UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 1-13153
Galileo International, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-4156005
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
9700 West Higgins Road, Suite 400, Rosemont, Illinois 60018
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(847) 518-4000
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant: (1) had filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
At November 5, 1999, there were 90,462,956 shares of common stock, par value
$.01 per share, of the registrant outstanding.
<PAGE>
GALILEO INTERNATIONAL, INC.
QUARTER ENDED SEPTEMBER 30, 1999
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Galileo International, Inc.
Condensed Consolidated Balance Sheets as of September
30, 1999 (unaudited) and December 31, 1998 3
Condensed Consolidated Statements of Income for the
quarter and nine months ended September 30, 1999 and
1998 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 1999 and 1998
(unaudited) 5
Condensed Consolidated Statement of Stockholders'
Equity for the nine months ended September 30, 1999
(unaudited) 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 23
PART II - OTHER INFORMATION
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 25
SIGNATURES 26
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, December 31,
1999 1998
----------- -----------
(Unaudited)
ASSETS
------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 12,866 $ 9,828
Accounts receivable, net 220,893 177,858
Other current assets 45,993 55,841
----------- -----------
Total current assets 279,752 243,527
Property and equipment, at cost:
Land 6,470 6,470
Buildings and improvements 78,569 77,210
Equipment 397,964 392,299
----------- -----------
483,003 475,979
Less accumulated depreciation 311,141 281,010
----------- -----------
Net property and equipment 171,862 194,969
Computer software, net 167,665 189,247
Intangible assets, net 581,757 609,806
Other noncurrent assets 92,608 53,531
----------- -----------
$ 1,293,644 $ 1,291,080
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 41,741 $ 46,901
Accrued commissions 45,744 32,424
Income taxes payable 27,481 11,873
Other accrued liabilities 107,675 134,652
Capital lease obligations, current portion -- 5,976
Long-term debt, current portion 87,000 --
----------- -----------
Total current liabilities 309,641 231,826
Pension and postretirement benefits 66,164 55,982
Deferred tax liability 14,895 25,404
Other noncurrent liabilities 45,642 42,969
Capital lease obligations, less current portion -- 22,752
Long-term debt, less current portion 434,392 69,520
----------- -----------
Total liabilities 870,734 448,453
Stockholders' equity:
Special voting preferred stock: $.01 par value;
3 and 7 shares authorized; 3 and 7 shares issued
and outstanding -- --
Preferred stock: $.01 par value; 25,000,000 shares
authorized; no shares issued -- --
Common stock: $.01 par value; 250,000,000 shares
authorized; 105,032,883 and 104,930,750 shares issued;
91,321,183 and 104,761,650 shares outstanding 1,050 1,049
Additional paid-in capital 671,491 668,466
Retained earnings 353,287 184,575
Unamortized restricted stock grants (2,961) (3,559)
Accumulated other comprehensive income 2,568 (1,139)
Common stock held in treasury, at cost: 13,711,700
and 169,100 shares (602,525) (6,765)
----------- -----------
Total stockholders' equity 422,910 842,627
=========== ===========
$ 1,293,644 $ 1,291,080
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share data)
<TABLE>
Quarter Nine Months
Ended September 30, Ended September 30,
----------------------- ------------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Electronic global distribution services $ 366,480 $ 342,187 $ 1,131,922 $ 1,029,810
Information services 18,212 35,274 55,583 105,298
---------- ----------- ------------ -----------
384,692 377,461 1,187,505 1,135,108
Operating expenses:
Cost of operations 133,323 146,786 397,768 425,829
Commissions, selling and administrative 154,797 144,344 468,334 424,727
---------- ----------- ------------ -----------
288,120 291,130 866,102 850,556
---------- ----------- ------------ -----------
Operating income 96,572 86,331 321,403 284,552
Other income (expense):
Interest expense, net (6,543) (1,938) (7,983) (8,122)
Other, net 233 684 10,212 2,081
---------- ----------- ------------ -----------
Income before income taxes 90,262 85,077 323,632 278,511
Income taxes 36,014 33,946 129,129 111,126
---------- ----------- ------------ -----------
Net income $ 54,248 $ 51,131 $ 194,503 $ 167,385
========== =========== ============ ===========
Weighted average shares outstanding 93,341,447 104,807,205 100,795,596 104,802,229
========== =========== ============ ===========
Basic earnings per share $ 0.58 $ 0.49 $ 1.93 $ 1.60
========== =========== =========== ===========
Diluted weighted average shares outstanding 94,030,532 105,252,952 101,596,075 105,178,343
========== =========== ============ ===========
Diluted earnings per share $ 0.58 $ 0.49 $ 1.91 $ 1.59
========== =========== ============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
Nine Months
Ended September 30,
-------------------------
1999 1998
---- ----
Operating activities:
<S> <C> <C>
Net income $194,503 $167,385
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 123,989 127,536
Gain on sale of assets (9,574) (98)
Deferred income taxes, net (5,451) 4,850
Changes in operating assets and liabilities,
net of effects from acquisition of businesses:
Increase in accounts receivable, net (43,794) (45,748)
Decrease (increase) in other current assets 4,433 (1,806)
Increase in noncurrent assets (5,702) (8,071)
Increase in accounts payable and accrued commissions 8,355 20,700
(Decrease) increase in accrued liabilities (19,881) 21,079
Increase in income taxes payable 15,781 14,661
Increase (decrease) in noncurrent liabilities 12,267 (6,567)
---------- ---------
Net cash provided by operating activities 274,926 293,921
Investing activities:
Purchase of property and equipment (44,114) (60,799)
Purchase and capitalization of computer software (13,863) (18,684)
Proceeds on sale of assets 10,074 3,195
Acquisition of businesses, net of $3,497 cash acquired - (33,715)
Other investing activities (28,458) -
---------- ---------
Net cash used in investing activities (76,361) (110,003)
Financing activities:
Borrowings under credit agreements 527,000 34,392
Repayments under credit agreements (75,128) (190,000)
Issuance of promissory note 307,736 -
Repayment of promissory note (307,736) -
Dividends paid to stockholders (25,791) (22,009)
Payments of capital lease obligations (27,690) (6,141)
Repurchase of common stock for treasury (595,760) -
Proceeds from exercise of employee stock options, net 3,026 367
---------- ---------
Net cash used in financing activities (194,343) (183,391)
Effect of exchange rate changes on cash (1,184) (348)
---------- ---------
Increase in cash and cash equivalents 3,038 179
Cash and cash equivalents at beginning of period 9,828 19,367
---------- ---------
Cash and cash equivalents at end of period $ 12,866 $ 19,546
========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share data)
<TABLE>
Special
Voting Additional
Preferred Common Paid - in Retained
Stock Stock Capital Earnings
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ - $ 1,049 $ 668,466 $ 184,575
Comprehensive income:
Net income - - - 194,503
Other comprehensive income, net of tax:
Unrealized holding gains on securities - - - -
Foreign currency translation adjustments - - - -
Other comprehensive income
Comprehensive income
Amortization of restricted stock grants - - - -
Issuance of 102,133 shares of common stock under
employee stock option plans - 1 3,025 -
Repurchase of 13,542,600 shares of common stock
for treasury - - - -
Dividends paid ($0.255 per share) - - - (25,791)
---------- --------- ---------- ---------
Balance at September 30, 1999 $ - $ 1,050 $ 671,491 $ 353,287
========== ========= ========== ==========
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share data)
Accumulated
Unamortized Other
Restricted Comprehensive Treasury
Stock Grants Income Stock Total
------------ --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ (3,559) $ (1,139) $ (6,765) $ 842,627
Comprehensive income:
Net income - - - 194,503
Other comprehensive income, net of tax:
Unrealized holding gains on securities - 4,489 - 4,489
Foreign currency translation adjustments - (782) - (782)
---------
Other comprehensive income 3,707
---------
Comprehensive income 198,210
Amortization of restricted stock grants 598 - - 598
Issuance of 102,133 shares of common stock under
employee stock option plans - - - 3,026
Repurchase of 13,542,600 shares of common stock
for treasury - - (595,760) (595,760)
Dividends paid ($0.255 per share) - - - (25,791)
------------ --------- --------- ---------
Balance at September 30, 1999 $ (2,961) $ 2,568 $ (602,525) $ 422,910
============ ========= ========= =========
See accompanying notes to condensed consolidated financial statements.
6
</TABLE>
<PAGE>
GALILEO INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial
statements of Galileo International, Inc. (the "Company") have been prepared
pursuant to the rules of the Securities and Exchange Commission for quarterly
reports on Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. The
information furnished herein includes all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of results for the interim periods presented.
The results of operations for the quarter ended September 30, 1999 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999.
These financial statements should be read in conjunction with the audited
financial statements and notes to the audited financial statements for the year
ended December 31, 1998 included in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 22, 1999.
NOTE 2 - BUSINESS ACQUISITIONS AND INVESTMENTS
On November 19, 1998, the Company acquired S. D. Shepherd Systems, Inc.
("Shepherd Systems"), an airline information systems company, for $16.7 million.
The Company also acquired two national distribution companies ("NDCs") during
1998. On June 1, 1998, Galileo Canada Distributions Systems, Inc. ("Galileo
Canada") was purchased for $34.4 million and on January 1, 1998, Galileo
Nordiska AB was purchased for $2.1 million. In connection with these
acquisitions, the Company also incurred expenses of $0.8 million, which have
been accounted for as part of the purchase prices. The Company accounted for
these acquisitions using the purchase method of accounting. Accordingly, the
costs of the acquisitions were allocated to the assets acquired and liabilities
assumed based on their respective fair values. Goodwill and other intangible
assets related to the cost of the acquisitions are being amortized over 6 to 25
years and are included in cost of operations expenses. The results of operations
and cash flows of the acquired companies have been consolidated with those of
the Company from the date of each acquisition. In connection with the
acquisition of Galileo Canada, the Company incurred $34.4 million of debt under
a five-year term loan agreement.
7
<PAGE>
NOTE 3 - EARNINGS PER SHARE
Basic earnings per share for the quarter and nine months ended September
30, 1999 and 1998 is calculated based on the weighted average shares outstanding
for the period. Diluted earnings per share is calculated as if the Company had
additional common stock outstanding from the beginning of the year or the date
of grant for all dilutive stock options, net of assumed repurchased shares using
the treasury stock method. This resulted in an increase in the weighted average
number of shares outstanding for the quarter and nine months ended September 30,
1999 of 689,085 and 800,479, respectively. The increase in the weighted average
number of shares outstanding for the quarter and nine months ended September 30,
1998 was 445,747 and 376,114, respectively.
NOTE 4 - SPECIAL CHARGES
The Company recorded special charges of $26.4 million ($15.9 million after
tax) during the quarter ended December 31, 1998 related to a strategic
realignment of the Company's operations in the United Kingdom and, to a lesser
degree, other realignments within the Company. These special charges were
comprised primarily of $15.0 million in severance costs related to the
termination of 399 employees, primarily in the development and marketing groups,
and $11.4 million of other costs, principally related to the closing of the
remaining Swindon, United Kingdom facilities. As of September 30, 1999, $14.6
million of severance related costs have been paid and charged against the
liability and 332 employees have been terminated. The Company expects the
realignment activities to be substantially complete in 1999. Also related to the
closing of Swindon, United Kingdom facilities, in 1993, the Company, formerly
Covia Partnership, combined with The Galileo Company Ltd. and consolidated its
two data center facilities resulting in the closure of the Swindon, United
Kingdom data center. In connection therewith, the estimated cost of the
consolidation was charged to expense. At September 30, 1999 and December 31,
1998, the estimated remaining liabilities for all of the above mentioned
restructuring activities were $20.7 million and $44.1 million, respectively, and
are included in the accompanying condensed consolidated balance sheets.
The Company recorded special charges of $20.1 million ($12.1 million after
tax) during the year ended December 31, 1997 related to the integration of NDCs
acquired in 1997 into the Company's operations. These special charges were
comprised primarily of $12.3 million in severance costs related to the
termination of 202 employees and $7.8 million of other integration costs,
principally related to the closing of duplicate facilities. As of September 30,
1999, $10.2 million of severance related costs have been paid and charged
against the liability and 138 employees have been terminated. The Company
expects the integration activities to be complete in 1999. At September 30, 1999
and December 31, 1998, the estimated remaining liabilities related to the
integration were $1.3 million and $3.4 million, respectively, and are included
in the accompanying condensed consolidated balance sheets.
8
<PAGE>
NOTE 5 - STOCKHOLDERS' EQUITY
For the nine months ended September 30, 1999, the Company accounted for a
$7.4 million net unrealized holding gain on available-for-sale marketable equity
securities in accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities". The
after tax effect of $4.5 million is included as a separate component of
Stockholders' Equity.
In early May 1999, the Company filed a registration statement with the
Securities and Exchange Commission for a secondary offering of 36,727,600 shares
of its common stock, including 4,790,500 shares subject to an underwriters'
over-allotment option. This filing was a result of a demand for registration
made by a subsidiary of US Airways, Inc., which was followed by the registration
of additional shares held by affiliates of United Air Lines, Inc., KLM Royal
Dutch Airlines, Alitalia, and TAP Air Portugal. On June 3, 1999, the secondary
offering of 31,937,100 shares of the Company's common stock was completed at a
price of $45 per share. The Company did not receive any proceeds from the
offering. The over-allotment option was exercised on June 29, 1999 with the
underwriters purchasing 2,000,000 shares and the Company purchasing 2,790,500
shares at a total purchase price of $122.2 million.
On June 17, 1999, the Board of Directors of the Company authorized an
increase in the size of the Company's share repurchase program to $750.0
million, a $250.0 million increase from the $500.0 million previously authorized
in April 1999. The amount, timing and price of any repurchases of the Company's
common stock depends on market conditions and other factors. Repurchased shares
are held in treasury for the purpose of providing available shares for possible
resale in future public or private offerings, and for other general corporate
purposes. Repurchases are funded through the Company's available working capital
and long-term borrowing facilities.
On June 30, 1999, the Company purchased all of the issued and outstanding
shares of a British Airways Plc subsidiary, which indirectly owned 7,000,400
shares of the Company's common stock. This purchase was funded by the issuance
of a $307.7 million one day promissory note to British Airways Plc. This note
was paid in full on July 1, 1999 using funding available under the Company's
existing credit agreements.
As a result of the aforementioned secondary offering and share repurchases,
the Company redeemed four shares of its special voting preferred stock during
the quarter ended June 30, 1999.
For the quarter ended September 30, 1999, the Company repurchased 3,504,300
of its shares in the open market at a total cost of $154.5 million. As of
September 30, 1999, the Company held a total of 13,711,700 shares in treasury.
9
<PAGE>
NOTE 6 - INTEREST IN EQUANT
At December 31, 1998, the Company owned 1,094,380 non-marketable
depository certificates representing beneficial ownership of common stock of
Equant N.V. ("Equant"), a telecommunications company affiliated with Societe
Internationale de Telecommunications Aeronautiques ("SITA").
In connection with a secondary offering of Equant common stock in February
1999, the Company liquidated 132,741 of these certificates. The Company received
proceeds of $9.4 million from the transaction, resulting in a gain of $9.4
million.
In July 1999, SITA notified the Company of a reallocation of depository
certificates among SITA members. Due to the Company's higher usage of the SITA
network over the four years ended December 31, 1998, the Company received
708,335 additional depository certificates. As a result, the Company held
1,669,974 depository certificates at September 30, 1999. If these certificates
were converted into registered common stock of Equant, the market value at
September 30, 1999 would have been $135.9 million.
The Company's carrying value of these depository certificates was nominal
at September 30, 1999 and December 31, 1998. Any future disposal of such
depository certificates may result in additional gains to the Company. (1)
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SUMMARY
Galileo International, Inc. is one of the world's leading providers of
electronic global distribution services for the travel industry. We provide
travel agencies at approximately 40,000 locations, as well as other subscribers,
with the ability to view schedules, availability and fare information, book
reservations and issue tickets for more than 500 airlines. We also provide our
subscriber customers with information and booking capabilities for major hotel
chains, car rental companies, cruise lines and numerous tour operators
throughout the world.
Our geographic breadth is demonstrated by the table below which shows the
estimated number of travel agency locations and terminals by region.
Travel Agency Travel Agency
Locations Terminals
at September 30, 1999 at September 30, 1999
--------------------- ---------------------
Region Number % Number %
- ------ ------ ----- ------ -----
United States 11,900 29.5% 56,700 34.4%
Europe 13,800 34.2% 58,200 35.3%
Asia/Pacific 6,200 15.4% 23,800 14.5%
Canada 3,100 7.7% 11,000 6.7%
Middle East/Africa 3,500 8.7% 10,500 6.4%
Latin America 1,800 4.5% 4,500 2.7%
----------------- ----------------
40,300 100.0% 164,700 100.0%
================= =================
11
<PAGE>
We generate revenue from the provision of electronic global distribution
services and information services. During the nine months ended September 30,
1999, we generated 95.3% of our revenue from electronic global distribution
services and 4.7% of our revenue from information services. The following table
summarizes electronic global distribution services revenues by geographic
location as a percentage of the total, and summarizes total booking volumes for
each of the periods indicated. The location of the subscriber making the booking
determines the geographic region credited with the related revenues and
bookings:
Quarter Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
Percentage of Revenue
- ---------------------
U.S. Market 40.8 % 43.2 % 41.5 % 43.8 %
All Other Markets 59.2 56.8 58.5 56.2
-------------------- --------------------
100.0 % 100.0 % 100.0 % 100.0 %
==================== ====================
Worldwide Bookings
- ------------------
(in millions)
U.S. Market:
Air 31.7 33.2 100.3 103.2
Car/Hotel/Leisure 5.9 5.8 17.6 17.1
------------------ ------------------
Total Bookings 37.6 39.0 117.9 120.3
All Other Markets:
Air 48.5 47.4 154.2 144.5
Passive Booking Adjustment -
Japan (1) 1.0 - 1.0 -
----------------- ------------------
Adjusted Air 49.5 47.4 155.2 144.5
Car/Hotel/Leisure 1.5 1.5 4.6 4.2
------------------ ------------------
Total Bookings 51.0 48.9 159.8 148.7
Total Worldwide Bookings 88.6 87.9 277.7 269.0
================== ==================
(1) Adjusts for the impact of a July 1999 pricing structure change that
reduced reported passive booking volumes in Japan. In markets outside of
Japan, the net impact to reported passive bookings due to the pricing
structure change was slightly positive.
12
<PAGE>
THIRD QUARTER 1999 COMPARED TO THIRD QUARTER 1998
REVENUES. Revenues increased $7.2 million, or 1.9%, to $384.7 million for
the quarter ended September 30, 1999 from $377.5 million for the quarter ended
September 30, 1998. Our electronic global distribution services revenues grew
$24.3 million, or 7.1%. Airline booking revenue increased 6.5% over the quarter
ended September 30, 1998 due to a booking fee price increase that went into
effect in March 1999, other yield improvements, and a 0.7% increase in worldwide
air booking volumes.
International booking volumes increased 2.4% and U.S. booking volumes
decreased 3.7% over the same period last year. Adjusting for the impact of a
July 1999 pricing structure change that reduced reported passive booking volumes
in Japan, total international booking volumes increased 4.5% for the quarter.
The increase in international booking volumes for the quarter was driven by
continued strong growth in developing markets, such as Africa and the Middle
East, and solid performance in Europe and Asia. Booking volumes in Canada were
lower year over year due primarily to very strong results in Canada in the third
quarter of 1998 related to a major airfare promotion. Excluding the Canadian
market, international booking volumes increased 7.2% for the quarter.
The volume decline in U.S. bookings is primarily due to a decrease in our
U.S. market share, which we believe is attributable to the effect of our recent
field sales force transition. With the new U.S. sales force in place, we are
aggressively executing growth plans for new and renewal business. We expect
continued weakness in our U.S. market position in the near term, after which we
anticipate seeing the positive effect of our focused sales force initiatives by
the middle of next year. (1)
The growth in electronic global distribution services revenues was
partially offset by a decline in information services revenues due principally
to the impact of providing fewer network services to an airline customer. This
revenue loss was largely offset by a reduction in operating expenses directly
related to the provision of these services.
COST OF OPERATIONS. Cost of operations expenses decreased $13.5 million, or
9.2%, to $133.3 million for the quarter ended September 30, 1999 from $146.8
million for the quarter ended September 30, 1998. The decline in cost of
operations expenses was due primarily to a $14.0 million decrease in voice
communication charges related to the decrease in network services provided to an
airline customer. The remaining slight increase was attributable to higher
communication costs associated with ongoing migration to new data network
technology and growth in both new and existing markets. This increase in
communication costs was partially offset by net cost savings from the Swindon,
UK realignment and lower Data Centre expenses, as we continue to take advantage
of decreasing technology costs.
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
13
<PAGE>
COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $10.5 million, or 7.2%, to $154.8 million for
the quarter ended September 30, 1999 from $144.3 million for the quarter
September 30, 1998. NDC commissions and subscriber incentive payments increased
$15.9 million, or 17.4%, to $107.5 million for the quarter ended September 30,
1999 from $91.6 million for the quarter ended September 30, 1998. The increase
in electronic global distribution services revenues resulted in increased
commissions to NDCs, which are generally based on a percentage of booking
revenues, and have therefore grown at a rate consistent with the growth in
booking revenues by country. Incentive payments, which are provided to
subscribers in order to maintain and expand our travel agency customer base,
increased in the quarter principally due to the initiation of new contracts with
multinational and key U.S. regional accounts in late 1998 and the first quarter
of 1999. Remaining commissions, selling and administrative expenses decreased
primarily due to lower selling expenses in the U.S. as we continue to transition
to our internal sales force in 1999, partially offset by the accrual of
estimated payments required under services agreements with the sellers of
certain NDCs acquired in 1997 and 1998.
OTHER INCOME (EXPENSE). Other income (expense) includes interest expense
net of interest income, foreign exchange gains or losses, and other
non-operating items. Other expense, net increased $5.1 million to $6.3 million
in expense for the quarter ended September 30, 1999 from $1.2 million in expense
for the quarter ended September 30, 1998. This increase was primarily the result
of higher interest expense arising from higher average debt levels in 1999 due
to significant repurchases of common stock for treasury.
INCOME TAXES. Income taxes increased $2.1 million, or 6.1%, to $36.0
million for the quarter ended September 30, 1999 from $33.9 million for the
quarter ended September 30, 1998. The increase was a result of higher income
before income taxes for the quarter ended September 30, 1999 compared to the
quarter ended September 30, 1998. Our effective tax rate was approximately 40%
in both periods.
NET INCOME. Net income increased $3.1 million, or 6.1%, to $54.2 million
for the quarter ended September 30, 1999, from $51.1 million for the quarter
ended September 30, 1998. Net income as a percentage of revenues increased to
14.1% from 13.5% over the same period and our operating margin expanded 2.2
percentage points to 25.1% for the quarter ended September 30, 1999 from 22.9%
for the quarter ended September 30, 1998.
14
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
REVENUES. Revenues increased $52.4 million, or 4.6%, to $1,187.5 million
for the nine months ended September 30, 1999 from $1,135.1 million for the nine
months ended September 30, 1998. Our electronic global distribution services
revenues grew $102.1 million, or 9.9%. Airline booking revenue increased 9.0%
over the nine months ended September 30, 1998 due to a booking fee price
increase that went into effect in March 1999, other yield improvements, and a
3.2% increase in worldwide air booking volumes.
International booking volumes increased 6.8% and U.S. booking volumes
decreased 2.0% for the nine months ended September 30, 1999. Excluding the
impact of a July 1999 pricing structure change that eliminated non-ticketed
passive booking volumes for which we no longer receive a fee, total
international booking volumes increased 7.4% for the period. This increase in
international booking volumes for the period was driven by continued strong
growth in developing markets, such as Africa and the Middle East, and solid
performance in Europe and Asia.
The volume decline in U.S. bookings is primarily due to a decrease in our
U.S. market share, which we believe is attributable to the effect of our recent
field sales force transition. With the new U.S. sales force in place, we are
aggressively executing growth plans for new and renewal business. We expect
continued weakness in our U.S. market position in the near term, after which we
anticipate seeing the positive effect of our sales force initiatives by the
middle of next year. (1)
The growth in electronic global distribution services revenues was
partially offset by a decline in information services revenues due principally
to the impact of providing fewer network services to an airline customer. This
revenue loss was largely offset by a reduction in operating expenses directly
related to the provision of these services.
