Isle of Man or the Republic of Ireland and is
employed by the Employer as a permanent employee working at least 16 hours
per week."
Dated this 12th day of July 1991
R. Street
---------------------------------
Authorised Signatory
Exd:[sig]
<PAGE> 47
Phoenix Assurance Public Limited Company
Policy No. G.9788
Issued to : The Galileo Company Limited
MEMORANDUM NO. 2
It is hereby declared that with effect from the commencement date the Policy
is amended in the following manner:-
The first paragraph of Part 1 of the Third Schedule is deleted and replaced by
the following:-
"The annual rate of Benefit Insured in respect of a member at any time shall
be an amount equal to
(i) sixty per cent. of his Scheme Salary
less
(ii) the National Insurance Deduction
provided that in no case shall the Benefit Insured exceed" ,
Dated this 16th day of June 1992
PW Briers
---------------------------------
Authorised Signatory
Exd: [sig]
<PAGE> 48
Phoenix Assurance Public Limited Company
10. Any benefit payable under the Policy in respect of PAYMENT OF
a member shall be paid to the Grantees to be applied in BENEFITS
accordance with the Scheme; the Company shall not be
bound to see to the application of any money so paid.
11. The age of a member shall be proved to the satis- EVIDENCE
faction of the Company when required by the Company and OF AGE
in any case before the payment hereunder of any benefit
in respect of the member. If the age of a member shall have been
incorrectly stated the Company reserves the right to make
such adjustment to the benefits and/or premiums in respect
of him as it considers to be appropriate.
12. A member shall cease to be included in the Policy CESSATION OF
(i) on the Terminating Date or MEMBERSHIP
(ii) on ceasing to be in the Employer's service
or
(iii) on ceasing to be in eligible employment subject
to Provision No. 14 or
(iv) on commencing Maternity Leave subject to Provision
No. 13
whichever occurs first. The Grantees shall notify the
Company of the happening of any of the events referred to in
sections (ii), (iii) and (iv) above.
No benefit shall be payable under the Policy in respect of
a member after he has ceased to be included in the Policy.
13. A member (other than one to whom the next following MATERNITY
paragraph applies) shall cease to be included in the Policy LEAVE
at the commencement of her Maternity Leave but shall be included
again on returning to work for the Employer at the end of that
leave.
At the request of the Grantees the member shall continue to be
included in the Policy throughout her Maternity Leave subject to the special
conditions applicable to her Waiting Period as set out in the definition of that
expression in Provision No. 1. Any benefit that becomes payable in respect of
such a member shall be based on her Scheme Salary immediately before the
commencement of her Maternity Leave.
Any request by the Grantees under this Provision shall be made to
the Company at the commencement of the member's Maternity Leave.
Pll(9)(1981)
<PAGE> 49
Phoenix Assurance Public Limited Company
14. Subject to the continued payment of any premiums TEMPORARY
applicable to him, a member who was in eligible employment ABSENCE
immediately before becoming absent shall continue to be
included in the Policy
(i) during any period in which he is absent
because of illness or disablement
(ii) during any period in which he is temporarily
absent for a reason other than illness or
disablement: provided that a member's
continued inclusion under this section (ii) for
a period of absence of more than one month shall
be subject to the agreement of the Grantees and
the Company in each case and to such special terms
and conditions as the Company may require,
provided that a member's inclusion in the Policy shall
in any event cease if section (i) or (ii) of Provision
No. 12 applies or if it ceases in accordance with
Provision No. 13.
15. A member who ceases to be included in the Policy in OPTION TO
accordance with Provision No. 12 or 17 shall have the option, to EFFECT POLICY
be exercised within one month after such cessation and subject to
the terms of this Provision, of effecting with the Company an
individual permanent health insurance policy without supplying any
evidence of his state of health. A member who in accordance with
Provision No. 13 ceases to be included in the Policy because she
is on Maternity Leave shall not be entitled to exercise the option
under this Provision on such cessation. Any such member shall,
for the purposes of this Provision, be regarded as ceasing to be
included in the Policy at the end of her Maternity Leave if she
does not then return to work for the Employer.