COST OF OPERATIONS. Cost of operations expenses decreased $28.0 million, or
6.6%, to $397.8 million for the nine months ended September 30, 1999 from
$425.8 million for the nine months ended September 30, 1998. The decline in cost
of operations expenses was due primarily to a $43.0 million decrease in voice
communication charges related to the decrease in network services provided to an
airline customer. Partially offsetting this decrease was $11.9 million in
additional cost of operations expenses incurred due to the Galileo Canada and
Shepherd Systems acquisitions in 1998. These additional operating expenses,
principally wages, maintenance and installation expenses, communication costs
and depreciation expense, were largely offset by lower commissions as we no
longer pay commissions to Galileo Canada but instead incur the direct costs of
distributing our products in this market. Additionally, we now record the
amortization of the excess of the cost of these acquisitions over the fair value
of net assets acquired and also record amortization of other intangibles
acquired.
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
15
<PAGE>
Remaining cost of operations expenses increased primarily due to increased
maintenance costs on subscriber equipment at agency locations and higher
communication costs associated with ongoing migration to new data network
technology and growth in both new and existing markets. This increase in
communication costs was partially offset by net cost savings from the Swindon,
UK realignment and lower Data Centre expenses as we continue to take advantage
of decreasing technology costs.
COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $43.6 million, or 10.3%, to $468.3 million for
the nine months ended September 30, 1999 from $424.7 million for the nine months
ended September 30, 1998. NDC commissions and subscriber incentive payments
increased $48.9 million, or 17.7%, to $324.5 million for the nine months ended
September 30, 1999 from $275.6 million for the nine months ended September 30,
1998. The increase in electronic global distribution services revenues resulted
in increased commissions to NDCs, which were partially offset by the elimination
of commissions to Galileo Canada as, subsequent to this acquisition in June
1998, we no longer pay commissions but instead incur the direct costs of
operating in this market. Incentive payments increased significantly in this
period principally due to the initiation of new contracts with multinational and
key U.S. regional accounts in late 1998 and the first quarter of 1999, as well
as the impact of payments to subscribers previously incurred by Galileo Canada
prior to June 1998.
The remaining decrease in commissions, selling and administrative expenses
was primarily attributable to decreased selling expenses in the U.S. as we
transition to our internal sales force in 1999, partially offset by the accrual
of estimated payments required under services agreements with the sellers of
certain NDCs acquired in 1997 and 1998.
OTHER INCOME (EXPENSE). Other income (expense) includes interest expense
net of interest income, foreign exchange gains or losses, and other
non-operating items. Other income, net increased $8.2 million to $2.2 million in
income for the nine months ended September 30, 1999 from $6.0 million in expense
for the nine months ended September 30, 1998. This increase was primarily the
result of a $9.4 million gain recognized from the sale of a portion of the
equity we owned in Equant.
INCOME TAXES. Income taxes increased $18.0 million, or 16.2%, to $129.1
million for the nine months ended September 30, 1999 from $111.1 million for the
nine months ended September 30, 1998. The increase was a result of higher income
before income taxes for the nine months ended September 30, 1999 compared to the
nine months ended September 30, 1998. Our effective tax rate was approximately
40% in both periods.
NET INCOME. Net income increased $27.1 million, or 16.2%, to $194.5 million
for the nine months ended September 30, 1999 from $167.4 million for the nine
months ended September 30, 1998. Net income as a percentage of revenues
increased to 16.4% from 14.7% over the same period and our operating margin
expanded 2.0 percentage points to 27.1% for the nine months ended September 30,
1999 from 25.1% for the nine months ended September 30, 1998.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $12.9 million and working capital totaled
($29.9) million at September 30, 1999. Excluding $87.0 million in debt
outstanding under our 364-day credit agreement, which was used to fund a portion
of our repurchases of common stock for treasury, working capital totaled $57.1
million at September 30, 1999. At December 31, 1998, cash and cash equivalents
totaled $9.8 million and working capital totaled $11.7 million. Cash and cash
equivalents increased slightly as cash generated from strong operating results
was used for investing and financing activities.
Cash flow used in investing activities principally relates to purchases of
mainframe data processing and network equipment and purchases of computer
equipment provided to our travel agency subscribers. Capital expenditures,
excluding the capitalization of internally developed software, were $48.1
million for the nine months ended September 30, 1999 compared to $67.8 million
for the nine months ended September 30, 1998. In addition, we used $23.5 million
to acquire minority ownership equity positions in six technology-related
companies during the nine months ended September 30, 1999. Proceeds from the
sale of assets were $10.1 million for the nine months ended September 30, 1999
primarily from the sale of a portion of the equity we owned in Equant.
Cash flow used in financing activities for the nine months ended September
30,1999, includes repurchases of common stock for treasury totaling $595.8
million and $25.8 million in dividends paid to our stockholders. We paid a
$0.075 per share cash dividend on February 19, 1999 to stockholders of record as
of February 5, 1999, a $0.09 per share cash dividend on May 21, 1999 to
stockholders of record as of May 7, 1999, and a $0.09 per share cash dividend on
August 20, 1999 to stockholders of record as of August 6, 1999. We also paid
$25.5 million to terminate two equipment leases related to Swindon data center
assets pursuant to advantageous early termination provisions allowed within the
leases. During the nine months ended September 30, 1999, net borrowings under
our credit facilities totaled $451.9 million and we have $113.0 million
available under our revolving credit facilities at September 30, 1999. In
connection with the purchase of a British Airways Plc subsidiary, we issued a
$307.7 million promissory note on June 30, 1999 which was paid in full on July
1, 1999 using funds available under our existing credit facilities.
We expect that future cash requirements will principally be for capital
expenditures, repayments of indebtedness, share repurchases, and strategic
acquisitions and investments. We believe that cash generated by operating
activities will be sufficient to fund our future cash requirements, except that
significant share repurchases, acquisitions, or investments may require
additional borrowings or other financing alternatives. (1)
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
17
<PAGE>
In addition to reinvesting a substantial portion of earnings in our
business, we currently intend to pay regular quarterly dividends and to
repurchase additional shares of our common stock. (1) On October 21, 1999, we
declared a cash dividend of $0.09 per share to be paid on November 19, 1999 to
stockholders of record as of November 5, 1999. The declaration and payment of
future dividends, as well as the amount thereof, and the amount of future
repurchases of our common stock beyond the existing $750 million stock
repurchase program are subject to the discretion of our Board of Directors and
will depend upon our results of operations, financial condition, cash
requirements, future prospects and other factors deemed relevant by our Board of
Directors. There can be no assurance that we will continue to declare and pay
dividends or repurchase shares of our common stock in the future. (1)
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We will implement the provisions of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", which is required to be adopted for financial statements issued for
the fiscal year ending December 31, 2001. Statement 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity recognize those items
as assets or liabilities in the statement of financial position and measure them
at fair value. Management believes that adoption of Statement 133 will not have
a material impact on our financial statements. (1)
YEAR 2000 (1)
The Year 2000 issue is a result of computer programs being written using
two digits rather than four to define the applicable year. Any of our computer
programs or systems or those of our vendors and suppliers that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000.
Beginning in September 1995, we implemented a program designed to help
ensure that all hardware and software used in connection with our business,
including our software products, will manage and manipulate data involving the
transition of dates from 1999 to 2000 without functional or data abnormality and
without producing inaccurate results related to such dates. An internal analysis
of our hardware and software has led us to conclude that the majority of our
systems have been engineered to be Year 2000 compliant and should provide a
seamless transition to the Year 2000. In addition, we have consulted outside
experts, including attorneys and independent auditors, regarding our Year 2000
plans.
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
18
<PAGE>
We electronically exchange information with the computer systems of our
travel vendor customers and suppliers, including air, car, hotel, cruise, rail
and other vendors. We use standardized travel industry interchange formats to
electronically exchange information with many of these vendor customers and
suppliers. Many of these formats did not require modification in order to be
Year 2000 compliant. Where required, modifications to these formats have been
completed. Our GlobalFares(TM) system began successfully processing airline
fares with Year 2000 dates in July 1998. The investigation and assessment of our
network systems is complete and remediation was finalized in October 1999. In
the third quarter of 1999, we completed remediation of our travel agency-based
software and distributed upgrades for operating systems and package installation
systems. The Year 2000 remediation for most of our travel agency-based software
addresses aesthetic modifications and is not essential for the reservation
booking and ticketing capability of these products.
Remediation planning for country-specific software solutions facilitating
travel agency access to certain third party vendors is ongoing. We continue to
develop, distribute and install, where necessary, upgrades to PC hardware and
software either on a normal maintenance cycle where it exists, or a separate
implementation plan where it does not exist. Agency premise software remediation
is on schedule for completion in November 1999. Remediation activities related
to our mainframe computer systems, which include our Galileo(R) and Apollo(R)
computer reservations systems ("CRS"), were completed on schedule in 1998. Our
Galileo and Apollo systems successfully processed the first Year 2000 airline
reservation bookings on January 3, 1999 and February 4, 1999, respectively, with
airlines that support Year 2000 in their systems. Most non-mainframe activities
were completed on schedule during the third quarter of 1999. The activities
remaining are scheduled for completion in November.
Embedded systems are not an integral component in our primary business or
operations. Nevertheless, we have identified and validated as compliant or,
where necessary, are in the process of remediating embedded systems in certain
of our facilities and environmental systems. We do not anticipate any material
adverse impact to our business or operations related to Year 2000 performance of
embedded systems.
Testing is a critical component in our Year 2000 preparedness program. Our
system for Year 2000 hardware and software validation -- called the
"TimeMachine"-- is essentially a copy of our production environment which
performs date-sensitive tests and supports connectivity to the systems of our
vendor customers, suppliers of data, NDCs and certain other third parties
without interrupting existing systems and without risk of contaminating "live"
production data.
Contingency plans are now in place for all mainframe and non-mainframe
activities. We will continue to review and revise contingency plans to address
possible Year 2000 failures of our internal systems and business processes or
those of vendor customers, critical service suppliers, other suppliers of data
and our NDCs, on whose systems we are dependent. Our contingency plans identify
the interruption of local services provided by third parties, such as
telecommunication firms and power supply companies, as the events that would be
most likely to occur. However, should a problem occur, it would generally be
localized and we do not anticipate that it would have a material adverse effect
on our business, financial condition or
19
<PAGE>
results of operations. Our contingency planning involved risk assessment for all
of our business functions and operating and staff departments, including the
identification of assumptions and dependencies. The contingency plans for each
business function and operating and staff department provide for proactive
preparation for Year 2000 challenges, checklists of activities to perform for
validation of possible failures and reactive planning to address any actual Year
2000 failures. The contingency plans also address on-site staff coverage on
January 1, 2000 for all relevant operating and staff departments, and include
support personnel from our critical hardware and software suppliers.
As an electronic global distribution services company, our products are
dependent upon data provided by our air, car, hotel and tour vendor customers
and other suppliers of data. We are also dependent on critical service
providers, such as telecommunications firms for worldwide product distribution.
We are continuing to assess Year 2000 issues arising from our relationships with
third parties, including our NDCs, to determine the extent to which our
interface systems are vulnerable to failure by these parties to remediate their
own Year 2000-sensitive systems. We have requested Year 2000 compliance status
information from all of our vendor customers, critical other suppliers of data
and our NDCs. We continue to work closely with our NDCs to provide assistance to
meet their Year 2000 challenges. While many of these third parties have reported
that they are not finding significant problems in their own systems, we cannot
guarantee that the systems of these third parties will be made Year 2000
compliant in a timely manner. Vendor customers, service providers and NDCs
continue to participate with us in Year 2000 testing.
The interruption of services provided by critical service providers, such
as telecommunications firms and power supply companies, due to their own Year
2000 difficulties, could have a material adverse effect on our business and
operations. With respect to bookings for travel after January 1, 2000, any
failure on our part or on the part of our vendor customers, other suppliers of
data or NDCs to ensure that systems are Year 2000 compliant, regardless of when
such bookings occur, could have a material adverse effect on our business,
financial condition or results of operations.
We incurred $4.5 million of expenses in the first nine months of 1999, $8.0
million of expenses in 1998 and $4.4 million of expenses in 1997 related to Year
2000 remediation. We believe future expenditures will total approximately $4.5
million. All of these costs are expected to be expensed as incurred. Further, we
expect to incur additional costs after 1999 to remediate and replace less
critical software applications and embedded systems; however, we do not expect
these expenses to have a material adverse effect on our business, financial
condition or results of operations.
The cost of our Year 2000 project and the dates on which we plan to
complete our Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, third
parties' Year 2000 readiness and other factors. Based on our current schedule
for completion of our Year 2000 project, we believe that our planning is
adequate to secure Year 2000 readiness of our critical systems. Nevertheless,
20
<PAGE>
achieving Year 2000 readiness is subject to various risks and uncertainties,
many of which are described above. We are not able to predict all of the factors
that could cause actual results to differ materially from our current
expectations about our Year 2000 readiness. At this time, we believe the major
risks associated with Year 2000 processing are a system failure or
miscalculation causing an inability to process bookings or engage in other
normal business activities. Our failure, or the failure of third parties with
whom we have significant business relationships, to achieve Year 2000 readiness
with respect to critical systems could have a material adverse effect on our
business, financial condition or results of operations.
NEW EUROPEAN CURRENCY
In January 1999, certain European countries introduced a new currency unit
called the "euro". We planned, developed and successfully implemented a project
to ensure that hardware and software systems operated or licensed in our
business, including systems provided to our travel agency subscriber and travel
vendor customers, are designed to properly process reservations denominated in
euros. We completed the necessary development and successfully issued tickets in
euros on the first official trading day, January 4, 1999. We estimate that the
introduction of the euro, including the total costs for the euro project, will
not have a material effect on our business, financial condition, or results of
operations. (1)
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
21
<PAGE>
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
These statements are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. We have based these forward-looking statements on our
current expectations and projections about future events. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. These
forward-looking statements are subject to risks and uncertainties that could
cause actual events or results to differ materially from the events or results
expressed or implied by the forward-looking statements. You are cautioned not to
place undue reliance on these forward-looking statements. Risks and
uncertainties associated with our forward-looking statements include, but are
not limited to: the loss and inability to replace the bookings generated by one
or more of our five largest travel agency customers; our ability to effectively
execute our sales initiatives in key markets; our sensitivity to general
economic conditions and events that affect airline travel and the airlines that
participate in our Apollo and Galileo systems; circumstances relating to our
investment in technology, including our ability to timely develop and achieve
market acceptance of new products, or our failure or the failure of our
customers and other third parties to achieve Year 2000 compliance in a timely
and cost-effective manner; the results of our international operations and
expansion into developing and new CRS markets, governmental approvals, trade and
tariff barriers, and political risks; new or different legal or regulatory
requirements governing the CRS industry; and natural disasters or other
calamities that may cause significant damage to our Data Centre facility.
22
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Certain of our expenses are subject to fluctuations in currency values and
interest rates. We address these risks through a controlled program of risk
management that includes the use of derivative financial instruments. To some
degree, we are exposed to credit-related losses in the event of nonperformance
by counterparties to financial instruments, but management does not expect any
counterparties to fail to meet their obligations given their high credit
ratings. (1) We do not hold or issue financial instruments for trading purposes.
We enter into foreign exchange forward contracts to manage exposure to
fluctuations in foreign exchange rates related to the funding of our European
and Canadian operations. At September 30, 1999, we had entered into foreign
exchange forward contracts which provide for purchases of GBP 5.8 million and
CAD 7.5 million at various dates throughout the remainder of 1999 and 2000. At
September 30, 1999 and December 31, 1998, the notional principal amounts of
outstanding forward contracts were $14.0 million and $31.3 million,
respectively. The fair value of outstanding forward contracts at September 30,
1999 and December 31, 1998 was $0.6 million and $0.8 million, respectively.
We have also entered into interest rate swap agreements to convert portions
of our variable rate debt to fixed rate. We account for our interest rate swap
agreements as a hedge of our interest rate exposure. At September 30, 1999 and
December 31, 1998, we had an outstanding interest rate swap agreement with a
notional value of $34.4 million and a fixed interest rate of 5.87%. The fair
value of the outstanding swap agreement at September 30, 1999 and December 31,
1998 was $0.5 million and ($1.0) million, respectively.
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 22.
23
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
In connection with the secondary offering of our common stock described in
Note 5 to the Condensed Consolidated Financial Statements found in Part I, Item
1 above, a stockholder controlled by US Airways sold all of the shares of our
common stock it held. In that same offering, a stockholder controlled by KLM
Royal Dutch Airlines reduced its ownership of our common stock to below 5% of
the total number of shares of our common stock then outstanding and a
stockholder controlled by United Airlines, Inc. reduced its ownership of our
common stock to below 25% of the total number of shares of our common stock then
outstanding. As a result of these sales, we redeemed our Series G, F and C
special voting preferred stock shares held by the stockholders controlled by US
Airways, KLM Royal Dutch Airlines and United Airlines, respectively, resulting
in the resignations of their respective nominees to our board of directors,
Messrs. Thomas A. Mutryn, Frank H. Rovekamp and David A. Coltman.
In connection with our purchase of all of the issued and outstanding shares
of a British Airways Plc subsidiary, which indirectly owned 7,000,400 shares of
our common stock as described in Note 5 to the Condensed Consolidated Financial
Statements found in Part I, Item 1 above, British Airways Plc sold all of the
shares of our common stock it held. As a result of this sale, we redeemed the
Series D share of our special voting preferred stock held indirectly by British
Airways and the British Airways nominee to our board of directors, Derek M.
Stevens, resigned following the sale.
24
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit
Number Exhibit Description
------ -------------------
10.1 Annex No. 1 to Windsor, England Office Agreement for Lease dated
June 2, 1999
10.2 Amendment No. 1 to Galileo Canada ULC $34,391,917 Credit Agreement
10.3 Amendment No. 3 to Galileo International, Inc. Guaranty Agreement
10.4 Second Amended and Restated $200,000,000 364-day Credit Agreement
10.5 Amendment No. 5 to $400,000,000 Five Year Credit Agreement
*10.6 Non-Qualified Stock Option Agreement [Standard Form - Executive
Group]
*10.7 Non-Qualified Stock Option Agreement [Standard Form - Non-Employee
Director]
27.1 Financial Data Schedule
*Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K - The Company filed a report on Form 8-K with
the Securities and Exchange Commission on July 20, 1999 with respect to
Item 5.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GALILEO INTERNATIONAL, INC.
Date: November 12, 1999 By: /s/ Paul H. Bristow
-------------------
Paul H. Bristow
Executive Vice President, Chief
Financial Officer, Treasurer and
Director (Principal Financial and
Accounting Officer)
26
<PAGE>
GALILEO INTERNATIONAL, INC.
Exhibit Index
Exhibit
Number Exhibit Description
------ -------------------
10.1 Annex No. 1 to Windsor, England Office Agreement for Lease dated
June 2, 1999
10.2 Amendment No. 1 to Galileo Canada ULC $34,391,917 Credit Agreement
10.3 Amendment No. 3 to Galileo International, Inc. Guaranty Agreement
10.4 Second Amended and Restated $200,000,000 364-day Credit Agreement
10.5 Amendment No. 5 to $400,000,000 Five Year Credit Agreement
*10.6 Non-Qualified Stock Option Agreement [Standard Form -Executive
Group]
*10.7 Non-Qualified Stock Option Agreement [Standard Form - Non-Employee
Director]
27.1 Financial Data Schedule
*Management contract or compensatory plan or arrangement.
27
<PAGE>
Exhibit 10.1
CONFORMED COPY
DATED
28 SEPTMEBER 1999
- ----------------------------------------------------------------
GLASGOW CITY COUNCIL
and
THE GALILEO COMPANY
and
GALILEO INTERNATIONAL INC
- ----------------------------------------------------------------
LEASE
of
2 Windsor Dials, Goswell Road, Windsor, Berkshire
- ----------------------------------------------------------------
Nabarro Nathanson
50 Stratton Street
London W1X 6NX
Tel: 0171 493 9933
PARTICULARS
New or old tenancy The tenancy created by this Lease is a
new tenancy for the purposes of the
Landlord and Tenant (Covenants) Act
1995.
Landlord GLASGOW CITY COUNCIL as the
administrating authority for the
Strathclyde Pension Fund of City
Chambers Glasgow G2 1DU.
Tenant THE GALILEO COMPANY
Registered office Galileo Centre Europe, Windmill Hill,
Swindon SN5 6PH
Guarantor GALILEO INTERNATIONAL INC
Address 9700 West Higgins Road Suite 400
Rosemont IL 60018-4796.
Premises 2 Windsor Dials as shown edged red on
Plan 1.
Estate Windsor Dials Goswell Road Windsor.
Term granted 25 years from and including 1999.
Rent GBP 690,896 per annum subject to review.
Rent commencement date 5th January 2000
Rent review dates The fifth, tenth, fifteenth and
twentieth anniversaries of the
commencement of the Term.
Interest rate 3% over Base Rate.
Permitted use Offices within Use Class B1(a) of the
Town and Country Planning
CONTENTS
Clause Subject matter Page
1. DEFINITIONS......................................................1
2. INTERPRETATION...................................................6
3. GRANT AND TERM...................................................7
4. RIGHTS GRANTED...................................................8
5. RIGHTS RESERVED AND REGRANTED....................................9
6. THIRD PARTY RIGHTS OVER THE PREMISES............................10
7. PAYMENT OF RENTS................................................11
Tenant's obligation to pay rent.................................11
First payment of the Service Charge Estimate....................11
Rent Commencement Date..........................................11
Payment of rents................................................11
No right of set-off.............................................11
8. RENT REVIEW.....................................................12
Definitions.....................................................12
Determination of revised Rent by agreement......................13
The Surveyor....................................................13
Determination of the revised Rent by the Surveyor...............14
Rent pending review.............................................14
Legislative restrictions........................................14
Guarantors not to take part in the review.......................15
Rent review memorandum..........................................15
Time not of the essence.........................................15
9. OTHER FINANCIAL MATTERS.........................................15
Utilities.......................................................15
Common facilities...............................................15
Rates and taxes.................................................15
Payments relating to the Premises and other property............16
Landlord's costs................................................16
VAT.............................................................16
Interest........................................................17
Exclusion of statutory compensation.............................17
10. INSURANCE.......................................................17
Landlord's obligations relating to insurance....................17
Reinstatement...................................................18
Tenant's obligations relating to insurance......................18
Suspension of rent..............................................19
Option to determine following damage by an Insured Risk.........20
Option to determine following destruction by terrorism..........20
Insurance monies................................................20
11. SERVICE CHARGE..................................................21
12. STATE AND CONDITION OF THE PREMISES.............................33
Repair..........................................................33
Redecoration....................................................34
Alterations.....................................................35
Signs and reletting notices.....................................35
13. USE OF THE PREMISES.............................................36
The Permitted Use...............................................36
Restrictions on use.............................................36
Use of machinery................................................37
Fire and security precautions...................................37
Exclusionofwarranty.............................................37
14. DEALINGS........................................................37
Definitions.....................................................37
General restrictions............................................37
Assignments.....................................................38
Underlettings...................................................39
Terms to be contained in any underlease.........................39
Rent review in an underlease....................................41
Further provisions relating to underleases......................41
Provisions relating to subunderleases...........................41
Charging........................................................42
Declarations of trust...........................................42
Group sharing of occupation.....................................42
Registration of dealings and provision of information...........42
15. LEGAL REQUIREMENTS..............................................43
Legislation.....................................................43
Notices relating to the Premises................................43
Planning........................................................44
The Construction (Design and Management) Regulations 1994.......44
Defective Premises Act 1972.....................................45
Regulations.....................................................45
No additional rights............................................45
16. LANDLORD'S COVENANT FOR QUIET ENJOYMENT.........................45
17. LIMITS ON LANDLORD'S LIABILITY..................................46
18. FORFEITURE......................................................46
Landlord's right of re-entry....................................46
Events giving rise to the Landlord's right of re-entry..........46
19. NOTICES IN CONNECTION WITH THIS LEASE...........................47
20. MISCELLANEOUS...................................................47
Landlord's rights to remedy default by the Tenant...............47
Tenant to provide information...................................48
Tenant's indemnity..............................................48
Tenant'sacknowledgement.........................................48
Guarantor.......................................................48
Qualification of Landlord's liability...........................48
Sale of goods after end of Term.................................49
Arbitration.....................................................49
21. ENVIRONMENTAL PROVISIONS........................................49
22. GUARANTEE AND INDEMNITY.........................................52
Guarantee.......................................................52
Principal Debtor................................................52
Indemnity.......................................................52
No discharge of Guarantor.......................................53
Waiver by Guarantor of its rights...............................54
Payments in gross...............................................54
Guarantor to take a new lease...................................55
Supplementary provisions........................................55
23. NEW OR OLD LEASE................................................56
24. TENANT'S OPTION TO DETERMINE....................................56
25. JURISDICTION....................................................57
LEASE
HM LAND REGISTRY
LAND REGISTRATION ACTS 1925-1988
County and District/London Borough : Berkshire/Windsor and Maidenhead.