Under the individual policy
(i) the maximum benefit shall be the Benefit
Insured (or the Basic Benefit in any case
where the Third Schedule makes provision for a
Supplementary Benefit) for which the member
was included in the Policy on normal terms
immediately before the cessation of his cover
under the Policy (or such maximum amount as
P11(10)(1980)
<PAGE> 50
Phoenix Assurance Public Limited Company
is available under an individual policy OPTION TO
whichever is the lesser) and EFFECT POLICY
(ii) the Waiting Period shall not be less than (continued)
that applicable to the member under the Policy
and
(iii) the rate of premium shall be according to the
member's age and occupation when the option is
exercised.
Any individual policy shall be subject to the terms
conditions and rates which apply to permanent health insurance
policies then being issued to the general public.
The option described in this Provision shall not apply
to a member
(a) who is within five years of the Terminating Date or
(b) who, on ceasing to be a member, becomes insured by
the Company under another similar scheme of the
Employer or of any company or firm associated with
the Employer or
(c) who is resident or is taking up residence outside
the United Kingdom, the Channel Islands or the
Isle of Man or
(d) who on ceasing to be a member does not engage
in another full-time occupation or takes up an
occupation which is not acceptable to the Company
for this type of insurance or
(e) who leaves the Employer's service on being dismissed
for fraud or misconduct or
(f) who leaves the Employer's service or ceases
to be in eligible employment because of or
after a period of absence arising from
intentional self-inflicted injury or any criminal
act, intemperance or the taking of drugs (except
as prescribed by a Registered Medical Practitioner).
If a member, in respect of whom a benefit under the Policy is already in
course of payment, ceases to be in the Employer's
P11(11)(1980)
<PAGE> 51
Phoenix Assurance Public Limited Company
service the terms of this Provision shall be modified in OPTION TO
such manner as the Company considers to be appropriate. EFFECT POLICY
The benefits under any policy effected by such a (continued)
member shall be payable direct to the member and
shall be in lieu of any further benefits under the
Policy. Similar arrangements shall apply to a member
who ceases to be in the Employer's service during
the Waiting Period and in that case any policy
effected by the member will provide benefits if
his Disablement continues after the end of the
Waiting Period.
16. (A) The Policy and the terms and conditions TERMS AND
thereof shall attach and take effect in all respects CONDITIONS
as if they had been in full force and effect on and after OF POLICY
the Date of Commencement and the rights and liabilities
of the parties hereof shall be construed and take
effect accordingly.
(B) If the Grantees fail to observe and comply
with any of the terms and conditions of the Policy the
Company shall not be bound to accept any further premiums
and in the event of a premium not being accepted the payment
of premiums under the Policy shall be deemed to have been
discontinued.
17. (A) If the payment of premiums under the Policy DISCONTINUANCE
is discontinued the insurances hereunder in respect of OF PREMIUMS
members then included in the Policy shall thereupon
cease provided that, in respect of any member whose
Disablement commenced before and continues after the
discontinuance, the terms of the Policy shall continue
to apply until the end of such Disablement except as
provided for in section (B) below. For the purposes of this
Provision a member's Disablement shall include any period during
which a reduced benefit is payable in accordance with Provision
No. 8(B).
If the payment of premiums in respect of members
employed by one or more (but not all) of the Employers is
discontinued the foregoing terms of this section (A) shall apply
(mutatis mutandis) to such members.
(B) If the Employer of any members ceases to carry on
business (by reason of liquidation or otherwise) other than in
the course of reconstruction or amalgamation, such members shall
thereupon cease to be included in the Policy. In any case where,
on the Employer ceasing to carry on business as aforesaid, the
Disablement of the member has already commenced the arrangements
described in Provision No. 15 in respect of a member whose
service with the Employer ceases after the commencement of
benefit or during the Waiting Period shall apply.
P11(12)(1980)
<PAGE> 1
EXHIBIT 10.45
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of October 31, 1994 between GALILEO
INTERNATIONAL PARTNERSHIP, a partnership organized under the laws of the State
of Delaware and doing business at 9700 West Higgins Road, Suite 400, Rosemont,
Illinois (the "Company"), and JAMES E. BARLETT, an individual residing at 13350
Buckland Hall Road, St. Louis, Missouri ("Executive").