Title Numbers : BK290702, BK325323, BK72200,
BK342999, BK343891, BK322021,
BK122648, BK119337, BK134697 and
BK165738
Property : 2 Windsor Dials Goswell Road Windsor
as shown edged red on Plan 1.
DATE 28th September 1999
PARTIES
(1) GLASGOW CITY COUNCIL as administering authority for the Strathclyde
Pension Fund pursuant to the powers conferred upon it by the local
Government Superannuation (Scotland) Regulations 1987 (as amended) of
City Chambers of Glasgow G2 1DU (the Landlord);
(2) THE GALILEO COMPANY (incorporated and registered in England and Wales
under company number 2143570), the registered office of which is at
Galileo Centre Europe Windmill Hill Swindon SN5 6PH (the Tenant); and
(3) GALILEO INTERNATIONAL INC Delaware file number 2742539, of 9700 West
Higgins Road Suite 400 Rosemont IL 60018-4796 (the Guarantor).
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
In this Lease the following definitions apply (there being further
definitions at clause 11.1 and 11.6):
"Base Rate"
(a) either the base rate from time to time of The Royal Bank of Scotland
Bank plc (or of such other bank being a member of the Committee
of London Clearing Banks as the Landlord may from time to time
nominate), or
(b) if that rate is no longer published then the rate of interest which the
Landlord reasonably considers to be most closely comparable to
minimum lending rates generally applicable in the UK from time
to time and notifies to the Tenant in writing;
"Car Park"
has the meaning as given to that expression in clause 11.1;
"Car Park Management Agreement"
means the agreement dated 1 June 1999 between the Landlord and
The Royal Borough of Windsor and Maidenhead;
"Car Park Plan"
the plan annexed to this deed marked Car Park Plan;
"Common Parts"
all parts of the Estate except the Premises and the Units;
"Drainage Easement"
the drainage easement dated 30 April 1999 between the Landlord
(1) John Alfred Hamshire and Carolyn Ann Hamshire (2);
"Electricity Sub Station Lease"
the lease dated 7th September 1999 between the Landlord (1) and
Southern Electric Plc (2);
"Estate"
Windsor Dials Goswell Road Windsor Berkshire as shown for
identification only edged blue on Plan 1, including all walls,
fences and other boundaries of such land and all Service Media
on, over or under such land, and Service Media outside such
land but exclusively serving it (excluding, in both cases, any
Service Media which are not owned by the Landlord);
"Excluded Risks"
any risk against which the Landlord does not insure because
insurance cover for that risk is either not available in the
London insurance market at the time, or is available there only
at a premium (unless the Tenant is willing to pay such premium
having been notified of the same by the Landlord) or subject to
conditions which in the Landlord's reasonable opinion are
unacceptable;
"Group"
a group of companies within the meaning of section 42 of the
Landlord and Tenant Act 1954;
"Guarantor"
the third party to this deed, and/or any person who has entered
into a guarantee or an authorised guarantee agreement pursuant
to this Lease and their respective successors in title;
"Insurance Rent"
the reasonable cost to the Landlord of insuring:
(a) the Premises against the Insured Risks for their full reinstatement
cost, including the costs of demolition and site clearance,
temporary works, compliance with local authority
requirements in connection with any works of repair or
reinstatement, architects', surveyors' and other
professional fees and other incidental expenses, and in
each case with due allowance for inflation and VAT;
(b) against loss of the Rent (having regard to the provisions for the
review of the Rent) Service Charge and Car Park Service
Charge for a period of not less than three years nor more
than five years; and
(c) against public third party and occupiers' liability, of the Landlord in
connection with any matter relating to the Premises or the
occupation or use of the Premises by the Tenant or anyone
at the Premises with the express or implied authority of
the Tenant;
"Insured Risks"
(a) fire, explosion, lightning and earthquake;
(b) flood, storm, bursting or overflowing of water tanks, pipes, or other
water or heating apparatus;
(c) impact, aircraft (other than hostile aircraft or aerial devices) and
things dropped from such aircraft and other aerial devices;
(d) riot, civil commotion and malicious damage;
(e) such other commercial risks as the Landlord may from time to time
reasonably insure against; and
(f) terrorism, subsidence, landslip and heave,
but to the extent that any risk is for the time being an
Excluded Risk, it will not to that extent and for that time be
an Insured Risk;
"Interest Rate"
3% over the Base Rate;
"Landlord"
the first party to this deed and its successors in title and
persons entitled to the reversion immediately expectant on the
termination of this Lease;
"Landlord's Surveyor"
a suitably qualified chartered surveyor appointed by the
Landlord, who may be an individual, or a firm or company of
chartered surveyors, or an employee of the Landlord or a
company which is in the same Group as the Landlord;
"this Lease"
this deed as varied or supplemented by any Supplemental
Document;
"Permitted Use"
Offices within Use Class BI(a) of the Town and Country (Use
Classes) Order 1987 (as at the date that Order first came into
force);
"Plans"
the plans annexed to this deed;
"Plan 1"
the plan annexed to this deed marked "Plan 1";
"Planning Acts"
the Town and Country Planning Act 1990, the Planning (Listed
Building and Conservation Areas) Act 1990, the Planning
(Hazardous Substances) Act 1990 and the Planning and
Compensation Act 1991;
"Premises"
2 Windsor Dials Goswell Road Windsor shown for identification
only edged red on Plan 1 and including:
(a) all landlord's fixtures from time to time at those premises, but if
those fixtures are Service Media, then only if they fall
within paragraph (b) below;
(b) Service Media within and from time to time exclusively serving those
premises and which are owned by the Landlord;
but excluding:
(c) any Service Media within such premises but which do not serve such
premises exclusively, or which are not owned by the
Landlord;
"Quarter Days"
25 March, 24 June, 29 September and 25 December in each year;
"Rent"
six hundred and ninety thousand eight hundred and ninety six
pounds (GBP 690,896) per annum (subject to review);
"Rent Commencement Date"
5th January 2000
"Review Date"
The fifth, tenth, fifteenth and twentieth anniversaries of the
commencement of the Term and any other date when the Rent may
lawfully be reviewed under this Lease;
"Section 106 Agreement"
the agreement pursuant to section 106 of the Town and Country
Planning Act 1990 between The Royal Borough of Windsor and
Maidenhead BG Land Investments Limited and Helical Bar
Developments (South East) Limited dated 24 December 1997;
"Service Media"
conduits and equipment used for the reception, generation,
passage and/or storage of Utilities;
"Supplemental Document"
any deed, agreement, licence, memorandum or other document
which is supplemental to this deed;
"Surveyor"
an independent chartered surveyor appointed jointly by the
Landlord and the Tenant or, if they do not agree on the
identity of such surveyor, by the President of the Royal
Institution of Chartered Surveyors (or any other officer
authorised to carry out that function) on the application of
either the Landlord or the Tenant in accordance with this Lease;
"Tenant"
the second party to this deed and its successors in title;
"Term"
a term of 25 years from and including 1999;
"Units"
the buildings on the Estate, and Service Media within and
exclusively serving such areas (other than Service Media which
are not owned by the Landlord), which are let or intended for
letting, but not the Premises;
"Utilities"
electricity, gas, water, foul water and surface drainage,
heating, ventilation and air conditioning, smoke and fumes,
signals, telecommunications, satellite and data communications
and all other utilities;
"VAT"
value added tax payable by virtue of the Value Added Tax Act
1994 (or previous legislation relating to value added tax);
"Working Day"
any day (other than Saturday) on which banks are usually open
for business in England and Wales.
2. INTERPRETATION
2.1 In this Lease:
2.1.1 the table of contents and clause headings are for reference only and do
not affect its construction;
2.1.2 the words "include" and "including" are deemed to be followed by the
words "without limitation";
2.1.3 general words introduced by the word "other" do not have a restrictive
meaning by reason of being preceded by words indicating a
particular class of acts, things or matters; and
2.1.4 obligations owed by or to more than one person are owed by or to them
jointly and severally.
2.2 In this Lease, unless otherwise specified:
2.2.1 a reference to legislation is a reference to all legislation having
effect in the United Kingdom at any time during the Term, including
directives, decisions and regulations of the Council or Commission
of the European Union, Acts of Parliament, orders, regulations,
consents, licences, notices and bye-laws made or granted under any
Act of Parliament or directive, decision or regulation of the
Council or Commission of the European Union, or made or granted by
a local authority or by a court of competent jurisdiction and any
approved Codes of Practice issued by a statutory body;
2.2.2 a reference to particular legislation is a reference to that
legislation as amended, consolidated or re-enacted from time to
time and to all subordinate legislation made under it from time to
time;
2.2.3 a reference to a person includes an individual, corporation, company,
firm, partnership or government body or agency, whether or not
legally capable of holding land; and
2.2.4 a reference to a clause is a reference to a clause or sub-clause of
this Lease.
2.3 In this Lease:
2.3.1 an obligation of the Tenant not to do something includes an obligation
not to cause or allow that thing to be done;
2.3.2 a reference to any act or to any act or omission of the Tenant includes
any act or any act or omission of any other person at the Premises
or the Estate with the Tenant's exclusive authority which authority
may be expressed or implied;
2.3.3 the rights of the Landlord under any clause are without prejudice to
the rights of the Landlord under any other clause or Supplemental
Document or other instrument entered into in connection with this
Lease;
2.3.4 the obligations of or restrictions on the Tenant or a Guarantor under
any clause, Supplemental Document or other instrument entered into
in connection with this Lease, are without prejudice to the
obligations of or restrictions on the Tenant or Guarantor, or to
the rights of the Landlord under any other clause, Supplemental
Document or other instrument entered into in connection with this
Lease;
2.3.5 a reference to the consent or approval of the Landlord means the prior
consent in writing of the Landlord, signed by or on behalf of the
Landlord;
2.3.6 a reference to the consent or approval of the Tenant means the prior
consent in writing of the Tenant, signed by or on behalf of the
Tenant;
2.3.7 references to the end of the Term are to the end of the Term whether
before or at the end of the term of years granted by this Lease;
2.3.8 references to a fair proportion of any sum are to the whole or a
proportion of that sum which is fair and reasonable in the
circumstances as determined by the Landlord's Surveyor, whose
decision shall be final and binding save in the case of manifest
error and where there are different elements to that sum a
different proportion for each element may be determined on this
basis;
2.3.9 the perpetuity period is eighty years from the date of this deed;
2.3.10 where a sum is expressed to be payable on demand such demand
shall be made in writing and the sum will become payable, unless
otherwise specified, 5 Working Days after the demand has been made;
2.3.11 unless otherwise specified, references to the Premises and the
Estate include any part of the Premises or the Estate; and
2.3.12 where approval or consent of the Landlord or the Tenant hereunder
is not to be unreasonably withheld such obligations shall be deemed
to include the additional obligation that such approval or consent
must not be unreasonably delayed.
3. GRANT AND TERM
At the request of the Guarantor the Landlord with limited title
guarantee leases the Premises to the Tenant for the Term the Tenant
paying the following sums, which are reserved as rent: the Rent, the
Insurance Rent and any VAT payable on those sums and any interest due
under this Lease.
4. RIGHTS GRANTED
4.1 The following rights are granted by the Landlord to the Tenant its
tenants, servants or duly authorised agents and any other permitted
occupier and all other persons expressly or impliedly authorised by
the Tenant (or such occupier):
4.1.1 the right to enter and exit to and from the Premises at all times over
the roads and footpaths on the Common Parts;
4.1.2 the right to use the Common Parts so far as is necessary for
(a) the proper use of the Premises and the exercise of the rights granted
by this Lease; and
(b) the performance of the obligations contained in this Lease (including
the erection of scaffolding to the Premises) subject to the
Tenant making good any physical damage thereby caused;
4.1.3 the right to use the Service Media forming part of the Estate at the
date of this deed which from time to time serve, but do not form
part of, the Premises;
4.1.4 the right subject to the Landlord's consent (not to be unreasonably
withheld) to install, maintain and replace an aerial and satellite
dish on the Premises together with fibre-optic cabling;
4.1.5 the exclusive right to park at all times private motor cars within the
area shown coloured yellow on the Car Park Plan but in respect of
those spaces in the Car Park between midnight on Sunday and 1900
hours on Friday (except bank holidays);
4.1.6 the right to use for loading and unloading goods and equipment the area
coloured yellow on Plan 1.
4.2 The rights granted by clause 4.1:
4.2.1 unless stated to the contrary are not granted to the Tenant
exclusively, but are to be used in common with the Landlord any
other tenants and lawful occupiers of the Estate, and other persons
authorised by them, but this will not operate so as to prejudice
the rights granted by clause 4.1.5;
4.2.2 may be temporarily interrupted or varied for the purposes of any
necessary works of maintenance, repair, alteration or the
replacement of any land or Service Media in connection with which
the rights are exercised provided that at all times there is
reasonable access to the Premises save if this is impossible in the
event of emergency;
4.2.3 are to be exercised by the Tenant, and any authorised undertenant, in
accordance with any reasonable regulations which the Landlord may
make for the proper management of the Estate and notify to the
Tenant in writing; and
4.2.4 shall be continued subject to appropriate arrangements applicable if
any land or Service Media over or through which they are exercised
(or any rights in connection with such land or Service Media) is or
are adopted.
4.3 Nothing contained or referred to in this Lease will confer on, or grant
to, the Tenant any right, easement or privilege other than those
which are set out in clause 4.1 and section 62 of the Law of Property
Act 1925 will not apply to this Lease.
4.4 Nothing contained or referred to in this Lease entitles the Tenant to
the benefit of, or the right to enforce, or to prevent the release or
modification of any agreement entered into by any other tenant or
occupier of the Estate or any other tenant of the Landlord.
5. RIGHTS RESERVED AND REGRANTED
5.1 The following rights are reserved from this Lease and regranted to the
Landlord by the Tenant:
5.1.1 the right to build, or carry out works, on any other part of the Estate
unless such building or works permanently lessen the access of
light or air to the Premises and provided that it does not
materially affect the Tenant's or other permitted occupier's use of
the Premises for the Permitted Use or not materially affect the
exercise of the rights granted to the Tenant hereunder;
5.1.2 the right to inspect repair and replace any Service Media under the
Premises, but which do not form part of the Premises;
5.1.3 the right to attach scaffolding to or place it on the Premises for such
period as is reasonably necessary in the exercise of any of the
rights reserved and regranted by this clause 5.1;
5.1.4 the right to attach Service Media to the Premises in connection with
the provision of the Services; and
5.1.5 the right to enter the Premises:
(a) to exercise any other right reserved and regranted to the Landlord by
this Lease;
(b) when reasonably necessary to view the state and condition of the
Premises, to measure and undertake surveys of the Premises and
to prepare schedules of condition or of dilapidations at the
Premises;
(c) to determine when reasonably necessary whether the Tenant is complying
with its obligations in this Lease and to remedy any breach of
those obligations;
(d) to show prospective purchasers of any interest in the Landlord's
reversion or, in the last six months of the Term, to show
prospective tenants over the Premises;
(e) where reasonably necessary in connection with the provision of the
Services;
(f) to comply with the requirements of the insurers of the Premises; and
(g) for any other reasonable purpose connected with this Lease or with the
Landlord's interest in the Premises or the Estate or with the
proper management of the Estate.
5.2 The rights reserved and regranted by this Lease are reserved and
regranted to the Landlord and may be exercised by anyone properly
authorised by the Landlord.
5.3 The person exercising any right of entry reserved and regranted by this
Lease shall:
5.3.1 make good any physical damage caused, to the reasonable satisfaction of
the Tenant (subject to clause 5.4) but shall not be under any
obligation to make any other compensation to the Tenant or other
occupier of the Premises and without prejudice to the generality of
the foregoing the Landlord shall not be responsible for any
economic or consequential loss;
5.3.2 exercise the right of entry in a manner which causes as little
inconvenience as is reasonably practical with the Tenant's or other
occupier's use of the Premises.
5.4 The Tenant shall allow any person who has a right to enter the Premises
to enter the Premises at all reasonable times provided that
reasonable written notice has been given. In cases of emergency
where it is impractical to give any notice no notice need be given
and the Landlord or another person on behalf of the Landlord may
break into the Premises if entry cannot be effected in any other
way. The Landlord will make good any physical damage caused in
breaking into the Premises in these circumstances unless the Landlord
shall be required to break into the Premises because the Tenant is in
breach.
6. THIRD PARTY RIGHTS OVER THE PREMISES
6.1 There are excepted from this deed and this Lease is granted subject to:
6.1.1 all existing rights which belong to other property, or are enjoyed by
other property over the Premises or any land or Service Media over
which rights are granted by the Landlord to the Tenant by this
Lease and the matters contained or referred to in the Car Park
Management Agreement, Electricity Sub Station Lease and the
Drainage Easement and the matters contained or referred to in the
property and charges registers of title number BK290702.
6.1.2 the matters contained or referred to in the property and charges
registers of title number BK325323, BK72200, BK342999, BK343891,
BK322021, BK122648, BK119337, BK134697 and BK165738 as at the date
of this deed.
6.2 The Tenant shall comply with the matters contained or referred to in
the documents and registers referred to in clause 6.1.2 as at the
date of this deed so far as they relate to the Premises and the
rights granted by this Lease Provided That the Tenant shall not be
obliged to comply with any covenant contained or referred to in the
documents and registers referred to in clause 6.1.2 to the extent
that such covenant prohibits or restricts the Permitted Use.
6.3 The Tenant shall:
6.3.1 not knowingly permit any third party to acquire any right over the
Premises or to encroach upon the Premises;
6.3.2 at the cost of the Landlord and the Tenant (such cost to be apportioned
in a manner reflecting the respective interests of the parties in
the Premises) take any steps which the Landlord may reasonably
require to prevent the acquisition of any right over or
encroachment on the Premises or to prevent the loss of any right
which belongs to the Premises and are enjoyed over adjoining or
neighbouring property; and
6.3.3 give the Landlord written notice of any attempt to do these as soon as
practical after the Tenant becomes aware of any such attempt.
6.4 The Tenant shall not block or obstruct any window or ventilator at the
Premises.
6.5 The Tenant shall not grant any right or licence to a third party
relating to the airspace at the Premises.
7. PAYMENT OF RENTS
7.1 Tenant's obligation to pay rent
The Tenant agrees with the Landlord to pay:
7.1.1 the Rent, the Service Charge Estimate, the Car Park Service Charge
Estimate and any VAT payable on those sums in four equal
instalments in advance on the Quarter Days;
7.1.2 the Insurance Rent on demand;
7.1.3 the Service Charge Balance, the Car Park Service Charge Balance and any
VAT on them, on demand; and
7.1.4 interest in accordance with clause 9.7.
7.2 First payment of the Service Charge Estimate
The first instalment of the Service Charge Estimate and the Car Park
Service Charge Estimate and any VAT due on it is to be made on 5th
July 1999 and is to be a proportionate amount for the period from and
including the date of this deed until and including the day preceding
the next Quarter Day.
7.3 Rent Commencement Date
The first payment of the Rent shall be made on the Rent Commencement
Date and shall be the Rent for the period from and including the Rent
Commencement Date until and including the day preceding the next
Quarter Day.
7.4 Payment of rents
If required by the Landlord, the Tenant shall pay the Rent and any
VAT on the Rent, by banker's standing order to a bank and account in
the United Kingdom which the Landlord has notified in writing to the
Tenant.
7.5 No right of set-off
The Tenant waives any legal or equitable right of set-off, deduction,
abatement or counterclaim which it may have in respect of the Rent or
any other sums due under this Lease and agrees to make all payments
of Rent and other such sums in full on their due dates except for
deductions required by statute.
8. RENT REVIEW
8.1 Definitions
In this clause the following definition applies:
"Open Market Rent"
the full annual rent at which the Premises could be reasonably
expected to be let as a whole at the relevant Review Date in
the open market:
(a) without a fine or premium;
(b) by a willing landlord to a willing tenant;
(c) which would be payable after the expiry of a rent free or reduced rent
period of such length as would be negotiated in the open
market between the willing landlord and the willing tenant
at the relevant Review Date in respect only of fitting out
works which would be carried out by the willing tenant
(notwithstanding the assumption at paragraph (h) that the
Premises are assumed to be fitted out);
(d) under a lease for a term of 15 years commencing on and including the
relevant Review Date or a term equal to the unexpired
duration of the Lease as at the relevant Review Date,
whichever term is longer;
(e) otherwise on the same terms as this Lease, except as to the amount of
the Rent, and assuming that the rent commencement date in
such lease is at such date after the relevant Review Date
so as to provide for the rent free or reduced rent period
referred to in paragraph (c) above;
assuming that:
(f) the Premises are available to be let with vacant possession;
(g) the Premises and the Estate and any land or Service Media over which
any rights granted by this Lease are to be exercised are in
good and substantial repair and condition and if damaged or
destroyed that they have been reinstated (other than in the
case of material damage or destruction to the Estate by an
Excluded Risk) and subject to paragraph (i) below;
(h) the Premises are ready to accept the willing tenant's fitting-out works
and are in all other respects ready for immediate
occupation and use by the willing tenant;
(i) the Tenant has fully complied with the Tenants obligations in this
Lease and the Landlord has complied with the Landlord's
obligations in this Lease save where the Landlord is in
material breach and failed within a reasonable period to
remedy such breach;
(j) no work has been carried out on the Premises by the Tenant or any
undertenant or occupier, or on any other part of the Estate
before or during the Term, which would lessen the rental
value of the Premises; and
(k) the Premises can, in their assumed state, be lawfully used by the
willing tenant for the Permitted Use;
but disregarding:
(l) any occupation of the Premises by the Tenant or any authorised
undertenant or authorised occupier;
(m) any goodwill attached to the Premises by reason of the Tenant or any
authorised undertenant or authorised occupier carrying on
any business at the Premises;
(n) any improvements (including improvements which form part of the
Premises at the relevant Review Date) carried out by the
Tenant or any authorised undertenant or authorised
occupier, before or during the Term, with the consent (if
required) of the Landlord, at the cost of the relevant
Tenant or authorised undertenant, and not pursuant to an
obligation (other than an obligation to comply with
legislation) owed by the relevant Tenant or authorised
undertenant to the Landlord or its predecessors in title;
(o) any legislation which imposes a restraint upon agreeing or receiving an
increase in the Rent.
8.2 Determination of revised Rent by agreement
8.2.1 The Rent will be reviewed at each Review Date, and from each Review
Date the Rent will be the higher of the Rent reserved immediately
before the relevant Review Date and the Open Market Rent at the
relevant Review Date.
8.2.2 The Landlord and the Tenant may agree the level of the Open Market Rent
at any time before the Surveyor has determined it.
8.2.3 The Landlord and the Tenant may agree that, taking into account the
Open Market Rent at the relevant Review Date, the revised Rent
reserved from that Review Date will be formulated in terms which
provide for different amounts to be paid with effect from different
dates on or after that Review Date.
8.2.4 If the Landlord and the Tenant have not agreed the Open Market Rent
three months before the relevant Review Date, either may require it
to be determined by a Surveyor.
8.3 The Surveyor
8.3.1 The Tenant may not make an application for the appointment of a
Surveyor without first notifying the Landlord.
8.3.2 The Surveyor must be experienced in the letting and valuation of
properties of a similar type and in the same region as the Premises
and the Surveyor shall act as an expert and not as an arbitrator.
8.3.3 If the Surveyor dies, or gives up the appointment, or fails to act in
accordance with this clause 8, or it becomes apparent that the
Surveyor is or will become unable so to act, the Landlord and the
Tenant may make a further appointment of, or application for, a
substitute Surveyor.
8.4 Determination of the revised Rent by the Surveyor
8.4.1 The Surveyor shall be instructed to determine the Open Market Rent
within two months (or longer if reasonable) of being appointed and
to make a direction as to costs (including the costs of
appointment).
8.4.2 The Landlord and the Tenant may within a period to be directed by the
Surveyor submit a valuation of the Open Market Rent at the relevant
Review Date and written representations to the Surveyor, and may
make written counter-representations to the Surveyor within a
further period to be directed by the Surveyor having regard to the
date when the submissions were made. Any valuation, representation
or counter-representation supplied to the Surveyor are to be copied
to the other party at the same time. The Surveyor will not be
fettered by any valuation, representation or counter-representation
supplied.
8.4.3 The decision of the Surveyor will be final and binding and:
(a) he shall give notice to the Landlord and the Tenant inviting each of
them to submit to him in such time as he shall stipulate a
proposal for the Open Market Rent which may be supported by the
submission of reasons and/or a professional valuation or report;
(b) he shall afford to each party an opportunity to make counter
submissions in respect of any submission valuation or report;
(c) he shall give written reasons for his decision.
8.4.4 The costs of appointment and fees of the Surveyor shall be paid in such
proportions as the Surveyor directs, or if no such direction is
made, then equally by the Landlord and the Tenant. If the Tenant
has not paid any costs required to be paid under this clause within
10 Working Days of having been required to pay them, the Landlord
may pay such costs which will be deemed due as additional rent and
recoverable as rent in arrears.
8.5 Rent pending review
8.5.1 If the revised Rent has not been agreed or determined before the
relevant Review Date, then the Rent shall continue to be payable at
the rate payable immediately before the relevant Review Date.
8.5.2 On the Quarter Day after the revised Rent has been agreed or determined
the shortfall, if any, between the Rent paid and the revised Rent
for the period from the relevant Review Date until that Quarter Day
will become due together with interest on that shortfall at the
Base Rate from the date or dates on which such shortfall became
due.
8.6 Legislative restrictions
If there is any legislation in force at the relevant Review Date
which restricts the Landlord's right to review the Rent in accordance
with this clause, or to receive any increase in the Rent following a
review, then the date on which the legislation is repealed or amended
to allow a review of or increase in the Rent, will be a further
Review Date and the Landlord will be entitled to require a review of
the Rent in accordance with this clause, except that the revised Rent
will be the highest of:
8.6.1 the Open Market Rent at that further Review Date;
8.6.2 the Rent reserved immediately before that further Review Date; and
8.6.3 the Rent reserved immediately before the relevant legislative
restriction became applicable to this Lease.
8.7 Guarantors not to take part in the review
A Guarantor will not have the right to take part in the review of the
Rent, but will be bound by it.
8.8 Rent review memorandum
Following the agreement of the revised Rent after each rent review,
the Landlord, the Tenant and any Guarantor shall sign a memorandum
recording the revised level of the Rent and any agreement made
pursuant to clause 8.2.3. The memorandum will be prepared by the
Landlord, approved by the Tenant (save in manifest error) and each
party will bear its own costs.
8.9 Time not of the essence
Time will not be of the essence in relation to this clause.
9. OTHER FINANCIAL MATTERS
9.1 Utilities
The Tenant shall pay all charges, including future connection and
hire charges, relating to the supply of Utilities to the Premises and
will comply with all requirements of the suppliers of Utilities to
the Premises from time to time.
9.2 Common facilities
The Tenant shall pay on demand a fair and proper proportion of any
costs properly incurred or payable by the Landlord in respect of any
land or Service Media outside the Estate but used by the Premises.
9.3 Rates and taxes
9.3.1 The Tenant shall pay and indemnify the Landlord against all present and
future rates, duties and assessments of any nature charged on or
payable in respect of the Premises whether payable by the landlord,
owner, occupier or tenant of the Premises and whether of a capital
or income, recurring or non-recurring nature except any income or
corporation tax imposed on the Landlord in respect of:
(a) the grant of this deed; or
(b) the receipt of the rents reserved by this Lease; or
(c) any actual or deemed dealing or disposition by the Landlord with its
interest in the Premises.
9.3.2 The Tenant shall not make any claim for relief from any of the charges
referred to above which would result in the Landlord not being
entitled after the end of the Term to that relief in respect of the
Premises.
9.4 Payments relating to the Premises and other property
Where any of the charges payable under clauses 9.1, 9.2 or 9.3
relates to other property as well as the Premises, the amount to be
paid by the Tenant will be a fair and proper proportion of the whole
of the amount charged or payable.
9.5 Landlord's costs
The Tenant shall pay to the Landlord, on demand, the proper fees,
costs and expenses properly charged, incurred or payable by the
Landlord, and its advisors or bailiffs in connection with:
9.5.1 any steps taken in reasonable contemplation of, or in relation to, any
proceedings under section 146 or 147 of the Law of Property Act
1925 including the preparation and service of all notices, and even
if forfeiture is avoided (unless it is avoided by relief granted by
the court);
9.5.2 preparing and serving schedules of dilapidations at any time during the
Term (or after the Term in respect of dilapidations arising during
the Term), and supervising any works undertaken to remedy such
dilapidations provided that the same is served during or within 6
months after the end or sooner determination of the Term (howsoever
the same may be determined);
9.5.3 recovering (or attempting to recover) any arrears of Rent or other sums
due to the Landlord under this Lease, including the costs of
preparing and serving any notice under section 17 of the Landlord
and Tenant (Covenants) Act 1995 and any costs associated with the
Landlord's remedies of distress or execution;
9.5.4 any investigations or reports carried out to determine the nature and
extent of any breach by the Tenant of its obligations in this Lease
where the Tenant is in actual breach;
9.5.5 any reasonable steps taken to procure that a breach by the Tenant of
its obligations under this Lease is remedied; and
9.5.6 the reasonable and proper costs in connection with any application for
a consent of the Landlord (including the preparation of any
documents) which is needed by virtue of this Lease (whether or not
such consent is granted unless consent is unlawfully withheld where
the Landlord is bound to act reasonably);
9.6 VAT
9.6.1 Where the Tenant is to pay the Landlord for any supply made to the
Tenant by the Landlord, the Tenant shall also pay any VAT which may
be payable in connection with that supply.
9.6.2 Where the Tenant is to pay the Landlord the costs of any supplies made
to the Landlord, the Tenant shall also pay the Landlord any VAT
payable in connection with that supply, except to the extent that
the Landlord is able to recover or obtain a credit for the VAT from
HM Customs and Excise.
9.7 Interest
9.7.1 If the Rent or any other sums payable under this Lease by the Tenant to
the Landlord are not paid within 10 Working Days of the due date
for payment the Tenant shall pay interest to the Landlord at the
Interest Rate for the period from and including the due date until
payment (both before and after any judgment).
9.7.2 If the Landlord acting reasonably and properly refuses to accept any
Rent or other sum due under this Lease, when the Tenant is in
breach of any of its obligations in this Lease so as not to
prejudice the Landlord's rights to re-enter the Premises and
forfeit this Lease, the Tenant shall pay interest on such sum to
the Landlord at the Base Rate for the period from and including the
date such sum became due until the date the payment is accepted by
the Landlord.
9.7.3 Interest under this Lease will accrue on a daily basis, compounded with
quarterly rests on the Quarter Days and will be payable on demand.
9.8 Exclusion of statutory compensation
Any statutory right of the Tenant, or any undertenant, to claim
compensation from the Landlord on leaving the Premises is excluded to
the extent that the law allows.
10. INSURANCE
10.1 Landlord's obligations relating to insurance
10.1.1 The Landlord shall insure the Premises and the Common Parts in
their full reinstatement value other than any part of the Premises
installed by the Tenant or any other occupier, against the Insured
Risks.
10.1.2 The Landlord shall insure against loss of Rent (having regard to
the provisions for the review of the Rent) and Service Charge for a
period of not less than three nor more than five years.
10.1.3 The insurance taken out by the Landlord shall be through a
reputable agency chosen by the Landlord and subject to any
exclusions, excesses and conditions as may be usual in the
insurance market at the time or required by the insurers.
10.1.4 The Landlord shall, at the request of the Tenant and at the
Tenant's cost if demand is made more often than once in any period
of twelve months, produce details of the terms of the current
insurance policy and evidence of the payment of the current premium.
10.1.5 If available from the insurer and expressly requested by the
Tenant the Landlord will apply to the insurer for a note of the
interest of the Tenant and undertenant and mortgagee to be endorsed
on the policy (where there is no provision for automatic noting to
be given);
10.1.6 The Landlord shall use its reasonable endeavours to have included
in any policy of insurance effected by the Landlord a clause or
note providing that the insurers will not pursue any rights to
which they may become subrograted as insurers of the Landlord
against the Tenant in respect of the Premises unless the loss or
damage has been occasioned or contributed to by the fraudulent or
criminal or malicious acts of the Tenant;
10.1.7 The Landlord shall notify the Tenant as soon as reasonably
practicable upon the Landlord becoming aware of any material change
in the risks covered by or the terms of any policy of insurance
effected by the Landlord from time to time under this Lease.
10.2 Reinstatement
10.2.1 If the Premises or the Common Parts are damaged or destroyed by
an Insured Risk, then:
(a) unless payment of any insurance monies is refused because of any act or
omission of the Tenant and the Tenant has failed to comply with
clause 10.3.8;
(b) subject to the Landlord being able to obtain any necessary consents; and
(c) subject to the necessary labour and materials being and remaining
available,
the Landlord shall repair and reinstate the Premises or the Common
Parts (other than any part which the Landlord is not obliged to
insure) or in building a Comparable Building or Comparable Common
Parts as soon as reasonably possible. A "Comparable Building" is a
building similar to the Premises in design, function, size and
location and capable of being used by the Tenant for the Permitted
Use, but may differ in these aspects from the Premises having
regard to the principles of good estate management and building
design. "Comparable Common Parts" are common parts similar to the
Common Parts in design, function, size and location but may differ
in these aspects from the Common Parts having regard to the
principles of good estate management and building design. The
Landlord shall be responsible for any shortfall (other than arising
from any act or omission by the Tenant).
10.2.2 The Landlord shall use all reasonable endeavours to obtain the
necessary labour, materials and consents to repair or reinstate the
Premises or Common Parts, but will not be obliged to appeal against
any refusal of a consent.
10.3 Tenant's obligations relating to insurance
The Tenant shall:
10.3.1 pay the Insurance Rent in accordance with this Lease;
10.3.2 pay on demand any proper increase in the insurance premium for
any other part of the Estate or any adjoining property of the
Landlord which is attributable to the use of the Premises, or
anything done or omitted to be done on the Premises in both cases
by the Tenant or any other occupier of the Premises;
10.3.3 pay on demand a fair proportion of the costs incurred or payable
by the Landlord in connection with the Landlord obtaining any
valuation of the Estate for insurance purposes, as long as such
valuation is made at least three years after any previous such
valuation and not for the first valuation prior to the grant of the
Lease;
10.3.4 comply with the requirements of the insurers relating to the
Premises in so far as the Tenant has been notified of the same in
writing;
10.3.5 not do or omit to do anything which may make any insurance of the
Estate, taken out by the Landlord, void or voidable, or which would
result in an increase in the premiums for such insurance;
10.3.6 give the Landlord written notice of any damage to or destruction
of the Premises by an Insured Risk immediately upon the Tenant
becoming aware of the same;
10.3.7 pay the Landlord on demand the whole or a fair and reasonable
proportion (according to the nature and extent of the damage) of
the amount of any excess required by the insurers in connection
with that damage or destruction;
10.3.8 pay the Landlord on demand an amount equal to any amount which
the insurers refuse to pay, following damage or destruction by an
Insured Risk, because of any act or omission of the Tenant;
10.3.9 if reasonably requested by the Landlord, remove its fixtures and
effects from the Premises where necessary to allow the Landlord to
repair or reinstate the Premises;
10.3.10 pay the Landlord on demand the proper costs incurred by the
Landlord in preparing and settling any insurance claim relating to
the Premises arising from any insurance taken out by the Landlord;
and
10.3.11 not take out any insurance of the Premises against the Insured
Risks in its own name (other than in respect of any part of the
Premises installed by the Tenant or any undertenant or other
occupier), and if the Tenant has the benefit of any such insurance,
the Tenant shall hold all money receivable under that insurance
upon trust for the Landlord.
10.4 Suspension of rent
10.4.1 If the whole of the Estate or the Premises or any part thereof
which the Landlord is obliged to insure, or the means of access
over the Estate to the Premises or to the Car Park or any Service
Media over which the Tenant exercises rights granted by this Lease,
are damaged or destroyed by any Insured Risk so as to make the
Premises or any part thereof which the Landlord is obliged to
insure and/or the Car Park and access to either, unfit for or
incapable of occupation or use, the Rent, Service Charge and Car
Park Service Charge (or a due proportion of it according to the
nature and extent of the damage) will be suspended from the date of
damage or destruction until expiry of the period of five years or,
if sooner, until the Premises, or such part, have been made fit for
or capable of occupation and use for the Permitted Use, or the
means of access restored or the Service Media over which the rights
are exercised are repaired or restored or the Common Parts or the
Car Park have been repaired or restored to the extent necessary for
the occupation and Permitted Use of the Premises.
10.4.2 The Rent will not be suspended to the extent that any loss of
rent insurance has been made ineffective, or payment of it has been
refused by the insurers because of any act or omission by the
Tenant unless the Tenant shall have paid to the Landlord in full
the extent of the loss of rent monies so refused.
10.4.3 Any dispute relating to this clause 10.4 will be referred to
arbitration.
10.5 Option to determine following damage by an Insured Risk
10.5.1 If the Premises or any part thereof or the means of access
thereto over the Estate to the Premises or the Car Park is made
unfit for occupation or use by damage or destruction caused by an
Insured Risk and the Landlord has not been able to complete the
necessary works of repair or reinstatement because of circumstances
beyond its reasonable control, within five years of the damage or
destruction the Landlord (having used reasonable endeavours to
comply with its obligations under clause 10.2) or the Tenant may
terminate this Lease by giving three months' written notice to the
other.
10.5.2 The notice referred to in 10.5.1 may be given at any time from
the period three months prior to the fifth anniversary of the
damage or destruction until the necessary works are completed.
10.5.3 This Lease will terminate on the date specified in the notice but
such termination will be without prejudice to any claim which the
Landlord or the Tenant may have against the other for any earlier
breach of their respective obligations in this Lease.
10.5.4 The Tenant shall remain bound by clause 10.3.7 after such
termination.
10.6 Option to determine following destruction by terrorism.
10.6.1 This clause only applies if terrorism shall become an Excluded
Risk.
10.6.2 If the Premises are destroyed or substantially damaged so as to
be incapable of use for the Permitted Use because of terrorism and
the Landlord has not been able to reinstate the Premises or a
Comparable Building within two years of the destruction or the
substantial damage the Landlord or the Tenant may terminate this
Lease by giving three months' written notice to the other.
10.6.3 The notice may be given at any time from the second anniversary
of the destruction until the Premises are reinstated.
10.6.4 This Lease will terminate on the date specified in the notice but
such termination will be without prejudice to any claim which the
Landlord or the Tenant may have against the other for any earlier
breach of their respective obligations in this Lease.
10.7 Insurance monies
All insurance monies payable arising from insurance which the
Landlord is obliged to take out pursuant to the terms of this Lease
will belong to the Landlord.
11. SERVICE CHARGE
11.1 Definitions
In this Lease the following additional definitions apply:
"Car Park"
means the multi-storey Car Park on the Estate edged green on
Plan 1;
"Car Park Service Charge Account"
means the Landlord's bank account holding (inter alia) the Car
Park Service Charge Balance and the Reserves;
"Certificate"
means a statement prepared by the Landlord's Accountant or the
Landlord's Surveyor, which shows:
(a) in respect of the Service Charge: the Service Charge Estimate, the
Landlord's Expenses, the Service Charge and the Service
Charge Balance; and
(b) in respect of the Car Park Service Charge: the Car Park Service Charge
Estimate, the Car Park Expenses, the Car Park Service
Charge and the Car Park Service Charge Balance
for the Service Charge Year which statement shall be audited
and certified by the Landlord's Accountant;
"Common Parts"
means all parts of the Estate except:
(a) the Premises and the Units; and
(b) (for the purposes of the Service Charge only) the Car Park;
"Construction Documents"
means the building contract and any other agreement contract or
warranty relating to the initial design and construction of the
Estate;
"Inherent Defects"
means any defect in the Common Parts or the Car Park or any
plant, machinery, conduits or equipment installed in on or
under the Common Parts or as the case may be the Car Park which
is attributable to:
(a) defective design of the original construction of the Common Parts or
Car Park as applicable;
(b) defective workmanship or materials used during the original
construction of the Common Parts or Car Park as applicable;
(c) defective supervision of the original construction of the Common Parts
or Car Park, as applicable, or the installation of any
plant, machinery, conduits or equipment during such period;
or
(d) defective preparation of the site upon which the Estate is constructed;
"Landlord's Accountant"
means an independent chartered accountant appointed by the
Landlord who shall be a member of the Institute of Chartered
Accountants of England and Wales;
"Landlord's Expenses"
means the reasonable and proper costs (including any VAT
charged on such costs to the extent that the Landlord is not
able to recover, offset or obtain a credit for such VAT from HM
Customs & Excise) incurred or provided for by or on behalf of
the Landlord in connection with all or any of the Services and:
(a) a fair and reasonable proportion of any reasonable costs incurred or
payable by the Landlord in respect of any party walls,
fences or structures, Service Media or other conveniences
and easements which are enjoyed by the tenants of the
Estate in common with any adjoining property save to the
extent the Tenant is liable to contribute toward the same
under clause 9.2;
(b) the fees of managing agents retained by the Landlord for the management
of the Common Parts (provided such fees in aggregate at all
times do not exceed 12 per cent of the Service Charge other
than the fees of the managing agents pursuant to this
paragraph), the provision of the Services and the
collection of the Service Charge Estimate and the Service
Charge Balance due from the Tenant and the other occupiers
of the Estate but not any such costs arising by reason of
those service charges being in arrears;
(c) cost of certification of the Certificate by the Landlord's Accountant;
but excluding:
(i) subject to paragraph (b) above any fees and expenses attributable to
the collection of rent and other sums due from tenants
and other occupiers of the Estate;
(ii) the cost of lettings, rent reviews, marketing and relettings of any
part of the Estate;
(iii) the costs of the initial construction equipment and fitting out of the
Common Parts so that they are ready and available for
initial use by the tenants and occupiers of the Estate;
(iv) the cost of remedying defects or completing outstanding works to be
remedied or completed under provisions for making good
defects or remedying or completing outstanding works
in the Construction Documents;
(v) the cost of monitoring the Environment Agency boreholes on the Estate
and any continued water monitoring pursuant to
condition 11 of the Planning Permission dated 24
December 1997 (97/75707) and taking any required
actions to protect ground water;
(vi) the cost of the initial landscaping planting of trees hedgerows shrubs
grass and other plants in relation to the Estate and
the replacement of any trees hedgerows shrubs or grass
which are removed or become seriously damaged or
diseased within 12 months of the date hereof or if
later within 12 months of initial completion of the
said landscaping and planting of the Estate;
"Leading Counsel"
means Queens Counsel having experience of the law and practice
relevant to the issue in despute;
"Net Internal Area"
means the net internal area measured in square feet in
accordance with the Code of Measuring Practice dated November
1993 and issued by the Royal Institution of Chartered Surveyors
and the Incorporated Society of Valuers and Auctioneers;
"Reserves"
means the total of the sums provided for in the anticipation of
future expenditure pursuant to paragraph (w) of the Services or
paragraph (u) of the Car Park Services;
"Services"
means:
(a) cleaning, maintaining, decorating, treating, and keeping the Common
Parts in good repair and condition and, where economic
repair is not possible, rebuilding and replacing the Common
Parts;
(b) keeping the Common Parts adequately lit;
(c) providing signs of such size and design as the Landlord may reasonably
determine at the entrance to the Estate and at such other
locations as the Landlord reasonably considers necessary;
(d) insuring the Common Parts and any plant and machinery used in
connection with the provision of any of the matters listed
in the definition of the Services against the Insured Risks
to their full reinstatement cost including the cost of
demolition and site clearance, temporary works, compliance
with local authority requirements in connection with any
works of repair or reinstatement, architects', surveyors'
and other professional fees and other incidental expenses
and in each case with due allowance for inflation and VAT;
(e) insuring the Landlord against third party and public liability in
connection with any matter relating to the Common Parts and
preparing and settling any insurance claim relating to the
Common Parts;
(f) removing any obstruction or hazard on the Common Parts;;
(g) providing, operating, inspecting maintaining, repairing and keeping in
good working order and where economic repair is not
possible replacing any equipment, plant and machinery and
other materials, which are either on the Common Parts
including any Service Media (insofar as it does not
exclusively serve and form part of either the Premises or
any of the Units or any part of the Service Media to which
the Tenant contributes towards pursuant to clause 9.2) or
used in providing the Services;
(h) fuel and Utilities used on the Common Parts or in providing the
Services;
(i) providing, maintaining and, when reasonably necessary, renewing signs
and other suitable or necessary notices on the Common Parts;
(j) the maintenance and restocking of any planted or landscaped parts of
the Common Parts;
(k) providing, maintaining and, when reasonably necessary, replacing or
altering such security systems on the Common Parts for the
benefit of the tenants or occupiers of the Estate, which
the Landlord (in the interests of good estate management)
reasonably considers appropriate and which may include the
provision of alarms, closed circuit television, barriers
and other equipment, and security guards and patrols
(whether employed by the Landlord or engaged as
contractors);
(l) providing fire detection, prevention and fighting equipment, and any
signs or notices required by the fire authority for the
Common Parts and maintaining, repairing and, when
necessary, replacing such items;
(m) complying with any legislation relating to the Common Parts (other than
works for which any tenant or occupier is responsible);
(n) complying with or, where the Landlord reasonably considers it
appropriate, contesting the requirements or proposals of
the local or any other competent authority in respect of
the Common Parts;
(o) complying with the matters referred to in clause 6.1 in so far as they
relate to the Common Parts;
(p) abating any nuisance to the Common Parts so far as such nuisance is not
caused by any tenants or occupiers of the Estate;
(q) any other item, work or service as shall be reasonably requested in
writing by all of the tenants of the Estate,
(r) all present and future rates, taxes, duties and assessments of whatever
nature charged on or payable in respect of the Common Parts
(other than initial connection fees);
(s) entering into and complying with maintenance and other contracts
entered into for the provision of the Services;
(t) managing the car parking spaces on the Common Parts for the occupiers
of the Estate and their visitors;
(u) providing and replacing refuse containers for occupiers of the Estate
and arranging for the collection of refuse;
(v) employing or arranging for the employment and the termination of
employment (but excluding any costs relating to claims of
unfair dismissal unless that dismissal is upheld to have
been unfair and the dismissal arose from a request from all
of the tenants on the Estate) of staff in connection with
the provision of Services, including the reasonable cost of
insurance, pension and welfare contributions and the
provision of clothing, tools and equipment;
(w) making such provisions as the Landlord reasonably considers appropriate
(if any) for anticipated future expenditure including the
provision and replacement of any plant, machinery or
equipment used or to be used in connection with the
Services provided that any such future expenditure should
first be met out of Reserves (if any);
(x) leasing any item used in providing the Services;
(y) obtaining any professional advice which may from time to time
reasonably and properly be required in relation to the
management of the Common Parts or the provision of the
Services;
(z) any other works, services or facilities which the Landlord from time to
time reasonably considers necessary for the purpose of
maintaining, improving or modernising the services or
facilities in or for the Common Parts and which are for the
general benefit of all, or substantially all, of the
occupiers of the Estate and are in accordance with the
principles of good estate management
provided that in all cases such items are in accordance with
the principles of good estate management;
"Service Charge"
means the Tenant's Proportion of the Landlord's Expenses in
relation to the relevant Service Charge;
"Service Charge Account"
means the Landlord's bank account holding (inter alia) the
Service Charge Balance and the Reserves (if applicable);
"Service Charge Balance"
means the shortfall, if any, between the Service Charge
Estimate and the Service Charge;
"Service Charge Estimate"
means the Tenant's Proportion of the amount which the Landlord,
or the Landlord's Surveyor or the Landlord's Accountant,
reasonably estimates will be the total reasonable and proper
cost of the Landlord's Expenses in any Service Charge Year;
"Service Charge Year"
means the year from and including 30 June in each year or such
other date which the Landlord reasonably chooses from time to
time;
"Tenant's Proportion"
means
(i) 35.43%; or
(ii)with effect from the next Service Charge Year following a
material increase in the extent of any Units such other
percentage fairly and reasonably determined by the
Landlord's Surveyor based on the proportion which the Net
Internal Area of the Premises bears to the aggregate of the
Net Internal Area of the Premises and the Net Internal Area
of the Units,
provided that the aggregate percentage payable by the Premises
and the Units shall be 100%.