W I T N E S S E T H :
WHEREAS, the Company is a partnership of major international airlines
and is engaged in the travel services and computer reservation systems business
in the United States, the United Kingdom and elsewhere in the world; and
WHEREAS, the Company wishes to employ Executive and Executive wishes to
be so employed;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. EMPLOYMENT; POSITION AND RESPONSIBILITIES. The Company agrees to
employ Executive, and Executive agrees to serve, as President and Chief
Executive Officer of the Company. In such capacity, Executive shall have
authority and responsibility, subject to control and direction by the Board of
Directors (the "Board"), to administer and manage the business of the Company.
Executive shall also serve as a non-voting member of the Board. Executive will
be located at the Rosemont, Illinois office of the Company or at such other
location as the Board may designate as the principal office of the Company.
Executive acknowledges that his employment hereunder will require substantial
travel.
2. OBLIGATIONS OF EXECUTIVE. During the Term of this Agreement (as
hereinafter defined) Executive agrees that he will devote substantially all of
his time, attention and energies to the business of Employer; that he will
exercise the highest degree of loyalty and conduct in the performance of his
duties, and that he will do nothing that harms, directly or indirectly, the
business or reputation of the Company.
<PAGE> 2
3. COMPENSATION.
(a) Executive's salary during the Term of this Agreement (as
hereinafter defined) shall be at the rate of $420,000 per annum, commencing on
the date first above written. The Board will review Executive's salary on an
annual basis and increases will be at the discretion of the Board taking into
account Executive's individual job performance.
(b) Executive will participate, on a basis comparable to other
executives of the Company, in the Company's annual management incentive
compensation plan (the "MIP"), a copy of which has been furnished to Executive.
The terms of the MIP will apply to Executive except as otherwise provided by
this Agreement. Nothing in this Agreement shall prevent the Company from
changing the MIP or from reducing or terminating annual incentive compensation
payments thereunder altogether, provided that the changes, reductions or
terminations are applicable to executives of the Company generally.
(c) Executive will participate in the Company's long term incentive
plan (the "LTIP") when the pending revision of the LTIP is adopted by the Board
and becomes effective. For each of the LTIP vesting years (which may be two and
shall not be more than three), Executive will receive $150,000 payable at the
same time that payments under the MIP are made to executives of the Company for
the preceding year. Nothing in this Agreement shall prevent the Company from
changing the LTIP or from reducing or terminating long-term incentive
compensation payments thereunder, provided that the changes, reductions or
terminations are applicable to executives of the Company generally.
(d) Executive shall be entitled to paid annual vacation, personal
leave and holidays during each calendar year during his employment in
accordance with the policies of the Company. Executive will participate in
health, welfare (including disability) and defined benefit and contribution
retirement plans, including but not limited to the pension plan and 401(k)
savings plan, that are maintained by the Company on the same basis as such
benefits are generally available to employees of the Company in the United
States, and subject to the right of the Company to change, reduce or terminate
such plans or benefits in respect of employees generally.
-2-
<PAGE> 3
(e) Executive will be reimbursed for reasonable business, travel and
relocation expenses in accordance with the normal policies of the Company
including dues, fees and expenses associated with membership in professional,
business and civic organizations in which Executive's participation is in the
interest of the Company. The Company will also reimburse Executive for one club
membership (i.e., initial fees and dues); will provide Executive with an
airfare allowance of up to $21,000 per year based upon ID50 tickets on partner
airlines, and will provide to Executive a cellular telephone for business use
and a monthly car allowance based on a three year lease of a $45,000 automobile
(until the expiration of its lease in 1995, Executive's car will be the top of
the range Lexus currently under lease to the Company). The benefits and
payments described in this subparagraph shall not include an income tax
grossup, and Executive will be responsible for any tax on their value.
Executive's expenses will be accounted for and reimbursed through the Company's
normal expense reporting and approval process and his expense reports will also
be reviewed annually by the Board or a committee or designee of the Board.