11.2 Landlord's obligations
11.2.1 The Landlord shall carry out or provide items (a) to (r) of the
Services and of the Car Park Services and if the Landlord acting
reasonably considers appropriate it shall carry out or provide any
of the items (s) to (z) of the Services and (s) to (y) of the Car
Park Services in each and every case in an economic and efficient
manner and at a standard consistent with a high class office
development and in accordance with the principles of good estate
management and where appropriate using good and suitable materials.
11.2.2 The Landlord shall use all reasonable endeavours to obtain any
appropriate payments from its insurers.
11.2.3 The Landlord will have no liability for any failure or
interruption of any Services or the Car Park Services:
(a) during the proper inspection, maintenance, repair or replacement of any
relevant Service Media or equipment; or
(b) resulting from a shortage of fuel, water, materials or labour unless
through the default of the Landlord its agents, contractors or
employees; or
(c) resulting from a breakdown of any equipment used in connection with the
provision of the Services or the Car Park Services unless
through the default of the Landlord its agents, contractors or
employees; or
(d) resulting from any non-negligent non-malicious or non-criminal act or
omission of any employee, contractor or agent of the Landlord;
or
(e) for any other reason beyond the reasonable control of the Landlord.
11.2.4 In the circumstances mentioned in paragraphs (a), (b), (c), and
(d) in clause 11.2.3 above, the Landlord shall exercise best
endeavours to restore the relevant Service or the Car Park Services
as applicable without delay in the case of a material failure or
interruption and in all other cases as soon as reasonably
practicable.
11.2.5 The Landlord shall produce the Certificate to the Tenant as soon
as practicable after the end of the Service Charge Year.
11.2.6 The Landlord shall, but at the reasonable cost of the Tenant,
supply copies of any invoices and receipts for the Services and the
Car Park Services within a reasonable time of the Tenant's written
request for such copies.
11.3 Tenant's obligations
11.3.1 The Tenant shall pay the Service Charge Estimate and the Car Park
Service Charge Estimate, and any VAT on them and the Service Charge
Balance and the Car Park Service Charge Balance, and any VAT on
them as provided in clause 7.1 (Tenant's obligation to pay rent).
11.3.2 If the date of this deed does not coincide with the beginning of
a Service Charge Year, the Service Charge and the Car Park Service
Charge due from the Tenant for the part of that Service Charge Year
which is within the Term will be reduced by the proportion which
the part of that Service Charge Year which is before the beginning
of the Term bears to one year, and the Service Charge Estimate and
the Car Park Service Charge Estimate for that part of that Service
Charge Year will be adjusted accordingly.
11.3.3 If the end of the Term does not coincide with the end of a
Service Charge Year, the Service Charge and the Car Park Service
Charge due from the Tenant for the part of that Service Charge Year
which is within the Term will be reduced by the proportion which
the part of that Service Charge Year which is after the end of the
Term bears to one year and shall be payable notwithstanding the end
of the Term.
11.3.4 Apportionments made under clause 11.3.2 and 11.3.3 shall be
computed as if the Landlord's Expenses and Car Park Expenses for
the relevant Service Charge Year was incurred by equal daily
amounts throughout each Service Charge Year.
11.4 Estimating and revising the Service Charge and the Car Park Service
Charge
11.4.1 The Landlord shall give the Tenant as soon as reasonably
practicable a statement of the Service Charge Estimate and the Car
Park Service Charge Estimate for each Service Charge Year. Until
the statement has been given, the Service Charge Estimate and the
Car Park Service Charge Estimate shall be payable at the rate of
the Service Charge and the Car Park Service Charge for the previous
Service Charge Year. Once the statement has been given, the
remaining instalments of the Service Charge Estimate and the Car
Park Service Charge Estimate and any VAT on them will be adjusted
so as to provide for payment of the whole Service Charge Estimate
and the Car Park Service Charge Estimate for that Service Charge
Year to be paid during that year.
11.4.2 If, during a Service Charge Year, the Landlord reasonably expects
the cost of the Services and the Car Park Services to increase
materially above its previous estimate of the cost of the Services
and the Car Park Services for that Service Charge Year, the
Landlord may revise its estimate of those costs and the Service
Charge Estimate and the Car Park Service Charge Estimate will be
based on that revised estimate and the remaining instalments of the
Service Charge Estimate and the Car Park Service Charge Estimate
adjusted so that the revised Service Charge Estimate and the Car
Park Service Charge Estimate will have been paid by the end of that
Service Charge Year. The Landlord may revise the Service Charge
Estimate and the Car Park Service Charge Estimate more than once in
a Service Charge Year.
11.5 General provisions
11.5.1 In the absence of manifest error, the Certificate will be
conclusive as to matters of fact referred to in the Certificate.
11.5.2 The Tenant shall have the right to challenge invoices and
receipts relating to the Service Charge and/or the Car Park Service
Charge but shall not be entitled to refuse to pay the Service
Charge pending the resolution of any dispute;
11.5.3 The Landlord shall notify the Tenant in writing of any change in
the date of the beginning of the Service Charge Year.
11.5.4 If the Service Charge or the Car Park Service Charge for any
Service Charge Year is less than the Service Charge Estimate or the
Car Park Service Charge Estimate (as applicable) (as and if
revised), the balance will be credited against the instalments of
the Service Charge Estimate or the Car Park Service Charge Estimate
(as applicable) due from the Tenant in the following Service Charge
Year, or, at the end of the Term, set off against any sums due from
the Tenant to the Landlord with any balance being repaid to the
Tenant.
11.5.5 The Landlord's Expenses and the Car Park Expenses for the Service
Charge Year in which the beginning of the Term falls may include
reasonable costs incurred by or provided for or on behalf of the
Landlord before the beginning of the Term so far as they relate to
Services or as applicable the Car Services which are to be provided
during the Term. The Landlord's Expenses and the Car Park Expenses
in any Service Charge Year may include provisions for reasonable
expenses to be made after the end of the Term so far as such
provisions are reasonable having regard to the Services or as
applicable the Car Park Services which are provided during the Term.
11.5.6 The Landlord shall at the Tenant's request take reasonable and
proper steps to enforce for the benefit of the Tenant, the Landlord
and the other tenants of the Estate all remedies that may be
available to the Landlord under the Construction Documents in
respect of Inherent Defects in the Common Parts or the Car Park or
both where such defects are due to any breach of obligation
thereunder provided that:
(a) before commencing legal proceedings Leading Counsel shall have advised
in writing that any claim would have a reasonable chance of
success;
(b) before seeking such advice the Landlord will have due regard to any
representations made by the Tenant its solicitors or surveyors
concerning the Inherent Defects and liability of any party
under the Construction Documents and as to the choice of and
content of the instructions to Leading Counsel;
(c) the Landlord will permit the Tenant its solicitors and surveyors to
attend any consultation with Leading Counsel and will supply
the Tenant with a copy of the written advice from such counsel
and any note made by the Landlord or its solicitors of any
advice tendered by such counsel in consultation;
(d) The costs of taking such action (including all professional fees) shall
form part of the Landlord's Expenses or the Car Park Expenses
(as applicable).
11.5.7 To the extent only that the Landlord recovers any sums under the
Construction Documents in respect of Inherent Defects having used
all reasonable endeavours to do so the Landlord shall after
deduction of all proper and reasonable costs incurred by the
Landlord forthwith refund to the Service Charge Account or the Car
Park Service Charge Account as applicable any sums which it may
have paid in respect of remedying Inherent Defects which form part
of the Landlord's Expenses or the Car Park Expenses as applicable.
11.5.8 To the extent that the Landlord recovers (and it shall use all
reasonable endeavours to recover the same) any cost or sums which
the Landlord recovers from any third party or under any other
clause, or from any insurance taken out by the Landlord where the
Tenant is obliged to refund the Landlord the whole or any part of
the premium; the Landlord shall after deduction of all proper and
reasonable costs incurred by the Landlord refund to the Service
Charge Account or the Car Park Service Charge Account as applicable
any sums which it may have paid in respect of such items as
Landlord's Expenses
11.6 Car Park Service Charge
11.6.1 In this Lease the following definitions also apply
"Additional Car Park Charge"
means a fair and proper proportion of the costs incurred by the
Landlord of managing the Car Park as a direct result of the
Tenant exercising the right granted to it under clause 11.6.2;
"Car Park Certificate"
means a statement prepared by the Landlord's Surveyor or the
Landlord's Accountant, which shows the Car Park Service Charge
Estimate, the Car Park Expenses, the Car Park Service Charge
and the Car Park Service Charge Balance for the relevant
Service Charge Year which statement shall be audited and
certified by the Landlord's Account;
"Car Park Expenses"
means the reasonable and proper costs (including any VAT
charged on such costs to the extent that the Landlord is not
able to recover, offset or obtain a credit for such VAT from HM
Customs & Excise) incurred or provided for by or on behalf of
the Landlord in connection with all or any of the Car Park
Services and:
(a) a fair and reasonable proportion of any reasonable costs incurred or
payable by the Landlord in respect of any party walls,
fences or structures, Service Media or other conveniences
and easements which are enjoyed by the tenants of the
Estate in common with any adjoining property save to the
extent that the Tenant is liable to contribute towards the
same under clause 9.2;
(b) the fees of managing agents retained by the Landlord for the management
of the Car Park (provided such fees in aggregate at all
times do not exceed 12 per cent of the Car Park Service
Charge other than the fees of the managing agents pursuant
to this paragraph), the provision of the matters listed in
this definition and the collection of the Car Park Service
Charge Estimate and the Car Park Service Charge Balance due
from the Tenant and the other occupiers of the Estate but
not any such costs arising by reason of those rents or
service charges being in arrears;
(c) cost of certification of the Car Park Certificate by the Landlord's
Accountant;
but excluding:
(i) subject to paragraph (b) above any fees and expenses attributable to
the collection of rent and other sums due from tenants
and other occupiers of the Estate;
(ii) the costs of the initial construction equipment and fitting out of the
Car Park so that they are ready and available for
initial use by the tenants and occupiers of the Estate
or by the public;
(iii) the cost of remedying defects or completing outstanding works to be
remedied or completed under provisions for remedying
defects or remedying or completing outstanding works
in the Construction Documents;
(iv) the costs of complying with the Planning Agreements and the Car Park
Agreement (to the extent that such compliance does not
benefit the Tenant) and paragraph (c) of the
definition of Car Park Services;
(v) the cost of monitoring the Environment Agency boreholes on the Estate
and any continued water monitoring pursuant to
condition 11 of the Planning Permission dated 24
December 1997 (97/75707) and taking any required
actions to protect ground water;
(vi) the cost of making good any material damage sustained to the Car Park
during such times as the general public are entitled
to use or gain access to the Car Park pursuant to the
Car Park Management Agreement unless such damage is
caused by the Tenant or any subtenant or occupier of
the Estate and their employees, contractors or agents;
(vii) any increase in the costs of the Landlord insuring the Car Park in
accordance with the terms of this Lease (including for
the avoidance of doubt increase excess and charges)
arising as a result of the proposed use by the general
public as referred to at paragraph (vi) above;
(viii) any costs incurred in providing additional security (including
for the avoidance of doubt security guards, CCTV and
equipment) as a result of the proposed use by the
general public as referred to at paragraph (vi) above
to the extent that such facilities are only available
when the Car Park is open to the general public;
(ix) any cost of providing, operating, inspecting, maintaining, repairing
and replacing any equipment, plant, machinery and
signs and other materials which have been installed in
Car Park exclusively as a result of the proposed use
by the general public as referred to at paragraph (vi)
above.
"Car Park Services"
means:
(a) cleaning, maintaining, decorating, treating, and keeping the Car Park
in good repair and condition and, where economic repair is
not possible, rebuilding and replacing the Car Park;
(b) keeping the Car Park adequately lit;
(c) without unreasonable delay (but subject to it being lawful to do so and
subject to prior notification by the Tenant) removing or
procuring the removal of any car or other vehicle occupying
any space within the Car Park allocated to the Tenant;
(d) removing any obstruction or hazard on the Car Park;
(e) providing, operating, inspecting and maintaining, repairing and keeping
in good working order and where economic repair is not
possible replacing any equipment, plant and machinery and
other materials, which are either on the Car Park including
any Service Media or used in providing the Car Park
Services;
(f) fuel and Utilities used on the Car Park or in providing the Car Park
Services;
(g) providing, maintaining and, when reasonably necessary, renewing signs
and other suitable or necessary notices in the Car Park;
(h) operating the Car Park for occupiers of the Estate and their visitors;
(i) providing, maintaining and, when reasonably necessary, replacing or
altering such security systems on the Car Park for the
benefit of the tenants or occupiers of the Estate, which
the Landlord (in the interests of good estate management)
reasonably considers appropriate and which may include the
provision of alarms, closed circuit television, barriers
and other equipment, and security guards and patrols
(whether employed by the Landlord or engaged as
contractors);
(j) insuring the Car Park and any plant and machinery used in connection
with the provision of any of the Car Park Services against
the Insured Risks for their full reinstatement cost,
including the cost of demolition and site clearance,
temporary works, compliance with local authority
requirements in connection with any works of repair or
reinstatement, architects', surveyors' and other
professional fees and other incidental expenses and in each
case with due allowance for inflation and VAT;
(k) insuring the Landlord against third party and public liability in
connection with any matter relating to the Car Park and
preparing and settling any insurance claim relating to the
Car Park;
(l) complying with any legislation relating to the Car Park (other than
works for which the Landlord or any tenant or occupier is
responsible);
(m) complying with or, where the Landlord reasonably considers it
appropriate, contesting the requirements or proposals of
the local or any other competent authority in respect of
the Car Park (other than works for which the Landlord is
responsible under the terms of this Lease);
(n) complying with the matters referred to in clause 6.1 in so far as they
relate to the Car Park (other than those matters for which
the Landlord is responsible under the terms of this Lease);
(o) abating any nuisance to the Car Park so far as such nuisance is not
caused by any tenant or occupiers of the Estate;
(p) all present and future rates, taxes, duties and assessments of whatever
nature charged on or payable in respect of the Car Park
(other than initial connection fees);
(q) any other item, work or service as shall be requested in writing by all
of the tenants of the Estate;
(r) providing fire detection, prevention and fighting equipment and any
signs or notices required by the fire authority for the Car
Park and maintaining, repairing and, when necessary,
replacing such items;
(s) providing and replacing refuse containers for the tenants and occupiers
of the Estate and arranging for the collection of refuse;
(t) employing or arranging for the employment and the termination of
employment (but excluding any costs relating to claims of
unfair dismissal unless the dismissal is upheld to have
been unfair and the dismissal arose from a request from all
of the tenants on the Estate) of staff in connection with
the provision of the Car Park Services, including the
reasonable costs of insurance, pension and welfare
contributions and the provision of clothing, tools and
equipment;
(u) making such provisions as the Landlord reasonably considers appropriate
(if any) for anticipated future expenditure including the
provision and replacement of any plant, machinery or
equipment used or to be used in connection with the Car
Park Services provided that any such future expenditure
should first be met out of Reserves (if any);
(v) leasing any item used in providing the Car Park Services;
(w) obtaining any professional advice which may from time to time
reasonably and properly be required in relation to the
management of the Car Park or the provision of the Car Park
Services;
(x) any other works, services or facilities which the Landlord from time to
time reasonably considers necessary for the purpose of
maintaining, improving or modernising the services or
facilities in or for the Car Park, and which are for the
general benefit of all, or substantially all, of the
occupiers of the Estate and are in accordance with the
principles of good estate management,
(y) entering into and complying with maintenance and other contracts
entered into for the provision of the Car Park Services;
provided that in all cases such items are in accordance with
the principles of good estate management.
"Car Park Service Charge"
means the Tenant's Proportion of 69 per cent of the Car Park
Expenses in relation to the relevant Service Charge Year;
"Car Park Service Charge Balance"
means the shortfall, if any, between the Car Park Service
Charge Estimate and Car Park Service Charge;
"Car Park Service Charge Estimate"
means the Tenant"s Proportion of 69 per cent of the amount
which the Landlord's Accountant, reasonably estimates will be
the total reasonable and proper cost of the Car Park Expenses
in any Service Charge Year;
"Local Authority"
means the Royal Borough of Windsor & Maidenhead or a successor
authority.
11.6.2 To the extent that the Landlord can grant the same pursuant to
the Car Park Management Agreement the Tenant shall have the right
subject to the Section 106 Agreement to park such cars at the
weekend and on bank holidays (the "restricted times") in the Car
Park as the Landlord in its reasonable discretion permits subject
to the prior notification by the Tenant to the Landlord of the
exercise of the right and subject further to payment of the
Additional Car Park Charge Provided that the Tenant shall use
reasonable endeavours to ensure that during restricted times:
(i) car parking spaces outside the Car Park will be used in priority to any
spaces within the Car Park and
(ii) car parking spaces on level one of the Car Park will be used in
priority to any spaces on other levels of the Car Park
Provided Further that to the extent it is reasonably
foreseeable the Tenant shall notify the Landlord of its
requirement to use the Car Park during restricted times
quarterly in advance.
11.6.3 If the Local Authority ceases to require the Car Park for public
use as provided for in the Car Park Management Agreement or Section
106 Agreement then the definition of Common Parts in the Service
Charge shall include the Car Park and the Car Park Service Charge
provision shall cease to have effect (other than that the Tenant
shall pay any balance of Car Park Service Charge due up to the date
the Local Authority ceases to require the Car Park for public use).
12. STATE AND CONDITION OF THE PREMISES
12.1 Repair
12.1.1 The Tenant shall repair the Premises and keep them in good and
substantial repair and condition.
12.1.2 The Tenant shall keep all plant and machinery forming part of the
Premises in good condition and working order, and replace any items
of plant or machinery which become beyond repair with new ones of a
type and quality reasonably satisfactory to the Landlord.
12.1.3 The Tenant shall enter into and maintain contracts for the
maintenance of plant and machinery at the Premises, with reputable
contractors.
12.1.4 The Tenant shall carry out all works and treatments to the
Premises as are necessary to comply with repair and maintenance
covenants imposed upon the Tenant by this Lease in relation to the
Premises and to ensure the health and safety of people working at
or visiting the Premises.
12.1.5 The Tenant shall regularly clean the inside and outside of the
windows at the Premises.
12.1.6 The Tenant will not be liable under this clause 12.1 to the
extent that the Landlord is obliged to carry out the relevant
repair works under clause 10.2 (Reinstatement) or to the extent
that the Landlord is prevented from carrying them out by reason of
the matters referred to in paragraph (b) or (c) of clause 10.2.1 or
to the extent if the Premises are destroyed or substantially
damaged because of terrorism so as to be incapable of use for the
Permitted Use.
12.2 Redecoration
12.2.1 The Tenant shall redecorate the inside of the Premises every five
years, and in the last six months of the Term but not more
frequently than once in any period of 12 months, and, on the last
occasion, in colours and materials approved by the Landlord (such
approval not to be unreasonably withheld or delayed).
12.2.2 The Tenant shall redecorate any appropriate exterior surfaces of
the Premises in colours and materials approved by the Landlord
(such approval not to be unreasonably withheld or delayed) every
three years and in the last six months of the Term but not more
frequently than once in any period of 12 months.
12.2.3 All redecoration is to be carried out to a good standard and in
accordance with good modern practice and to the reasonable
satisfaction of the Landlord.
12.2.4 The Tenant will not be obliged to redecorate the Premises while
the Landlord is repairing or reinstating the Premises by reason of
clause 10.2 (Reinstatement) to the extent that repair or
reinstatement includes redecoration. The Tenant shall then
redecorate the exterior and interior every three and five years
respectively after the repair or reinstatement and in both cases in
the last six months of the Term but not more frequently than once
in any period of 12 months and otherwise in accordance with this
clause 12.2.
12.2.5 The Tenant will not be obliged to redecorate the exterior of the
Premises during the last year of the Term provided the Tenant has
been granted a new lease of the Premises.
12.3 Alterations
12.3.1 The Tenant shall not:
(a) construct any new building or structure or install any additional
Service Media on the Premises other than as set out in clause
12.3.2;
(b) make any structural alterations or additions to the Premises (other
than minor openings in walls and slabs with Landlord's consent
which shall not be unreasonably withheld); or
(c) make any alterations or additions to the outside parts or exterior of
the Premises, including any material alterations to their
appearance.
12.3.2 The Tenant shall not without the consent of the Landlord, such
consent not to be unreasonably withheld or delayed, make any
internal, non-structural alterations or additions to the Premises
or install any plant or equipment on the roof.
12.3.3 The Tenant may, without the consent of the Landlord, erect, alter
and remove, internal demountable partitioning or make any
alterations to the Service Media which are internally within the
Premises and exclusively serve the Premises and belong to the
Landlord provided that:
(a) such works will not result in a breach of paragraphs 12.3.1 or 12.3.2;
(b) such works will be carried out to the relevant regulatory and
professional standards generally recognised in the United
Kingdom at the time the works are carried out; and
(c) the Tenant provides detailed plans and specifications showing the works
to the Landlord prior to any such erection or works.
12.3.4 On any application for consent for alterations or additions the
Tenant shall give the Landlord 3 copies of a specification and
detailed drawings identifying the proposed works.
12.3.5 Unless otherwise required by the Landlord, the Tenant shall, at
the end of the Term, remove any alterations or additions made to
the Premises (and make good any damage caused by that removal to
the reasonable satisfaction of the Landlord) and shall reinstate
the Premises to their original layout and condition it being agreed
that there shall be no obligation to reinstate at the end of the
Term if the Tenant has entered into a new lease of the Premises
containing covenants in similar terms to this clause 12.3 and
PROVIDED THAT the Tenant shall not be obliged to remove the floor
boxes installed at the Premises and reinstate the floor to the
condition it was prior to their installation insofar as the floor
has been altered by the installation of the floor boxes.
12.4 Signs and reletting notices
12.4.1 The Tenant and/or other authorised occupier(s) shall not display
any signs or notices at the Premises which can be seen from outside
the Premises, except one external sign giving the name and business
of the Tenant (and/or other authorised occupier(s)), the size,
style and position of which have been approved by the Landlord
previously in writing such approval not to be unreasonably
withheld. The Tenant shall be entitled to display a sign giving
the name and business of the Tenant (and/or other authorised
occupier(s)) on the Estate name board (if any) provided by the
Landlord subject to obtaining the approval of the Landlord as
aforesaid.
12.4.2 At the end of the Term the Tenant shall remove any signs at the
Premises installed under clause 12.4.1 and will make good any
damage caused by that removal to the reasonable satisfaction of the
Landlord.
12.4.3 During the last six months of the Term the Tenant shall permit
the Landlord to place a sign on the Premises for the reletting of
the Premises as long as the sign does not unreasonably restrict the
access of light or air to the Premises.
13. USE OF THE PREMISES
13.1 The Permitted Use
The Tenant shall not use the Premises except for the Permitted Use.
13.2 Restrictions on use
The Tenant shall not:
13.2.1 use the Premises as an Employment Exchange or an office of the
Department of Social Security or its successors at which the
general public call without appointment;
13.2.2 leave the Premises unoccupied for a period of more than one month
without first notifying the Landlord in writing and without making
security arrangements at the Tenant's cost to the reasonable
satisfaction of the Landlord;
13.2.3 do anything on the Premises which is illegal or immoral;
13.2.4 do anything on the Premises which would cause a nuisance or any
damage to the Landlord or any of the other occupiers of the Estate
or any owner or occupier of any other property near the Estate;
13.2.5 carry out any noisy, noxious, dangerous or offensive acts at the
Premises;
13.2.6 store dangerous or inflammable materials at the Premises, unless
they are:
(a) of a type usually kept by persons carrying on the same business as the
Tenant (or other occupier) or necessary for the operation of
any plant or machinery;
(b) kept in reasonable quantities; and
(c) stored safely and in accordance with any requirements or
recommendations of the insurers of the Premises;
13.2.7 allow waste to accumulate at the Premises;
13.2.8 allow any material which is deleterious, polluting or dangerous
(to persons or property) to enter any Service Media or any
adjoining property; nor
13.2.9 overload or obstruct any Service Media which serve the Premises,
13.3 Use of machinery
The Tenant shall not use any machinery on the Premises in a manner
which causes or may cause:
13.3.1 any damage to the fabric of the Premises or any strain on the
structure of the Premises beyond that which it is designed to bear;
or
13.3.2 any undue noise or vibration.
13.4 Fire and security precautions
The Tenant shall comply with the requirements and recommendations of
the fire authority and with any reasonable requirements of the
Landlord relating to fire prevention and the provision of fire
fighting equipment at the Premises and the reasonable requirements of
the Landlord in relation to the security of the Premises while they
are vacant.
13.5 Exclusion of warranty
The Landlord does not warrant or represent that the Premises may be
used for the Permitted Use or for any other purpose.
14. DEALINGS
14.1 Definitions
In this clause the following definitions apply:
"Assignee"
the proposed assignee;
"Assignment"
the proposed assignment;
"Permitted Part"
(a) a whole floor;
(b) part of a floor or if part of a floor be sub-let or sub-underlet then
the remainder of that floor so that there shall be no more
than two occupations of each floor;
14.2 General restrictions
The Tenant shall not part with nor agree (unless such agreement is
conditional upon obtaining the relevant Landlord's consent pursuant
to this clause) to part with possession of the whole or part of the
Premises or this Lease, nor allow any other person to occupy the
whole or any part of the Premises, except as permitted by the
remainder of this clause 14.
14.3 Assignments
14.3.1 The Tenant shall not assign any part (as opposed to the whole) of
this Lease.
14.3.2 The Tenant shall not assign the whole of this Lease without the
consent of the Landlord, such consent not to be unreasonably
withheld or delayed.
14.3.3 The Landlord and the Tenant agree that, for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927, the Landlord
may refuse its consent to an assignment in any of the following
circumstances:
(a) if the Tenant has not paid all the Rent and Insurance Rent and other
undisputed sums due under this Lease;
(b) if in the proper opinion of the Landlord acting reasonably the Assignee
is not of sufficient financial standing to pay the Rent and
other sums payable under this Lease and to comply with the
tenant's obligations in this Lease (except where in the proper
opinion of the Landlord acting reasonably acceptable security
for such payments and such obligations is provided);
(c) if, where the obligations of the Tenant have been guaranteed by a
member of the same Group as the Tenant, the Assignee is
another member of that Group unless in the case of an
assignment within the same Group as The Galileo Company only
the assignee is guaranteed by Galileo International Inc. or a
guarantor of equivalent status;
(d) if the Assignee (being a body corporate) is not incorporated within the
UK, unless its proposed guarantor (and if more than one then
all of them) (being a body corporate) is (or are) incorporated
within the UK.
14.3.4 The Landlord and the Tenant agree that, for the purposes of
section 19(1A) of the Landlord and Tenant Act 1927, the Landlord
may give its consent to an assignment subject to all or any of the
following conditions:
(a) that the Tenant enters into an authorised guarantee agreement no later
than the date of the Assignment, which agreement is to be by
deed, is to provide for a guarantee of all the obligations of
the Assignee under this Lease from the date of the Assignment
until the Assignee is released by virtue of the Landlord and
Tenant (Covenants) Act 1995 (save in the case where The Galileo
Company and/or Galileo International Inc. is liable to the
Landlord under an authorised guarantee agreement pursuant to an
assignment which has taken place prior to the twentieth
anniversary of the commencement of the Term (but not otherwise)
until the twentieth anniversary of the commencement of the Term
if sooner), and which provides for all the matters permitted by
section 16(5) of that Act and which is otherwise in accordance
with section 16 of that Act and in a form reasonably required
by the Landlord;
(b) that, where reasonably required by the Landlord, the Assignee shall
procure a guarantor or guarantors, reasonably acceptable to the
Landlord, to enter into a full guarantee and indemnity of the
Assignee's obligations under this Lease, such guarantee and
indemnity to be by deed and to be in the form of clause 21
(with such additions and amendments as are necessary to reflect
the fact that the guarantee and indemnity is being entered into
after the date of this deed and by means of a separate
document) together with any additional provisions reasonably
required by the Landlord;
(c) that, if at any time before the Assignment the circumstances set out in
clause 14.3.3 apply, the Landlord may revoke its consent to the
Assignment by written notice to the Tenant;
(d) that the Assignment is completed within such time as may reasonably be
specified by the Landlord not being less than two months.
14.3.5 Clauses 14.3.3 and 14.3.4 do not limit the right of the Landlord
to refuse consent to an assignment on any other reasonable ground
or to impose any other reasonable condition to its consent.
14.4 Underlettings
14.4.1 The Tenant shall not underlet or agree (unless such agreement is
conditional upon obtaining the relevant Landlord's consent pursuant
to this clause) to underlet any part of the Premises (as distinct
from the whole) except by an underlease of a Permitted Part.
14.4.2 The Tenant shall not underlet the whole of the Premises or a
Permitted Part, except in accordance with the remainder of this
clause 14.4 and with clause 14.5 (Terms to be contained in any
underlease) and then only with the consent of the Landlord, such
consent not to be unreasonably withheld or delayed.
14.4.3 The Tenant shall not underlet the whole of the Premises or a
Permitted Part without first obtaining from the undertenant a
covenant by the undertenant with the Landlord to comply in the case
of an underlease of the whole with the terms of this Lease on the
part of the tenant, other than as to the payment of any Rent or
other sums reserved as rent by this Lease, and to comply with the
obligations on the undertenant in the underlease until the
undertenant is released by virtue of the Landlord and Tenant
(Covenants) Act 1995.
14.4.4 Any underlease of the whole of the Premises or of a Permitted
Part shall be granted:
(a) at a rent which is not less than the then open market rental value of
the whole of the Premises or the Permitted Part (as the case
may be);
(b) without a fine or premium; and
(c) with the underlease rent payable not more than one quarter in advance.
14.4.5 The Tenant shall not grant any underlease of a Permitted Part
until an order of a court of competent jurisdiction is made under
section 38(4) of the Landlord and Tenant Act 1954 authorising an
agreement excluding sections 24 to 28 (inclusive) from the tenancy
to be created by the underlease. The Tenant shall supply the
Landlord with a copy of the order (with the form of underlease)
certified by solicitors as a true copy of the original for this
purpose.
14.5 Terms to be contained in any underlease
Any underlease of the whole shall contain the same obligations on the
part of the undertenant and rights on the part of the landlord as are
contained in this Lease (other than as to the amount of rent) and any
underlease of the whole or a Permitted Part (save where otherwise
specified below) shall contain the following terms:
14.5.1 an agreement in any underlease of a Permitted Part excluding
sections 24 to 28 (inclusive) of the Landlord and Tenant Act 1954
from the tenancy created by the underlease;
14.5.2 (where the term of the underlease extends beyond a Review Date) a
provision for the review of the rent in the same terms and on the
same dates as the review of the Rent in this Lease;
14.5.3 a provision for re-entry in the same terms as clause 18
(Forfeiture);
14.5.4 an obligation on the undertenant not to deal with or dispose of
its interest in the underlease, or part with possession of the
whole or part of that interest or permit any other person to occupy
the Premises or the Permitted Part (as the case may be) except as
permitted by clause 14.11 (mutatis mutandis) and except, in the
case of an underlease of the whole of the Premises, by way of:
(a) an assignment of the whole of its interest in the Premises;
(b) a charge of the whole of its interest in the Premises (other than by
way of floating charge); or
(c) a subunderlease of the whole of the Premises or a Permitted Part,
or except in the case of an underlease of a Permitted Part by way
of:
(d) an assignment of the whole of its interest in the Permitted Part; or
(e) a subunderlease of the Permitted Part,
which may, in any event, only be made with the Landlord's consent,
such consent not to be unreasonably withheld or delayed;
14.5.5 agreements between the Tenant and the undertenant in the same
terms as clause 14.3.3 and 14.3.4 (mutatis mutandis);
14.5.6 an agreement between the Tenant and the undertenant expressed to
be for the purposes of section 19(1A) of the Landlord and Tenant
Act 1927 that the Tenant may give its consent to an assignment of
the underlease subject to a condition that the proposed assignee of
the underlease enters into a covenant with the Landlord to comply
in the case of an underlease of the whole of the Premises with the
terms of this Lease on the part of the tenant, other than as to the
payment of any Rent or other sums reserved as rent by this Lease,
and to comply with the obligations on the undertenant in the
underlease, from the date the instrument of the assignment of the
underlease is completed until the assignee of the underlease is
released by virtue of the Landlord and Tenant (Covenants) Act 1995;
14.5.7 an acknowledgement in the terms of clause 14.3.5;
14.5.8 a provision that any document to be entered into by an assignee
of the undertenant in fulfilment of a condition of consent to the
assignment shall be in a form reasonably required by the Landlord;
and
14.5.9 provisions in the same form as clauses 14.4.3, 14.4.4 and 14.4.5
but relating to the undertenant in place of the Tenant, the
subundertenant in place of the undertenant and the grant of a
subunderlease in place of the grant of an underlease.
14.6 Rent review in an underlease
14.6.1 The Tenant shall procure that the rent in any underlease is
reviewed in accordance with the underlease but shall not instigate
the review procedure until the review of rent under this Lease has
been instigated provided the review procedures under this Lease are
instigated within three months of the relevant review date.
14.6.2 If the rent review in an underlease is referred to a third party
for determination, the Tenant shall:
(a) where practicable give the Landlord a reasonable opportunity to supply
evidence to the Tenant in relation to
representations/counter-representations to be made on behalf of
the Tenant and the Tenant shall as soon as practicable provide
copies of such representations/counter-representations to the
Landlord; and
(b) keep the Landlord informed as to the progress of that third party
determination.
14.7 Further provisions relating to underleases
14.7.1 The Tenant shall take all reasonable steps to enforce the
obligations of the undertenant in any underlease.
14.7.2 Where the Tenant has the right to grant consent to an assignment
of an undertenant's interest in the Premises or a Permitted Part it
shall not grant consent hereunder without the Landlord's consent
such consent not to be unreasonably withheld or delayed and shall
in any event require an authorised guarantee agreement in
accordance with the underlease.
14.7.3 The Tenant shall not vary the terms of any underlease without the
consent of the Landlord such consent not to be unreasonably
withheld or delayed.
14.7.4 The Tenant shall notify the Landlord as soon as reasonably
practicable if it accepts or agrees to accept a surrender of, or
forfeit, any underlease.
14.7.5 The Tenant shall not grant an underlease for a term capable of
lasting beyond the twentieth anniversary of the commencement of the
Term unless the Tenant is capable of terminating any such
underlease prior to the twentieth anniversary of the commencement
of the Term.
14.8 Provisions relating to subunderleases
The Tenant shall procure that any subunderlease, whether of the whole
of the Premises or of a Permitted Part, contains terms:
14.8.1 in relation to the subunderlease and the undertenant and
subundertenant equivalent to the terms set out or referred to in
clause 14.5 (other than clauses 14.5.4 and 14.5.9); 14.6 and 14.7;
14.8.2 prohibiting the subundertenant from dealing with or disposing of
its interest in the subunderlease or parting with possession of the
whole or any part of that interest or permitting any other person
to occupy the Premises or the Permitted Part (as the case may be)
except as provided by clause 14.11 (mutatis mutandis) and except,
with the consent of the Landlord (such consent not to be
unreasonably withheld or delayed), in the case of a subunderlease
of the whole of the Premises by way of:
(a) an assignment of the whole of its interest in the Premises; or
(b) a charge of the whole of its interest in the Premises,
or in the case of a subunderlease of a Permitted Part by way of an
assignment of the whole of its interest in the Permitted Part, and
is otherwise consistent with the terms of this Lease.
14.9 Charging
14.9.1 The Tenant shall not charge or agree to charge any part of the
Premises (as distinct from the whole).
14.9.2 The Tenant shall not charge or agree to charge the whole of the
Premises (other than by way of floating charge) without the consent
of the Landlord, such consent not to be unreasonably withheld or
delayed.
14.10 Declarations of trust
The Tenant shall not execute any declaration of trust of the whole or
any part of its interest in the Premises or this Lease.
14.11 Group sharing of occupation
If the Tenant, undertenant or sub undertenant is a company, it may
share occupation of the Premises with one or more other companies
which are within its Group on the following conditions:
14.11.1 the Tenant, undertenant or sub undertenant promptly notifies the
Landlord in writing of the beginning and end of the arrangement;
14.11.2 no relationship of landlord and tenant is created by the
arrangement; and
14.11.3 the other companies vacate the Premises immediately if any of
them ceases to be a member of the same Group as the Tenant
undertenant or sub undertenant.
14.12 Registration of dealings and provision of information
14.12.1 Within one month of any dealing with, or devolution of, the
Premises or a Permitted Part or this Lease or of any interest
created out of them or it, the Tenant shall:
(a) notify the Landlord in writing of that dealing or devolution;
(b) give the Landlord a copy of any document effecting or evidencing the
dealing or devolution and the copy will be certified by
solicitors as a true copy of the original; and
(c) pay the Landlord a reasonable registration fee of not less than GBP 25.
14.12.2 Registration of any dealing with or devolution of the Premises or
this Lease or of any interest created out of them or it will not
imply that the Landlord has considered or approved the terms of
that dealing or devolution.
14.12.3 The Tenant shall give the Landlord written details of persons
occupying the Premises and the basis upon which they occupy on
request by the Landlord.
14.12.4 The Tenant shall apply to register this Lease and any assignment
or other registrable disposition of this Lease at HM Land Registry
within two months of the date of the grant of this Lease or the
date of the instrument of the assignment or other disposition
requiring registration (as the case may be).
15. LEGAL REQUIREMENTS
15.1 Legislation
The Tenant shall:
15.1.1 comply with all legislation affecting the Premises, their use and
occupation, and the health and safety of persons working at or
visiting the Premises, whether the legislation requires the owner,
landlord, tenant or occupier to comply;
15.1.2 carry out any works to the Premises which are required by
legislation;
15.1.3 obtain all licences and consents which are required under any
legislation to use the Premises for the purposes permitted by this
Lease or carry out any works or other activity at the Premises
actually carried out;
15.1.4 at the end of the Term pay the Landlord a fair proportion of any
compensation which the Tenant has received or which is receivable
by the Tenant because of any restriction placed on the use of the
Premises under any legislation;
15.1.5 not do or omit to do anything at the Premises which would result
in
(a) any part of the Estate failing to comply with any legislation; or
(b) the Landlord incurring any cost, penalty or liability under any
legislation.
15.2 Notices relating to the Premises
The Tenant shall:
15.2.1 give the Landlord a copy of any notice received by the Tenant,
relating to the Premises or any occupier of them, or to the
Landlord's interest in them, within 5 Working Days of having
received it (or immediately if there are shorter time limits in the
notice);
15.2.2 whether a notice requires compliance by the owner or occupier of
the Premises, but subject to clause 15.2.3 and 15.2.4, comply with
the terms of any such notice;
15.2.3 make, or join the Landlord in making, any objection or appeal
against such notice, which the Landlord may reasonably require.
15.3 Planning
15.3.1 The Tenant shall comply with the Planning Acts.
15.3.2 The Tenant shall pay any charge imposed under the Planning Acts
in respect of the use of the Premises (other than in respect of the
Permitted Use), or any works carried out at the Premises.
15.3.3 The Tenant shall not apply for planning permission or make any
other application under the Planning Acts affecting the Premises
without the consent of the Landlord such consent not to be
unreasonably withheld or delayed.
15.3.4 The Landlord may withhold consent to implementation if the Tenant
has applied for the planning permission in breach of an obligation
in this Lease, or if any time limit in the permission, or the
inclusion or omission of any condition in or from the permission
would, or would be likely to, prejudice the Landlord's interest in
the Premises or the Estate.
15.3.5 In giving its consent to the Tenant implementing a planning
permission, the Landlord may if reasonable, as a condition of that
consent, require the Tenant to comply with all the conditions
contained in the permission before the end of the term of years
granted by this Lease, whether or not the permission imposes such
time limits and, where reasonable, require the Tenant to provide
security satisfactory to the Landlord for its compliance with the
conditions in the permission (as modified by the above condition).
The Tenant shall not implement the permission until that security
is supplied.
15.3.6 If reasonably required by the Landlord, the Tenant shall appeal
against any condition contained in a permission applied for by or
on behalf of the Tenant.
15.4 The Construction (Design and Management) Regulations 1994
15.4.1 In this clause "Regulations" means the Construction (Design and
Management) Regulations 1994 and "File" means the Health and Safety
file for the Premises and works carried out to it, required by the
Regulations and maintained in accordance with the Regulations and
any Code of Practice or other guidance issued by any competent
authority.
15.4.2 In respect of any works carried out by or on behalf of the Tenant
("Tenant's Works") (including any works of reinstatement which may
be carried out after the end of the Term) to which the Regulations
apply, the Tenant shall:
(a) comply in all respects with the Regulations and procure that any person
involved in carrying such works complies with the Regulations;
and
(b) act as the only client in respect of the Tenant's Works and where
required by the Landlord serve a declaration to that effect on
the Health and Safety Executive pursuant to Regulation 4 of the
Regulations and give a copy of it to the Landlord.
15.4.3 The Tenant shall:
(a) maintain and make the File available to the Landlord for inspection at
all reasonable times;
(b) on reasonable request provide copies of the whole or any part of the
File to the Landlord; and
(c) hand the File to the Landlord at the end of the Term unless the Tenant
has entered into a renewal lease of the Premises on terms
containing a similar clause.
15.4.4 In relation to works referred to in clause 15.4.2 the Tenant
shall obtain all copyright licences which are needed for the Tenant
to comply lawfully with this clause 15.4.
15.4.5 In relation to works referred to in clause 15.4.2 the Tenant
shall use all reasonable endeavours to ensure that the copyright
licences obtained by the Tenant shall:
(a) be granted with a full title guarantee;
(b) allow the Landlord and anyone deriving title through or under them to
take further copies of the File or any part of it for use in
connection with the Tenant's Works;
(c) be obtained without cost to any such person;
(d) allow any such person to grant sub-licences on similar terms; and
(e) be irrevocable.
15.4.6 In relation to any works carried out by any undertenant or other
occupier of the Premises the Tenant shall use reasonable endeavours
to ensure that the undertenant or other occupier so complies.
15.5 Defective Premises Act 1972
15.5.1 The Tenant shall give the Landlord written notice of any defect
in the Premises which may make the Landlord liable to do, or not to
do, any act to comply with the duty of care imposed by the
Defective Premises Act 1972.
15.5.2 The Tenant shall display any notices at the Premises needed to
enable the Landlord to comply with the Defective Premises Act 1972.
15.6 Regulations
The Tenant shall comply with regulations which may reasonably be made
by the Landlord from time to time and notified to the Tenant in
writing to ensure the health and safety of persons at the Estate and
generally for the proper management of the Estate.
15.7 No additional rights
The Landlord will not be obliged to grant any additional rights to
the Tenant or waive any of the Landlord's rights under this Lease in
connection with the obligations of the Tenant in this clause 15.
16. LANDLORD'S COVENANT FOR QUIET ENJOYMENT
The Landlord agrees with the Tenant that the Tenant may hold and use the
Premises during the Term without any interruption (except as authorised
by this Lease) by the Landlord or by any person lawfully claiming
through, under or in trust for the Landlord.
17. LIMITS ON LANDLORD'S LIABILITY
If the Landlord makes a request under section 6 or 7 of the Landlord and
Tenant (Covenants) Act 1995 (Release from covenants on assignment of the
reversion), the Tenant agrees not to unreasonably withhold or delay the
release requested.
18. FORFEITURE
18.1 Landlord's right of re-entry
If any event set out in clause 18.2 occurs, the Landlord may forfeit
this Lease and re-enter the Premises. The Term will then end, but
without prejudice to any claim which the Landlord may have against
the Tenant or a Guarantor or the Tenant against the Landlord for any
failure to comply with the terms of this Lease.
18.2 Events giving rise to the Landlord's right of re-entry
18.2.1 The Rent or any other sum payable under this Lease has not been
paid 15 Working Days after it became due, whether formally demanded
or not.
18.2.2 The Tenant has failed to comply with the terms of this Lease.
18.2.3 The Tenant if an individual (or if more than one individual then
any one of them):
(a) has a bankruptcy order made against him;
(b) is the subject of an interim order under Part VIII of the Insolvency
Act 1986; or
(c) enters into any composition, moratorium or other arrangement with its
creditors, whether or not in connection with any proceeding
under the Insolvency Act 1986; or
(d) a receiver of the income of the Premises is appointed under section 101
of the Law of Property Act 1925.
18.2.4 In relation to a Tenant which is a body corporate (or if more
than one body corporate then any one of them):
(a) a voluntary arrangement is made under Part I of the Insolvency Act 1986;
(b) an administration order is made under Part II of the Insolvency Act
1986;
(c) a receiver (including a receiver under section 101 of the Law of
Property Act 1925) or administrative receiver of its property
(or part of it) is appointed;
(d) is wound up under Part IV or Part V of the Insolvency Act 1986 (other
than a voluntary winding up whilst solvent for the purposes of
and followed by a solvent reconstruction or amalgamation);
(e) a scheme or arrangement is approved under section 425 of the Companies
Act 1985.
18.2.5 The Tenant which is a body corporate (or if more than one body
corporate then any of them):
(a) enters or proposes to enter into any arrangement, moratorium or
composition (other than any referred to above) with its
creditors; or
(b) is dissolved, or is removed from the Register of Companies, or ceases
to exist (whether or not capable of reinstatement or
reconstitution).
Provided however that in the event that this Lease is mortgaged at
the time of the proposed re-entry and the Landlord has been given
notice of the existence of the mortgage then prior to such re-entry
or proceedings therefor the Landlord will serve a notice of such
proceedings and proposed re-entry on the mortgagee at the
mortgagee's last known address.
19. NOTICES IN CONNECTION WITH THIS LEASE
19.1 Where a notice is to be given in connection with this Lease, it must be
given in writing and signed by or on behalf of the party giving it,
unless it is stated that it need not be given in writing.
19.2 Any notice to be given in connection with this Lease will be validly
served if sent by first class post, or registered post or recorded
delivery and addressed to or personally delivered to:
19.2.1 the Landlord at the address given in this deed or such other
address which the Landlord has notified to the Tenant in writing or
if a company incorporated in England and Wales at its registered
office;
19.2.2 the Tenant at the Premises at its registered office or its last
known address;
19.2.3 subject to clause 19.2.4 a Guarantor at the Premises or its
registered office or its last known address;
19.2.4 in the case of Galileo International Inc. to Messrs Richards
Butler (quoting reference CHKS/99-7783) of Beaufort House, 15 St
Botolph Street, London EC3A 7EE (or such other firm of solicitors
resident in England or Wales as it may from time to time by written
notice to the Landlord substitute).
19.3 Any notice or demand sent by post from within the UK and properly
stamped and correctly addressed will be conclusively treated as
having been delivered 2 Working Days after posting.
19.4 The Landlord and Tenant shall if possible give the other verbal notice
of any matter affecting the Premises where emergency action is needed
as well as written notice.
20. MISCELLANEOUS
20.1 Landlord's rights to remedy default by the Tenant
20.1.1 If the Tenant fails to comply with any of its obligations in this
Lease, the Landlord may give the Tenant written notice of that
failure, and the Tenant shall:
(a) immediately in the case of an emergency; and
(b) otherwise as soon as reasonably practicable, but in any event within
two months of such notice,
begin and then, within a reasonable time, complete remedying that
failure.
20.1.2 If the Tenant does not comply with clause 20.1.1, the Landlord
may enter the Premises and carry out any works which may be
reasonably needed to remedy the Tenant's failure to comply with its
obligations under this Lease.
20.1.3 Any costs incurred by the Landlord by reason of clause 20.1.2
will be a debt due from the Tenant payable on demand and may be
recovered by the Landlord as if it were additional rent.
20.2 Tenant to provide information
20.2.1 The Tenant shall give the Landlord any information or documents
which the Landlord reasonably requests to show that the Tenant is
complying with its obligations in this Lease.
20.2.2 As soon as practicable on becoming aware of such matters the
Tenant shall give the Landlord immediate written notice of any
defect or default which may make the Landlord liable to the Tenant
or any third party.
20.3 Tenant's indemnity
The Tenant agrees to indemnify the Landlord at all times (both during
and after the Term) against all charges, claims, proceedings,
liabilities, damages, losses, costs and expenses arising directly or
indirectly from:
20.3.1 the state of repair of the Premises;
20.3.2 any works carried out at the Premises by the Tenant or occupier
or person under its or their control;
20.3.3 any material breach of the Tenant's obligations in this Lease;
20.3.4 any act or omission of the Tenant.
20.4 Tenant's acknowledgement
The Tenant acknowledges that it has not entered into this Lease in
reliance on any representation made by or on behalf of the Landlord.