4. TERMINATION. This Agreement shall extend for a Term commencing on
the date first above written and ending on a Termination Date which shall be 15
days after written notice to terminate it is given by the Company to the
Executive or by the Executive to the Company, provided that this Agreement may
be terminated effective immediately by the Company for Cause, by the Executive
for Good Reason as herein provided, in which event the date on which notice of
termination is given shall be the Termination Date.
(a) If Executive terminates his employment under this Agreement without
Good Reason, or if the Company terminates his employment for Cause, the Company
shall have no financial obligation to Executive other than to pay his base
salary through the Termination Date, and Executive's participation in employee
benefit plans of the Company shall cease as of such Termination Date. The
Company shall give Executive written notice of a termination for Cause.
(i) For purposes of this Agreement, "Cause" shall mean: (A) any act or
omission that constitutes a material breach by Executive of, or material
misrepresentation or omission under this Agreement; (B) the commission by
Executive of a dishonest, illegal or wrongful act (1) involving fraud,
misrepresentation or moral turpitude, (2) causing damage to the Company or
(3) involving potential damage to the business and reputation of the
Company; (C) Executive's willful and
-3-
<PAGE> 4
repeated absence from his employment; or (D) Executive's willful failure
or refusal to perform specific and reasonable directives of the Company;
or (E) material and prolonged deficiencies in Executive's performance of
his assigned duties and responsibilities. In respect of events described
in clauses (C), (D) and (E) above, the Company shall give Executive
notice, reasonable as to time, place and manner in the circumstances
(notwithstanding that such notice may not comply with Section 9), and an
opportunity to cure the absence, failure, refusal or disregard in
question, provided that such absence, failure, refusal or disregard is
reasonably susceptible of cure in the circumstances.
(ii) For purposes of this Agreement, "Good Reason" shall mean
the occurrence of any of the following events, provided Executive has
not given Cause for termination or become Disabled: (A) the Company
shall have defaulted in its obligation to pay compensation to Executive
when, as and if due within 10 business days of written notice to the
Company that such payment was not made when due, or (B) the Company
shall have failed or refused to appoint and maintain Executive in a job
having the responsibilities and authority as set forth in Section 1
hereof (except that assignment of Executive to different job duties
based on the Board's assessment of his job performance, or appointment
of other executives to senior positions due to the Board's assessment of
a need to supplement Executive's skills or efforts, shall not constitute
"Good Reason" where Executive's compensation is not thereby reduced).
Executive shall give written notice to the Company of a termination by
him for Good Reason.
(b) If the Company terminates this Agreement without Cause, or if
Executive terminates this Agreement with Good Reason, then the Company shall
pay compensation to Executive as follows:
(1) Promptly after the Termination Date the Company will pay Executive
a lump sum equal to the total of (x) the balance of his base salary, at its rate
in effect at the Termination Date, for 12 months plus (y) an amount equal to a
reasonable estimate of the amount of annual incentive compensation he would
have received under the MIP attributable to such 12-month period assuming 100%
target achievement on his part, and
-4-
<PAGE> 5
(2) Commencing 12 months after the Termination Date and for a period of
12 months thereafter, the Company will pay Executive's salary on a monthly basis
plus a monthly amount equal to a reasonable estimate of the amount of annual
incentive compensation Executive would have received under the MIP attributable
to such month assuming 100% target achievement on his part. Such monthly
payments shall be reduced by any income Executive may generate by engaging
during such period in other employment or business activities (not including
investments). Executive shall have a duty to seek opportunities to generate such
other income in mitigation of the Company's obligation to make monthly payments
to him hereunder.
(3) In the event of a termination of this Agreement without Cause or
for Good Reason, the Company shall provide group insurance benefits to Executive
pursuant to Section 3(d) of this Agreement for 12 months after the Termination
Date. To the extent the terms of its plans so permit, the Company will continue
for the same period Executive's participation in any defined benefit and defined
contribution retirement plans, including any pension and 401(k) savings plan,
that are maintained by the Company.
(c) If Executive dies or becomes incapable by reason of Disability of
performing his duties under this Agreement, the Company will pay to Executive,
or to a person duly authorized to act on his behalf or to his estate, the sum of
(i) any unpaid salary accrued to the date of death or the Disability Date and
(if death or Disability occurs after June 30 of any year) (ii) an amount equal
to a reasonable estimate of the amount Executive would have received as annual
incentive compensation under the MIP for that year, prorated on the basis of a
ratio of the number of days in such year prior to the date of death or the
Disability Date to 360. Payment of such amount shall satisfy all obligations of
the Company to Executive under this Agreement, but in the case of Disability
Executive's employment hereunder shall continue for the purpose of continuing
his eligibility to receive medical, disability and other benefits pursuant to
Section 3(d) for 12 months after the Disability Date. For purposes of this
Agreement, "Disability" shall mean the inability of Executive, by reason of
physical or mental illness or injury, to perform his duties for more than a
total of 12 consecutive weeks during any 12-month period (such 12 weeks must be
consecutive, but shall not include vacations); the last day of such 12
consecutive week period is referred to herein as the "Disability Date". The
Company shall give Executive or
-5-
<PAGE> 6
a person duly authorized to act on his behalf written notice of a termination
based on Disability.
5. CONFIDENTIALITY. During and after the Term of this Agreement,
Executive covenants and agrees that, other than as required by law, he will not
disclose to anyone (including representatives of airlines that are partner
owners of the Company) without the Company's written consent, any confidential
materials, documents, records or other information of any type whatsoever
concerning or relating to the business and affairs of the Company that
Executive may have acquired in the course of his employment hereunder,
including but not limited to: (i) trade secrets of the Company; (ii) lists of
customers or clients of the Company; and (iii) information relating to methods
of doing business (including information concerning operations, technology and
systems) in use or contemplated use by the Company and not generally known
among competitors in the travel services and computer reservation systems
business.
6. NON-COMPETITION. (a) Executive acknowledges that the services he is
to render to the Company hereunder are special and unique in character, and
that their loss cannot be adequately compensated at law or by damages. In view
of (i) the unique value to the Company of the services to be provided by
Executive hereunder, (ii) the confidential information that Executive will
acquire in the course of his employment hereunder and (iii) as a material
inducement to the Company to enter into this Agreement and to pay Executive the
compensation and benefits provided for hereunder, Executive covenants and
agrees that during the Term of this Agreement, and for the longer of 12 months
after the Termination Date or such period thereafter as the Company continues
to pay monthly compensation to Executive hereunder, Executive will not
(A) manage, operate, control, participate in alone or in combination
with others, render financial or other assistance to or be connected in any
manner with the ownership, management, representation, operation or control of
or otherwise render service or assistance to any travel services and computer
reservation systems company, airline or multinational customer of the Company
or any affiliate thereof (each a "Travel Company") that is actively engaged in
or interested in developing and/or expanding a range of services comparable to
those provided by the Company as a partner, director, officer, employee, agent,
contractor or in any other capacity, or otherwise directly or indirectly assist
any Travel Company to compete in any manner with any business activity engaged
in or actively being pursued (with or
-6-
<PAGE> 7
without the assistance or involvement of Executive) by the Company at the time
of termination related to the travel services and computer reservation systems
business; or
(B) combine with a group of two or more other former employees of
the Company to compete with the Company in the travel services and computer
reservation systems business, or solicit employees of the Company to leave the
employ of such entity for the purpose of engaging together in any employment,
competitive with the Company or otherwise.
(b) Executive and the Company recognize that, as a result of the
globalization of markets and technology through advances in telecommunications
systems and the internationalization of the travel services and computer
reservation system business, the market for the afore-described business is not
susceptible to geographic definition. Consequently, and given the nature of the
position Executive will hold with the Company, Executive and the Company agree
that the restrictions contained in Section 6 upon the activities of Executive
are geographically unlimited and reasonable as such.
(c) It is the desire and intent of the parties that the provisions
of Section 5, of this Section 6 and of Section 7 below shall be enforced to the
fullest extent permissible under the laws and public policies of the State of
Illinois. If any particular provisions or portions of Section 5 or of this
Section 6 or Section 7 below shall be adjudicated to be invalid or
unenforceable, Section 5, this Section 6 and Section 7 below shall be deemed
amended to delete therefrom such provision or portion adjudicated to be invalid
or unenforceable, such amendment to apply only in the particular jurisdiction
in which such adjudication is made.