20.5 Guarantor
The Tenant shall procure that a Guarantor enters into any deed or
document which is supplemental to this deed and which is entered into
before that Guarantor is released by virtue of the Landlord and
Tenant (Covenants) Act 1995.
20.6 Qualification of Landlord's liability
The Landlord will not be liable to the Tenant or any other person for:
20.6.1 any damage to person or property arising from any non negligent
act, omission or misfeasance by the Landlord, or its employees,
agents or independent contractors, or by any other tenant or
occupier of the Estate, or from the state and condition of the
Premises or of any other part of the Estate or any adjoining
property of the Landlord;
20.6.2 any interruption to the supply of Utilities to the Premises or
other parts of the Estate where this is caused by something outside
the control of the Landlord and is not necessary for the purposes
of good estate management;
20.6.3 any accidental damage to the Premises or to any property of the
Tenant or any other occupier of the Premises or their employees,
agents or independent contractors where this is caused by something
outside the control of the Landlord provided that such damage is
not caused by the negligent act or omission of the Landlord;
20.6.4 any accidental damage to any person occurring during the
performance by or on behalf of the Landlord of any service which
the Tenant or other authorised occupier of the Premises has
requested the Landlord to carry out which is not obliged to carry
out under the provisions of this Lease;
20.6.5 any failure to perform any obligation in this Lease, unless the
Tenant has given the Landlord written notice of the facts giving
rise to that failure and allowed the Landlord a reasonable time to
remedy the matter;
20.6.6 any act or omission of any other tenant or occupier of the Estate.
20.7 Sale of goods after end of Term
20.7.1 The Tenant irrevocably appoints the Landlord as its agent to
store or dispose of any items left by the Tenant at the Premises
more than 10 Working Days after the end of the Term.
20.7.2 The Landlord may store or dispose of such items after that time
as it thinks fit and without any liability to the Tenant, other
than to account to the Tenant for the proceeds of sale, after
deducting any costs of sale or storage incurred by the Landlord.
20.7.3 The Tenant agrees to indemnify the Landlord against any liability
incurred by the Landlord by reason of the Landlord disposing of any
items left at the Premises which do not belong to the Tenant, but
which the Landlord believed did belong to the Tenant, which will be
presumed unless the contrary is proved.
20.8 Arbitration
Where this Lease refers to a dispute being referred to arbitration,
it will be referred to a single arbitrator who will act in accordance
with the Arbitration Act 1996, and the referral will be a submission
to arbitration in accordance with that Act.
21. ENVIRONMENTAL PROVISIONS
In this clause 21, the following words have the following meaning:
"Environment"
means land, including any natural or man-made structures;
water, including ground waters and water in drains and sewers;
and air;
"Environmental Laws"
means all or any applicable legislation or common law with
regard to or concerning the pollution or protection of the
environment or harm to or the protection of human health or the
health of animals or plants or nuisance;
"Environmental Liability"
means any liability of the Landlord and/or the Tenant under
Environmental Laws (including, without limitation, liability
under Environmental Laws to undertake or pay for Remedial
Works);
"Hazardous Material"
means all waste, pollutants, contaminants and other hazardous,
toxic, noxious, flammable or corrosive matter (including all
materials listed or regulated as hazardous, toxic, noxious,
flammable or corrosive under Environmental Laws);
"Remedial Works"
means any steps reasonably necessary (having regard to
Environmental Laws) for limiting, removing, remedying,
cleaning-up, abating, containing, preventing, monitoring or
ameliorating damage to the Environment;
21.1 Notwithstanding any other term in this Lease, the Tenant shall not be
responsible for any Environmental Liability:
(a) arising in respect of the Premises and/or Estate in connection with any
Hazardous Material present on at or under or emanating from the
Premises and/or the Estate on or before the earlier of the date
of this Lease or the date upon which the Tenant first has
access to the Premises or which has been present or at or under
or emanating from the Premises or the Estate on or before the
earlier of such dates (unless arising out of the Tenant's act
or omission (which shall not include any omission to carry out
Remedial Works in connection with any Hazardous Material
present or which has been present or related to the condition
of the Premises and/or the Estate on the earlier of the date of
the Lease or the date upon which the Tenant first has access to
the Premises, unless resulting from the Tenant's act)); or
(b) resulting from material damage to the Estate and/or the Premises
arising out of the Landlord's negligent act or default.
21.2 In the event that any Environmental Liability claim is made against the
Tenant in connection with any Hazardous Material present on at or
under or emanating from the Premises and/or the Estate on or before
the earlier of the date of this Lease or the date upon which the
Tenant first has access to the Premises or which has been present or
at or under or emanating from the Premises and/or the Estate on or
before the earlier of such dates (unless arising as referred to in
clause 21.1(a)), the Landlord will indemnify the Tenant against any
costs liabilities or losses (including those set out in (b) to (d)
below) and the cost of settling such claim which the Tenant may
suffer or properly incur arising out of any such claim provided that:
(a) without limiting the provisions of sub-clause 21.3 below no claim may
be brought by the Tenant unless the Tenant shall have given to
the Landlord prior to the expiry of the Term or any period of
holding over at the end of the Term written notice specifying
any potential or actual claim provided that the Tenant had
notice of such claim prior to the expiry of the Term or any
period of holding over at the end of the Term;
(b) the Tenant will pass copies of all Court documents and/or other
communications received by the Tenant in connection with such
claim as soon as reasonably practicable to the Landlord;
(c) the Tenant will not deal with or attempt to settle any such claim
without the Landlord's prior written consent, such consent not
to be unreasonably refused or withheld where the failure to
settle a claim will result in personal liability on the part of
the Tenant or interruption to the Tenant's use of the Premises;
(d) the Landlord at the Landlord's expense will be entitled to conduct in
the Tenant's name the defence or settlement of any such claim
or the prosecution of any claim for any damages or otherwise
and the Tenant will provide at the Landlord's cost all
information and assistance to the Landlord which it reasonably
requires in connection with such matters.
21.3 The Tenant will notify the Landlord if it becomes aware of any
circumstances which it knows may give rise to Environmental Liability
arising in respect of the Premises and/or the Estate.
Insofar as there is any Environmental Liability connected with the Estate as
a result of the act or omission of any person after the earlier of
the dates referred to in sub-clause 21.1 above (other than the
Landlord or any person authorised by the Landlord) which gives rise
to any sum in the Service Charge and the Car Park Service Charge
(including the cost of carrying out any Remedial Works) the
Landlord agrees to take reasonable and proper steps to enforce for
the benefit of the Tenant, the Landlord and the other tenants of
the Estate all lawful remedies that may be properly be available to
the Landlord against the party responsible for causing the
Environmental Liability and/or shall make a claim under any
insurance policy benefiting the Estate to the extent that such
policy covers the damage caused, Provided that before commencing
legal proceedings Leading Counsel shall have advised the Landlord
in writing that any claim would have a reasonable chance of success
and provided further that the costs of taking such action
(including professional fees) shall form part of the Landlord's
Expenses or the Car Park Expenses as appropriate. For the
avoidance of doubt the Tenant will not be responsible under the
Service Charge or the Car Park Service Charge for any costs
incurred by the Landlord arising out of matters referred to in
clause 21.1 above (unless arising out of the Tenant's act or
omission (which shall not include any omission to carry out
Remedial Works in connection with any Hazardous Material present or
which has been present or related to the condition of the Premises
and or the Estate on the earlier of the date of the Lease or the
date upon which the Tenant first has access to the Premises, unless
resulting from the Tenant's act)).
21.4.2 To the extent only that the Landlord recovers any sums in
accordance with sub-clause 21.4.1. above the Landlord shall after
deduction of all reasonable and proper costs incurred by the
Landlord refund any such sums to the Service Charge Account or the
Car Park Service Charge Account as appropriate.
22. GUARANTEE AND INDEMNITY
22.1 Guarantee
22.1.1 In consideration of the grant of this deed to the Tenant, the
Guarantor irrevocably and unconditionally guarantees to the
Landlord that:
(a) the Rent and other sums due under this Lease will be duly and
punctually paid, and that all the other obligations of the
Tenant in this Lease will be duly performed and complied with,
in either case whether during or after the end of the Term; and
(b) the Tenant will comply with the obligations it enters into in any
authorised guarantee agreement entered into by it pursuant to
this Lease.
The Guarantor agrees that if at any time the Rent or other sums due
under this Lease (or any authorised guarantee agreement entered into
by the Tenant pursuant to this Lease) are not paid on their due date,
or any of the other obligations of the Tenant in this Lease (or any
authorised guarantee agreement entered into by the Tenant pursuant to
this Lease) are not duly performed and complied with, it shall, on
demand, pay such sum or perform or comply with such obligation.
22.2 Principal Debtor
As a separate and independent obligation for so long as the Guarantor
is liable under clause 22.1 the Guarantor agrees that if any sum or
obligation expressed to be guaranteed under this clause is not
recoverable from or enforceable against the Guarantor on the basis of
a guarantee (for whatever reason), the Guarantor shall be liable as
sole or principal debtor in respect of such sum or obligation and
which shall be paid, performed or complied with by the Guarantor on
demand.
22.3 Indemnity
As a separate and independent obligation for so long as the Guarantor
is liable under clause 22.1 the Guarantor agrees to indemnify the
Landlord and keep the Landlord indemnified against any costs, loss,
expense or liability resulting from:
22.3.1 the failure of the Tenant duly and punctually to pay the Rent and
other sums due under this Lease or to perform and materially comply
with its obligations in this Lease (or in any authorised guarantee
agreement entered into by the Tenant pursuant to this Lease);
22.3.2 any of the obligations on the Tenant in this Lease (or in any
authorised guarantee agreement entered into by the Tenant pursuant
to this Lease) being or becoming void, voidable or unenforceable by
the Landlord against the Tenant;
22.3.3 this Lease (or the Tenant's obligations under it) being
disclaimed;
22.3.4 this Lease being surrendered by a liquidator or trustee in
bankruptcy of the Tenant, or becoming forfeited;
22.3.5 the Tenant or any other person who is liable entering into any
arrangement or composition with any of its creditors (whether or
not such arrangement or composition binds or is expressed to bind
the Landlord); or
22.3.6 the Tenant (being a body corporate) ceasing to exist (whether or
not capable of reconstitution or reinstatement), and
to pay on demand to the Landlord the amount of such cost, loss,
expense or liability, whether or not the Landlord has sought to
enforce any rights against the Tenant.
22.4 No discharge of Guarantor
Without prejudice to section 18(3) of the Landlord and Tenant
(Covenants) Act 1995 (Effect of variations on guarantors), the
Guarantor's liability under this clause will remain in full force and
effect and will not be released, nor will the rights of the Landlord
be prejudiced or affected by of the following:
22.4.1 any time, indulgence or concession granted by the Landlord to the
Tenant;
22.4.2 the Landlord dealing with, exchanging, varying or failing to
perfect or enforce any of its rights or remedies against the Tenant;
22.4.3 the existence of or dealing with, varying or failing to perfect
or enforce any other rights or security which the Landlord may have
or acquire against the Tenant in respect of its obligations under
this Lease;
22.4.4 any variation of, addition to or reduction from, the terms of
this Lease whether or not the same is substantial or is prejudicial
to the Guarantor or confers only a personal right or obligation;
22.4.5 any non-acceptance of the Rent or other sums due from the Tenant
under this Lease, in circumstances where the Landlord acting
reasonably has reason to suspect a breach of its obligations in
this Lease;
22.4.6 the occurrence of any of the events set out in clause 18
(Forfeiture);
22.4.7 a surrender of part of the Premises, except that the Guarantor
will have no liability in relation to the surrendered part in
respect of any period after the date of the surrender;
22.4.8 any incapacity, disability or change in the constitution, status
or name of the Tenant or the Landlord;
22.4.9 any amalgamation, merger or reconstruction by the Landlord with
any other person or the acquisition of the whole or any part of its
assets or undertaking by any other person;
22.4.10 any voluntary arrangement entered into by the Tenant or any other
person who is liable with all or any of its creditors (whether or
not such arrangement binds or is expressed to bind the Landlord);
22.4.11 any other act or thing by virtue of which, but for this
provision, the Guarantor would have been released or discharged
from its obligations under this clause, or the rights of the
Landlord would have been prejudiced or affected, other than a
release by deed, entered into by the Landlord, in accordance with
the terms of such deed
and the parties acknowledge that each of the matters listed above is
separate and independent and is not to be interpreted in the light of
any other.
22.5 Waiver by Guarantor of its rights
22.5.1 Until all the liabilities expressed to be guaranteed by the
Guarantor under this clause have been paid, discharged or satisfied
irrevocably and in full, the Guarantor agrees not, without the
consent of the Landlord, to:
(a) exercise any of its rights in respect of the liabilities expressed to
be guaranteed under this clause against the Tenant or any other
person who is liable;
(b) demand or accept any security from the Tenant or any other person who
is liable in respect of the obligations of the Guarantor under
this clause or in respect of any indebtedness due to the
Guarantor from the Tenant or any other person who is liable,
and any security received by the Guarantor in breach of the
above or any such security held by the Guarantor at the date of
this deed shall be held by the Guarantor on trust for the
Landlord and delivered to the Landlord on demand;
(c) claim any legal or equitable set-off or counterclaim against the Tenant
or any other person who is liable; or
(d) claim or prove in competition with the Landlord in the liquidation or
bankruptcy or in any administration or receivership of the
Tenant or any other person who is liable, or have the benefit
of or share in any payment or distribution from or composition
or arrangement with the Tenant or any other person who is
liable, and any money or other property received by the
Guarantor in breach of this provision shall be held by the
Guarantor on trust for the Landlord and delivered to the
Landlord on demand.
22.5.2 The obligations of the Guarantor may be enforced by the Landlord
against the Guarantor:
(a) at its discretion and without first enforcing or seeking to enforce its
rights against the Tenant or any other person who is liable or
exercising its rights under any other security or resorting to
any other means of payment;
(b) as primary obligations and not merely as obligations of a surety.
22.6 Payments in gross
All dividends, compositions and moneys received by the Landlord from
the Tenant or any other person which are capable of being applied by
the Landlord in satisfaction of the liabilities expressed to be
guaranteed under this clause, will be regarded for all purposes as
payments in gross, and will not prejudice the right of the Landlord
to recover from the Guarantor the ultimate balance which, after
receipt of such dividends, compositions and moneys, may remain owing
or expressed to be owing to the Landlord.
22.7 Guarantor to take a new lease
22.7.1 In this clause a "Relevant Event" is:
(a) the surrender or disclaimer of this Lease, or the Tenant's obligations
under it by a liquidator or trustee in bankruptcy of the Tenant;
(b) the disclaimer of this Lease after it has become bona vacantia;
(c) the forfeiture of this Lease; or
(d) the Tenant (being a body corporate) ceasing to exist (whether or not
capable of being reconstituted or reinstated).
22.7.2 If a Relevant Event occurs the Guarantor agrees, at the request
of the Landlord made within 12 months following the Landlord having
notice of the Relevant Event, to take a new lease of the Premises
from the Landlord.
22.7.3 Such new lease shall:
(a) be for a term commencing on the date of the Relevant Event and be equal
to the unexpired residue of the term of years granted by this
Lease (or the residue which would be unexpired but for the
Relevant Event) as at the date of the Relevant Event;
(b) reserve a rent equal to the Rent reserved by this Lease immediately
before the Relevant Event and otherwise be on the same terms as
this Lease (other than this clause) but with no provision for a
rent-free period; and
(c) take effect from the date of the Relevant Event.
22.7.4 The new lease will take effect subject to this Lease, if and to
the extent that it is still subsisting, and subject to any
underlease or other interest created or permitted by the Tenant.
22.7.5 The Guarantor shall pay the Landlord's proper costs in connection
with the grant of such new lease and shall execute, deliver and pay
the stamp duty on a counterpart of it to the Landlord.
22.7.6 If the Landlord does not require the Guarantor to take a new
lease of the Premises, the Guarantor shall nevertheless pay on
demand to the Landlord a sum equal to the Rent and other sums due
under this Lease which would have been payable but for the Relevant
Event in respect of the period from the date of the Relevant Event
until 12 months after it or, if sooner, the date the Premises are
re-let.
22.8 Supplementary provisions
22.8.1 In this clause 22 a reference to "this clause" is a reference to
the whole of this clause 22.
22.8.2 This guarantee and indemnity is in addition to any other security
or any other right or remedy held by or available to the Landlord
from time to time.
22.8.3 As and when called upon to do so by either the Landlord or the
Tenant, the Guarantor shall enter into any Supplemental Document
(by deed if required) for the purpose of consenting to the Tenant
entering into such Supplemental Document and confirming that,
subject only to section 18(3) of the Landlord and Tenant
(Covenants) Act 1995 (Effect of variations on guarantors), all the
obligations of the Guarantor will remain in full force and effect
in respect of this Lease.
22.8.4 The Guarantor agrees to pay to the Landlord on demand, and on an
indemnity basis, all proper legal and other costs and charges which
may be payable by the Landlord in relation to the enforcement of
the Guarantor's obligations in this clause.
22.8.5 The Guarantor agrees to pay interest on each amount demanded of
it under this clause, at the Interest Rate until payment (both
before and after any judgment), except that where the sum demanded
from the Guarantor is interest due from the Tenant at that rate and
is paid by the Guarantor immediately on demand, the Guarantor will
not be liable to pay further interest on that sum.
22.8.6 Each of the provisions of this clause is distinct and severable
from the others, and if at any time one or more such provisions is
or becomes illegal, invalid or unenforceable (either wholly or to
any extent), the validity, legality and enforceability of the
remaining provisions (or the same provision to any other extent)
will not be affected or impaired.
22.8.7 The rights of the Landlord under this clause will enure for the
benefit of the Landlord and its successors in title without any
need for any express assignment of them.
23. NEW OR OLD LEASE
This Lease is a new tenancy for the purposes of Section 1 of the
Landlord and Tenant (Covenants) Act 1995.
24. TENANT'S OPTION TO DETERMINE
24.1 In this clause "Termination Date" means the twentieth anniversary of
the commencement of the Term.
24.2 The Tenant may determine the Term on the Termination Date by giving the
Landlord not less than 12 months' written notice, which notice must
be expressed to be given under section 24(2) of the Landlord and
Tenant Act 1954. The Term will then determine on the Termination
Date and the Tenant shall yield up the Premises in accordance with
clause 12.3.5 and with full vacant possession, but without prejudice
to any rights of any party against any other for any antecedent
breach of its obligations under this Lease.
24.3 The Tenant will cancel any registration it has made in connection with
this clause within one month of the Termination Date.
24.4 Time will be of the essence for the purposes of this clause.
24.5 If the Tenant does not exercise its rights under this clause and a new
tenancy is granted by virtue of any rights which the Tenant may have
at the relevant time, the Landlord (without acknowledging that any
such rights will or may exist) and the Tenant agree that the new
tenancy will not contain provisions equivalent or similar to this
clause unless the Landlord and the Tenant expressly agree otherwise.
25. jurisdiction
This Lease shall be construed in accordance with English Law and the
parties hereto hereby submit to the non-exclusive jurisdiction of the
English Court and the Guarantor hereby:-
25.1 Waives any right which it may have to object to service of process, the
commencement and/or the pursuing of any proceedings commenced by the
Landlord in an English Court or a State or District Court;
25.2 Acknowledges that it accepts the choice of English Law as the law of
construction for the purposes of this Lease; and
25.3 Accepts that the making of a claim and/or the commencement of and/or
the pursuing of proceedings against the Guarantor in any jurisdiction
shall not preclude the subsequent making of a claim or the
commencement or pursuing of proceedings in any other jurisdiction.
IN WITNESS of which this deed has been duly executed and is delivered on the
date written at the beginning of this deed.
The common seal of GLASGOW CITY )
COUNCIL was affixed to this deed in the )
presence of: )
Proper Officer
The common seal of THE GALILEO )
COMPANY was affixed to this deed )
in the presence of: )
Director /s/ Paul H. Bristow
Director/Secretary /s/ Baker de Araujo
The common seal of GALILEO )
INTERNATIONAL, Inc. was affixed )
to this deed in the presence of )
Authorised Signatory /s/ Paul H.Bristow
Authorised Signatory
<PAGE>
Exhibit 10.2
CONFORMED COPY
Amendment No. 1
to
Credit Agreement
Amendment dated as of July 21, 1999 to the Credit Agreement dated
as of June 5, 1998 (the "Credit Agreement") among Galileo Canada ULC, the
lenders party thereto and Bank of Montreal, as Agent.
W i t n e s s e t h
Whereas, the parties hereto desire to amend the Credit Agreement as
more fully set below;
Now, therefore, the parties hereto agree as follows:
Section 1. Defined Terms; References. Unless otherwise
specifically defined herein, each term used herein which is defined in
the Credit Agreement has the meaning assigned to such term in the Credit
Agreement. Each reference to "hereof", "hereunder", "herein" and
"hereby" and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the Credit
Agreement shall, after this Amendment becomes effective, refer to the
Credit Agreement as amended hereby.
Section 2. Amendment to the Credit Agreement. Pricing Schedule A
annexed hereto is hereby substituted for the Pricing Schedule A annexed
to the Credit Agreement.
Section 3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Illinois.
Section 4. Counterparts. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
Section 5. Effectiveness. This Amendment shall become effective on
the date when the Agent shall have received from each of the Borrower and
the Required Banks a counterpart hereof signed by such party or facsimile
or other written confirmation (in form satisfactory to the Agent) that
such party has signed a counterpart hereof and the written consent of the
Guarantor.
Galileo Canada ULC
By: /s/ Paul H. Bristow
Title Senior Vice President
Chief Financial
Officer
Bank of Montreal, individually and
as Agent
By: /s/ Patrice C. Wetzel
Title Director
Pricing Schedule A
Each of the terms "Euro-Dollar Margin" and "CD Margin" means, for
any date, the per annum rates set forth below in the row opposite such
term and in the column corresponding to the "Pricing Level" that applies
at such date:
Level I Level II Level III Level IV Level V
CD Margin 0.300% 0.300% 0.350% 0.425% 0.750%
Euro-Dollar 0.300% 0.300% 0.350% 0.425% 0.750%
Margin
For purposes of this Schedule, the following terms have the
following meanings:
"Applicable Cash Flow Ratio" means, on any day, the Cash Flow
Ratio (as defined in the Guaranty) on the last day of the most
recently ended fiscal quarter of the Guarantor for which the
Guarantor has delivered financial statements pursuant to
Section 3.01(a) or 3.01(b) of the Guaranty, as the case may be,
provided that at any time a Default exists under Section 3.01(a),
3.01(b) or 3.01(c) of the Guaranty, the Applicable Cash Flow Ratio
shall be deemed to be greater than or equal to 2.0 to 1.
"Level I Pricing" applies at any date if, at such date, the
Applicable Cash Flow Ratio is less than .25 to 1.
"Level II Pricing" applies at any date if, at such date, the
Applicable Cash Flow Ratio is greater than or equal to .25 to 1 but
less than .50 to 1.
"Level III Pricing" applies at any date if, at such date, the
Applicable Cash Flow Ratio is greater than or equal to .50 to 1 but
less than 1.0 to 1.
"Level IV Pricing" applies at any date if, at such date, the
Applicable Cash Flow Ratio is greater than or equal to 1.0 to 1 but
less than 2.0 to 1.
"Level V Pricing" applies at any date if, at such date, no
other Pricing Level applies.
"Pricing Level" refers to the determination of which of
Level I Pricing, Level II Pricing, Level III Pricing, Level IV
Pricing or Level V Pricing applies at any date.
Guarantor's Acknowledgement and Consent
The undersigned, Galileo International, Inc. has heretofore
executed and delivered a Guaranty Agreement dated as of June 5, 1998 (as
amended, the "Guaranty") in favor of Bank of Montreal, as Agent and Bank
of Montreal and the other lenders which are or may from time to time
become "Banks" party to the Credit Agreement dated as of June 5, 1998
among Galileo Canada ULC, the lenders party thereto and Bank of Montreal,
as Agent, and hereby consents to the Amendment to the Credit Agreement as
set forth above and confirms that the Guaranty and all of the
undersigned's obligations thereunder remain in full force and effect. The
undersigned further agrees that the consent of the undersigned to any
further amendments to the Credit Agreement shall not be required as a
result of this consent having been obtained, except to the extent, if
any, required by the Guaranty.
Galileo International, Inc.