7. SYSTEMS AND TECHNOLOGY OWNERSHIP. Executive acknowledges and
agrees that during the Term of this Agreement he will disclose to the Company
all material products, ideas, processes, systems inventions and business plans
developed by him which relate, directly or indirectly, to the travel services
and systems business of the Company (collectively, the "Intellectual
Property"). Executive further agrees that any Intellectual Property so
developed will be the sole property of the Company and that Executive will, at
the Company's request and cost, do whatever is necessary to secure the rights
thereto by patent, copyright or otherwise to the Company. In connection with
the foregoing, Executive represents, warrants and covenants that any
Intellectual Property or other copyrightable or patentable subject matter that
Executive delivers to the Company has
-7-
<PAGE> 8
been or will be created solely by Executive or that at the time of delivery
thereof Executive will have the right to transfer such subject matter to the
Company for use in its travel services and computer reservation systems
business. Further, and not by way of limitation, Executive hereby assigns to the
Company all of his right, title and interest in and to any Intellectual
Property from the moment of creation thereof. This Section 7 shall not apply to
any Intellectual Property or invention for which no equipment, supplies,
facility or trade secret information of the Company was used and which was
developed entirely on the Executive's own time, unless (a) the Intellectual
Property or invention relates (i) to the business of the Company, or (ii) to
the Company's actual or demonstrably anticipated research or development, or
(b) the Intellectual Property or invention results from any work performed by
the Executive for the Company.
8. GOVERNING LAW. This Agreement is governed by and is to be
construed and enforced in accordance with the laws of the State of Illinois,
not including its conflict of laws principles. If, under such law, any portion
of this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, judicial interpretation binding on the parties, regulation or
ordinance, such portion shall be deemed to be modified or altered to conform
thereto or, if that is not possible, to be omitted from this Agreement, and the
invalidity of any such portion shall not affect the force, effect or validity of
the remaining portions hereof.
9. NOTICES. All notices required to be given under this Agreement
shall be in writing and shall be deemed effective when received and shall be
delivered in person, or by facsimile transmission (with confirmation of
receipt), or by mail, postage prepaid, for delivery as registered or certified
mail addressed, (a) in the case of Executive, to him at his then current
business address with Employer, with a copy to Executive's residential address
as reflected above (or such other residential address as Executive may notify
the Company from time to time) or, (b) in the case of the Company, to the
Chairman of the Company or to such other person as the Company may designate in
writing to Executive.
10. RESOLUTION OF DISPUTES.
(a) The parties agree that all disputes arising under or in
connection with this Agreement (except to the extent specified in Section 10(b)
below), and any and all claims by Executive relating to his employment with the
Company including claims of discrimination arising under
-8-
<PAGE> 9
Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination
in Employment Act, the Americans with Disabilities Act and similar federal,
state and local legislation will be submitted to arbitration in Chicago,
Illinois before a panel of three arbitrators chosen under the rules of the
American Arbitration Association; provided, however, that any court with
jurisdiction over the parties may have jurisdiction over any action brought
with regard to or any action brought to enforce any violation or claimed
violation of Section 5, 6 or 7. The parties each hereby specifically submit to
the jurisdiction of any federal or state court located in the State of
Illinois and further agree that service of process may be made within or
without the State of Illinois by giving notice in the manner provided in
Section 9. Each party hereby waives any right to a trial by jury in any dispute
between them. In the event the principal offices of the Company are moved to a
State other than Illinois, arbitration of disputes hereunder shall take place
in such State, and the parties shall be deemed to have consented to personal
jurisdiction in such State.
(b) Executive recognizes that irreparable injury would be caused to the
Company, not adequately compensable by money damages, by Executive's violation
of any provision of Section 5, 6 or 7 of this Agreement. Executive further
agrees that in the event of any such violation or threatened violation the
Company or any of its direct or indirect subsidiaries or affiliates, in
addition to such other rights and remedies as may exist in its or their favor,
may apply to a court of law or equity to enforce the specific performance of
such provisions and, without notice to Executive, may apply for an injunction
or temporary restraining order against any act which would violate any such
provisions.
(c) The covenants of Executive contained in Sections 5, 6 and 7 of this
Agreement shall be construed as independent of all other provisions contained
in this Agreement.
11. Miscellaneous. (a) Executive represents and warrants to the Company
that Executive has no contracts or agreements of any nature that Executive has
entered into with any other person, firm or corporation that contain any
restraints on Executive's present or future services. Executive further
represents that he has brought to his employment hereunder, and will use in
connection with such employment, no customer lists or proprietary information
including computer software that was used by him or to which he had access by
reason of his prior employment and that is the property of his former employer.
-9-
<PAGE> 10
(b) Executive acknowledges and agrees that this Agreement constitutes
the entire understanding between the Company and Executive relating to the
employment of Executive by the Company or any direct or indirect subsidiary or
affiliate or partner of the Company, and supersedes all prior written and oral
agreements and understandings with respect to the subject matter of this
Agreement.
(c) This Agreement may be amended only by a subsequent written
agreement signed by Executive and the Company.
(d) No waiver by either party of or failure to assert any provision or
condition of this Agreement by him or it to be performed or right to be
exercised shall be deemed a waiver of such or similar or dissimilar provisions
and conditions or rights at the same time or any prior or subsequent time.
(e) This Agreement and all rights and obligations of Executive are
personal to Executive and shall not be assignable and any purported assignment
in violation hereof shall not be valid or binding on the Company.
(f) This Agreement may be signed in counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the year and day first above written.
GALILEO INTERNATIONAL PARTNERSHIP
By /s/ FRANK ROVEKAMP
----------------------------------
Frank Rovekamp
By
----------------------------------
Derek Stevens
By
----------------------------------
James Guyette
By
----------------------------------
James E. Barlett
-10-
<PAGE> 1
EXHIBIT 21.1
<TABLE>
<CAPTION>
State or Jurisdiction Number of Subsidiaries
Name of Subsidiary of Incorporation Nature of Business U.S. Foreign
- ------------------ ---------------- ------------------ ---- -------
<S> <C> <C> <C> <C>
Galileo Delaware Operating subsidiary of Galileo
International, International, Inc.; provision of
L.L.C. electronic global distribution services
for the travel industry using a
computerized reservation system
The Galileo England and Wales Provision of marketing, software and 6
Company other support services to Galileo
International, Inc.
Traviswiss AG Switzerland Provision of national distribution
services to travel agencies in
Switzerland
Galileo Nederland The Netherlands Provision of national distribution
BV services to travel agencies in The
Netherlands
ATS Partnership Delaware Provision of marketing, sales and
support of the Apollo brand products
of Galileo International, Inc. in the
United States, Mexico and certain
islands of the Caribbean
ATS Sub I Delaware Non-operating subsidiary; 99% partner 1
in ATS Partnership
ATS Sub II Delaware Non-operating subsidiary; 1% partner 1
in ATS Partnership
Galileo Asia Limited Delaware Provision of national distribution
services in Hong Kong, China,
Singapore and the Philippines
Galileo Brasil Delaware Provision of national distribution 1
Limited services in Brazil; 1% owner of
Galileo do Brasil & CIA
Galileo Brasil, Delaware Provision of national distribution
L.L.C. services in Brazil
Galileo Latin Delaware Provision of national distribution
America, L.L.C. services in Latin America; 99% owner
of Galileo do Brasil & CIA
Galileo Delaware Shell Company
Technologies, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 23.4
June 27, 1997
Galileo International, Inc.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
Ladies and Gentlemen:
The undersigned hereby consents to being designated as a person
about to become a director of Galileo International, Inc., a Delaware
corporation (the "Company"), in the Company's Registration Statement on Form S-1
(File No. 333-27495).
Very truly yours,
/s/ Frederic F. Brace
-------------------------------
Frederic F. Brace
<PAGE> 1
EXHIBIT 23.6
June 27, 1997
Galileo International, Inc.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
Ladies and Gentlemen:
The undersigned hereby consents to being designated as a person
about to become a director of Galileo International, Inc., a Delaware
corporation (the "Company"), in the Company's Registration Statement on Form S-1
(File No. 333-27495).
Very truly yours,
/s/ James E. Goodwin
-------------------------------
James E. Goodwin