By: /s/ Paul H. Bristow
Title: Senior Vice President
Chief Financial Officer
<PAGE>
Exhibit 10.3
CONFORMED COPY
AMENDMENT NO. 3
TO
GUARANTY AGREEMENT
AMENDMENT dated as of July 21, 1999 to the Guaranty Agreement dated as of
June 5, 1998 (the "Guaranty") executed by Galileo International, Inc. (the
"Guarantor") in favor of Bank of Montreal, as Agent and Bank of Montreal and the
other lenders which are or may from time to time become "Banks" under the Credit
Agreement dated as of June 5, 1998 among Galileo Canada ULC, the lenders party
thereto and Bank of Montreal, as Agent.
W I T N E S S E T H
WHEREAS, the parties hereto desire to amend the Guaranty as more
fully set below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically defined
herein, each term used herein which is defined in the Guaranty has the meaning
assigned to such term in the Guaranty. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each reference to
"this Agreement" and each other similar reference contained in the Guaranty
shall, after this Amendment becomes effective, refer to the Guaranty as amended
hereby.
SECTION 2. Amendment to the Guaranty. The figure "$500,000,000" in the
definition of "Restricted Payment" in Section 5.01 is changed to "$750,000,000".
SECTION 3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Illinois.
SECTION 4. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 5. Effectiveness. This Amendment shall become effective on the date
when the Agent shall have received from each of the Guarantor and the Required
Banks a counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Agent) that such party has signed a
counterpart hereof.
GALILEO INTERNATIONAL, INC.
By: /s/ Paul H. Bristow
Title Senior Vice President
Chief Financial Officer
BANK OF MONTREAL, individually and
as Agent
By: /s/ Patrice C. Wetzel
Title Director
<PAGE>
Exhibit 10.4
$200,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
July 21, 1999
GALILEO INTERNATIONAL, INC.
-----------------------------------------------------
J.P. Morgan Securities Inc.,
Lead Arranger
Morgan Guaranty Trust Company of New York,
Administrative Agent
Bank of America National Trust and Savings Association,
Syndication Agent
Bank of Montreal,
Documentation Agent
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 21, 1999
among GALILEO INTERNATIONAL, INC. (the ACompany@), the BANKS listed on the
signature pages hereof (the ABanks@) and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent (the AAgent@).
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into an Amended and
Restated Credit Agreement dated as of July 22, 1998, as amended as of November
18, 1998 and May 14, 1999 (the AAgreement@);
WHEREAS, at the date hereof, there are no Loans outstanding under
the Agreement; and
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein and to restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically defined
herein, each capitalized term used herein which is defined in the Agreement
shall have the meaning assigned to such term in the Agreement. Each reference to
Ahereof@, Ahereunder@, Aherein@ and Ahereby@ and each other similar reference
and each reference to Athis Agreement@ and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended and restated hereby. The term ANotes@ defined in the
Agreement shall include from and after the date hereof the New Notes (as defined
below).
SECTION 2. Amendments to Definitions. Section 1.01 is amended as
follows:
(a) The definition of ATermination Date@ is amended by replacing the date
AJuly 21, 1999@ with the date AJuly 19, 2000@; and
(b) The figure A$500,000,000@ in the definition of ARestricted Payment@ is
changed to A$750,000,000@.
<PAGE>
4
SECTION 3. New Pricing Schedules. The Pricing Schedule A and Pricing
Schedule B annexed hereto is hereby substituted for the Pricing Schedule A and
Pricing Schedule B, respectively, as annexed to the Agreement.
SECTION 4. Updated Representations. Each reference to A1997@ and
A1998@ in Section 4.04 is changed to A1998@ and A1999@, respectively.
SECTION 5. Changes in Lenders. With effect from and including the date
this Second Amendment and Restatement becomes effective in accordance with
Section 8, (i) each Person listed on the signature pages hereof which is not a
party to the Agreement (a ANew Bank@) shall become a Bank party to the Agreement
and (ii) the Commitment of each Bank shall be the amount set forth opposite the
name of such Bank on the signature pages hereof. Any Bank whose Commitment is
changed to zero shall upon such effectiveness cease to be a Bank party to the
Agreement, and all accrued fees and other amounts payable under the Agreement
for the account of such Bank shall be due and payable on such date; provided
that the provisions of Sections 8.03 and 9.03 of the Agreement shall inure to
the benefit of each such Bank with respect to the period during which such Bank
was a Bank party to the Agreement.
SECTION 6. Representations and Warranties. The Company represents
and warrants that as of the date hereof and after giving effect hereto:
(a) no Default has occurred and is continuing; and
(b) each representation and warranty of the Company set forth in the
Agreement after giving effect to this Second Amendment and Restatement is true
and correct as though made on and as of such date.
SECTION 7. Governing Law. This Second Amendment and Restatement
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 8. Counterparts; Effectiveness. This Second Amendment and
Restatement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Second Amendment and Restatement shall become
effective on the date that each of the following conditions shall have been
satisfied:
<PAGE>
(i) receipt by the Agent of duly executed counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall have
received telegraphic, telex or other written confirmation from such party
of execution of a counterpart hereof by such party);
(ii) receipt by the Agent of a duly executed Note of the Company for
each of the New Banks (a ANew Note@), dated on or before date of
effectiveness hereof and otherwise in compliance with Section 2.06 of the
Agreement;
(iii) receipt by the Agent of an opinion of Anthony C. Swanagan, Vice
President-Legal of the Company, substantially in the form of Exhibit E to
the Agreement with reference to this Second Amendment and Restatement, the
Agreement as amended and restated hereby and the New Notes; and
(iv) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Company, the corporate authority for and
the validity of the Agreement as amended and restated hereby, the New
Notes and any other matters relevant hereto, all in form and substance
satisfactory to the Agent;
provided that this Second Amendment and Restatement shall not become effective
or binding on any party hereto unless all of the foregoing conditions are
satisfied not later than the date hereof. The Agent shall promptly notify the
Company and the Banks of the effectiveness of this Second Amendment and
Restatement, and such notice shall be conclusive and binding on all parties
hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GALILEO INTERNATIONAL, INC.
By: /s/ Paul H. Bristow
Title: Senior Vice President and Chief Financial Officer
Address: 9700 West Higgins Road, Suite 400
Rosemont, IL 60018
Attn: Chief Financial Officer
<PAGE>
Commitments
ADMINISTRATIVE AGENT
$27,333,333 MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Robert Bottamedi
Title: Vice President
SYNDICATION AGENT
$24,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Chas McDonell
Title: Principal
DOCUMENTATION AGENT
$24,000,000 BANK OF MONTREAL
By: /s/ Patrice C. Wetzel
Title: Director
<PAGE>
$18,000,000 ABN AMRO BANK N.V.
By: /s/ John L. Church
Title: Group Vice President
By: /s/ Angela Reitz
Title: Vice President
$18,000,000 THE BANK OF TOKYO-MITSUBISHI,
LTD., CHICAGO BRANCH
By: /s/ Hisashi Miyashiro
Title: Deputy General Manager
$18,000,000 CREDIT LYONNAIS
NEW YORK BRANCH
By: /s/ Pascal Poupelle
Title: President and Chief Operating Officer
$18,000,000 THE NORTHERN TRUST COMPANY
By: /s/ Mark E. Taylor
Title: Second Vice President
<PAGE>
$18,000,000 SOCIETE GENERALE
CHICAGO BRANCH
By: /s/ Robert W. Bolt
Title: Director
By: /s/ Jose A. Moreno
Title: Director
$18,000,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By: /s/ Duncan M. Robertson
Title: Vice President
By: /s/ Lisa Walker
Title: Vice President
$16,666,667 THE SUMITOMO BANK, LIMITED
CHICAGO BRANCH
By: /s/ John H. Kemper
Title: Senior Vice President
<PAGE>
$0 BANK AUSTRIA AG
By: Martin E. Rahe
Title: Senior Vice President and Representative
$0 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ Brady S. Sadek
Title: Senior Vice President
$0 MIDLAND BANK PLC
By: /s/ Christopher M. Samms
Title: Vice President
$0 THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By: /s/ Kenneth C. Eichwald
Title: First Vice President and
Assistant General Manager
<PAGE>
$0 UBS AG,
STAMFORD BRANCH
By: /s/ Robert H. Riley III
Title: Executive Director
By: /s/ Paula Mueller
Title: Director
Total Commitments
$200,000,000
<PAGE>
PRICING SCHEDULE A
Each of the terms AEuro-Dollar Margin@, ACD Margin@, AFacility Fee Rate@
and ALetter of Credit Fee Rate@ means, for any date, the per annum rates set
forth below in the row opposite such term and in the column corresponding to the
APricing Level@ that applies at such date:
Level I Level II Level III Level IV Level V
CD Margin 0.650% 0.650% 0.750% 0.850% 1.150%
Euro-Dollar 0.525% 0.525% 0.625% 0.725% 1.025%
Margin
Facility Fee 0.100% 0.100% 0.125% 0.150% 0.225%
Rate
Letter of 0.525% 0.525% 0.625% 0.725% 1.025%
Credit Fee Rate
For purposes of this Schedule, the following terms have the following
meanings:
AApplicable Cash Flow Ratio@ means, on any day, the Cash Flow Ratio on the
last day of the most recently ended fiscal quarter of the Borrower for which the
Borrower has delivered financial statements pursuant to Section 5.01(a) or
5.01(b), as the case may be, provided that at any time a Default exists under
Section 5.01(a), 5.01(b) or 5.01(c), the Applicable Cash Flow Ratio shall be
deemed to be greater than or equal to 2.0 to 1.
ALevel I Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is less than .25 to 1.
ALevel II Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to .25 to 1 but less than .50 to 1.
ALevel III Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to .50 to 1 but less than 1.0 to 1.
ALevel IV Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to 1.0 to 1 but less than 2.0 to 1.
ALevel V Pricing@ applies at any date if, at such date, no other Pricing
Level applies.
<PAGE>
APricing Level@ refers to the determination of which of Level I Pricing,
Level II Pricing, Level III Pricing, Level IV Pricing or Level V Pricing applies
at any date.
<PAGE>
PRICING SCHEDULE B
Each of the terms AEuro-Dollar Margin@, ACD Margin@, AFacility Fee Rate@
and ALetter of Credit Fee Rate@ means, for any date, the per annum rates set
forth below in the row opposite such term and in the column corresponding to the
APricing Level@ that applies at such date:
Level I Level II Level III Level IV Level V
CD Margin 0.445% 0.650% 0.750% 0.850% 1.150%
Euro-Dollar 0.320% 0.525% 0.625% 0.725% 1.025%
Margin
Facility Fee 0.080% 0.100% 0.125% 0.150% 0.225%
Rate
Letter of 0.320% 0.525% 0.625% 0.725% 1.025%
Credit Fee Rate
For purposes of this Schedule, the following terms have the following
meanings, subject to the concluding paragraph of this Schedule:
ALevel I Pricing@ applies at any date if, at such date, the Borrower=s
long-term debt is rated A- or higher by S&P or A3 or higher by Moody=s.
ALevel II Pricing@ applies at any date if, at such date, (i) the
Borrower=s long-term debt is rated BBB+ or higher by S&P or Baa1 or higher by
Moody=s and (ii) Level I Pricing does not apply.
ALevel III Pricing@ applies at any date if, at such date, (i) the
Borrower=s long-term debt is rated BBB or higher by S&P and Baa2 or higher by
Moody=s and (ii) neither Level I Pricing nor Level II Pricing applies.
ALevel IV Pricing@ applies at any date if, at such date, (i) the
Borrower=s long-term debt is rated BBB- or higher by S&P and Baa3 or higher by
Moody=s and (ii) none of Level I Pricing, Level II Pricing and Level III Pricing
applies.
ALevel V Pricing@ applies at any date if, at such date, no other Pricing
Level applies.
APricing Level@ refers to the determination of which of Level I Pricing,
Level II Pricing, Level III Pricing, Level IV Pricing or Level V Pricing applies
at any date.
<PAGE>
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement, and any rating assigned to any other
debt security of the Borrower shall be disregarded. The ratings in effect for
any day are those in effect at the close of business on such day. In the case of
split ratings from S&P and Moody=s, so long as the Borrower=s long-term debt is
rated at least BBB by S&P and at least Baa2 by Moody=s, the rating to be used to
determine the applicable Pricing Level is the higher of the two (e.g., BBB+/A3
results in Level I Pricing).
<PAGE>
Exhibit 10.5
CONFORMED COPY
AMENDMENT NO. 5 TO FIVE-YEAR CREDIT AGREEMENT
AMENDMENT dated as of July 21, 1999 to the Five-Year Credit Agreement
dated as of July 23, 1997 (as heretofore amended, the ACredit Agreement@) among
GALILEO INTERNATIONAL, INC. (the ABorrower@), the BANKS party thereto (the
ABanks@) and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the AAgent@).
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit
Agreement as more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
Ahereof@, Ahereunder@, Aherein@ and Ahereby@ and each other similar reference
and each reference to Athis Agreement@ and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
SECTION 2. Amendments to the Credit Agreement. (a)
The figure A$500,000,000@ in the definition of ARestricted
Payment@ in Section 1.01 is changed to A$750,000,000@.
(b) Pricing Schedule A annexed hereto is hereby substituted for the
Pricing Schedule A annexed to the Credit Agreement.
SECTION 3. Governing Law. This Amendment shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 4. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 5. Effectiveness. This Amendment shall become effective on the
date when the Agent shall have received from each of the Borrower and the
Required Banks a counterpart hereof signed by such party or facsimile or other
written confirmation (in form satisfactory to the Agent) that such party has
signed a counterpart hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
GALILEO INTERNATIONAL, INC.
By: /s/ Paul H. Bristow
Title: Senior Vice President and Chief Financial Officer
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Robert Bottamedi
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Chas McDonell
Title: Principal
BANK OF MONTREAL
By: /s/ Patrice C. Wetzel
Title: Director
MIDLAND BANK PLC
By: /s/ Christopher M. Samms
Title: Vice President
<PAGE>
THE BANK OF TOKYO-MITSUBISHI,
LTD., CHICAGO BRANCH
By: /s/ Hisashi Miyashiro
Title: Deputy General Manager
THE SUMITOMO BANK, LIMITED
CHICAGO BRANCH
By: /s/ John H. Kemper
Title: Senior Vice President
ABN AMRO BANK N.V.
By: /s/ John L. Church
Title: Group Vice President
By: /s/ Angela Reitz
Title: Vice President
CREDIT LYONNAIS
NEW YORK BRANCH
By: /s/ Pascal Poupelle
Title: President and Chief Operating Officer
<PAGE>
ROYAL BANK OF CANADA
By:
Name:
Title:
SOCIETE GENERALE
CHICAGO BRANCH
By: /s/ Robert W. Bolt
Title: Director
UBS AG,
STAMFORD BRANCH
By: /s/ Robert H. Riley III
Title: Executive Director
By: /s/ Paula Mueller
Title: Director
<PAGE>
THE NORTHERN TRUST COMPANY
By: /s/ Mark E. Taylor
Title: Second Vice President
THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By:
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By: /s/ Duncan M. Robertson
Title: Vice President
By: /s/ Lisa Walker
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:
Name:
Title:
<PAGE>
PRICING SCHEDULE A
Each of the terms AEuro-Dollar Margin@, ACD Margin@, AFacility Fee Rate@ and
ALetter of Credit Fee Rate@ means, for any date, the per annum rates set forth
below in the row opposite such term and in the column corresponding to the
APricing Level@ that applies at such date:
Level I Level II Level III Level IV Level V
CD Margin 0.325% 0.325% 0.350% 0.400% 0.650%
Euro-Dollar 0.200% 0.200% 0.225% 0.275% 0.525%
Margin
Facility 0.100% 0.100% 0.125% 0.150% 0.225%
Fee Rate
Letter of 0.200% 0.200% 0.225% 0.275% 0.525%
Credit Fee
Rate
For purposes of this Schedule, the following terms have the following meanings:
AApplicable Cash Flow Ratio@ means, on any day, the Cash Flow Ratio on the
last day of the most recently ended fiscal quarter of the Borrower for which the
Borrower has delivered financial statements pursuant to Section 5.01(a) or
5.01(b), as the case may be, provided that at any time a Default exists under
Section 5.01(a), 5.01(b) or 5.01(c), the Applicable Cash Flow Ratio shall be
deemed to be greater than or equal to 2.0 to 1.
ALevel I Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is less than .25 to 1.
ALevel II Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to .25 to 1 but less than .50 to 1.
ALevel III Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to .50 to 1 but less than 1.0 to 1.
ALevel IV Pricing@ applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to 1.0 to 1 but less than 2.0 to 1.
ALevel V Pricing@ applies at any date if, at such date, no other Pricing
Level applies.
<PAGE>
APricing Level@ refers to the determination of which of Level I Pricing,
Level II Pricing, Level III Pricing, Level IV Pricing or Level V Pricing applies
at any date.
<PAGE>
Exhibit 10.6
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE
[1997 STOCK INCENTIVE PLAN, AS AMENDED]
[1999 EQUITY AND PERFORMANCE INCENTIVE PLAN]
THIS AGREEMENT (this "Agreement") is made as of
(the "Date of Grant") by and between Galileo International,
Inc., a Delaware corporation (the "Company"), and _____________ _____ (the
"Optionee").
1. Definitions. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Company's [1997 Equity Incentive
Plan (Established Effective July 30, 1997) (As Revised May 1, 1998) (As Amended
June 17, 1999)][1999 Equity and Performance Incentive Plan] (the "Plan").
2. Grant of Stock Option. Subject to and upon the terms, conditions,
and restrictions set forth in this Agreement and in the Plan, the Company hereby
grants to the Optionee as of the Date of Grant a stock option (the "Option") to
purchase _____________ shares of Company common stock, par value $.01 per share
(the "Common Stock") at a price of $ per share, subject to adjustment as
hereinafter provided (the "Option Price"). The Option may be exercised from time
to time in accordance with the terms of this Agreement. The Option is intended
to be a non-qualified stock option and shall not be treated as an "incentive
stock option" within the meaning of that term under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor provision
thereto.
3. Term of Option. The term of the Option shall commence on the Date
of Grant and, unless earlier terminated in accordance with Section 7 hereof,
shall expire
years from the Date of Grant.
4. Vesting of Option. Subject to the expiration or earlier
termination of the Option, the Option
granted hereby shall become exercisable as follows: To the extent the Option is
exercisable, it may be exercised in whole or in part. In no event shall the
Optionee be entitled to acquire a fraction of one Optioned Share pursuant to
this Option.
5. Transferability of Option. The Option granted hereby shall be
neither transferable nor assignable by the Optionee other than in accordance
with the Company's Beneficiary Designation Form, by will or by the laws of
descent and distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee, or in the event of his or her legal incapacity,
by his or her guardian or legal representative acting on behalf of the Optionee
in a fiduciary capacity under state law and court supervision. Any purported
transfer or encumbrance in violation of the provisions of this Section 5 shall
be void, and the other party to any such purported transaction shall not obtain
any rights to or interest in the Option.
6. Notice of Exercise; Payment.
(a) To the extent then exercisable, the Option may be exercised by written
notice to the Company or by telephone authorization pursuant to prescribed
procedures to the third party administrator approved by the Company stating the
number of Optioned Shares for which the Option is being exercised and the
intended manner of payment. The date of such notice shall be the exercise date.
Payment equal to the aggregate Option Price of the Optioned Shares being
exercised shall be tendered in full with the notice of exercise to the Company
either (i) in cash or by check acceptable to the Company, or (ii) to the extent
permitted by applicable law, by the tender to the Company of shares of Common
Stock owned by the Optionee for at least 6 months having an aggregate fair
market value on the date of exercise equal to the total Option Price, such fair
market value to be determined based on the closing sales price for the last
business day preceding the date of exercise or (iii) by any combination of the
payment methods specified in clauses (i) and (ii) hereof. In the event of
payment in shares of Common Stock with the agreement of the Company, the
requirement of payment in cash shall be deemed satisfied if the Optionee makes
arrangements that are satisfactory to the Company with a broker that is a member
of the National Association of Securities Dealers, Inc. to sell a sufficient
number of Optioned Shares which are being purchased pursuant to the exercise, so
that the net proceeds of the sale transaction will at least equal the amount of
the aggregate Option Price, plus, in the event that Optionee is subject to the
one million dollar cap under Section 162(m) of the Code, or any successor
provision, interest at the "applicable Federal rate" within the meaning of that
term under Section 1274 of the Code, or any successor provision thereto, for the
period from the date of exercise to the date of payment, and pursuant to which
the broker undertakes to deliver to the Company the amount of the aggregate
Option Price, plus such interest, not later than the date on which the sale
transaction will settle in the ordinary course of business. As a further
condition precedent to the exercise of this Option, the Optionee shall comply
with all regulations and the requirements of any regulatory authority having
control of, or supervision over, the issuance of shares of Common Stock and in
connection therewith shall execute any documents that the Committee shall in its
sole discretion deem necessary or advisable.
(b) In the event the Optionee is based outside of the United States, the
Optionee hereby authorizes the third party administrator approved by the Company
to pay any proceeds of sales of shares of Common Stock acquired by exercise to
the Company for remittance to the Optionee in the currency applicable to the
country in which the Optionee is based, net of any required taxes or other
proper charges.
7. Conditions and Limitations on Right to
Exercise Option. Notwithstanding the provisions of Sections
3 and 4 hereof,
(a) Except as otherwise provided in Section 7(b) hereof, this Option may
not be exercised unless the Optionee is, at the time of exercise, an employee of
the Company or a Subsidiary (as defined in the Plan) and has been employed by
the Company or a Subsidiary continuously since the Date of Grant.
(b) (i) If the Optionee ceases to be employed by the Company or a
Subsidiary (other than by reason of retirement (as defined in Section 8[(a)](ii)
below), death, or total disability (as defined in the Plan)), the Option granted
hereby, to the extent the Optionee was entitled to exercise it at the date of
termination of employment, may be exercised at any time within [days] [months]
after such termination (the "Exercise Period") but in no event shall the Option
be exercisable at any time after the date of expiration of the Option. Any part
of the Option not so exercised within the Exercise Period shall expire.
(ii) If the Optionee's employment is terminated by reason of
retirement (as defined in Section 8[(a)](ii) below), death or total disability
(as defined in the Plan), all or any part of the Option which has not yet been
exercised, whether otherwise eligible for immediate exercise by the terms of
this Agreement or not, may be exercised at any time within one year after such
termination but in no event shall the Option be exercisable at any time after
the date of expiration of the Option.
8. Acceleration of Option. Notwithstanding
the provisions of Section 4,
[(a)] the Option granted hereby shall become immediately exercisable in
full in the event of (i) the Optionee's death if such death occurs either after
termination of employment but before exercising the Option, or while the
Optionee is an employee of the Company or a Subsidiary, or (ii) the Optionee's
retirement as defined by (x) the then-current Company-sponsored plan or scheme,
or (y) the country laws and practices, applicable at the time of such
termination, or (iii) total disability (as defined in the Plan) of the Optionee
if the Optionee becomes totally disabled while an employee of the Company or a
Subsidiary[, or (iv) termination by the Company without Cause (as defined below)
within two years following a Change of Control (as defined in the Plan) of the
Company, or (v) a termination of the Optionee's employment with the Company as
mutually agreed between the Optionee and the Company in a signed writing.
(b) As used in this Agreement, "Cause" shall mean (i) the Optionee's
willful or repeated failure substantially to perform the duties of his or her
position with the Company (other than any such failure resulting from his or her
total disability (as defined in the Plan)), which failure is not or cannot be
cured within five (5) business days after the Company has given written notice
thereof to the Optionee specifying in detail the particulars of the acts or
omissions deemed to constitute such failure; (ii) the engaging by the Optionee
in willful misconduct which is materially injurious to the Company; (iii) the
engaging by the Optionee in any act of moral turpitude that is reasonably likely
to materially and adversely affect the Company or its business; or (iv) the
Optionee's conviction of, or entry of a plea of nolo contendere with respect to,
any felony. For purposes of this definition, no act, or failure to act, on the
Optionee's part shall be considered "willful" unless done, or omitted to be
done, by the Optionee in bad faith and without reasonable belief that the
Optionee's action or omission was in the best interests of the Company].
9. No Employment Contract. Nothing contained in this Agreement shall
confer upon the Optionee any right with respect to continued employment by the
Company or a Subsidiary, nor limit or affect in any manner the right of the
Company or a Subsidiary to terminate the employment or adjust the compensation
of the Optionee.
<PAGE>
10. Taxes and Withholding. If the Company or any Subsidiary shall be
required to withhold any federal, state, local or foreign tax in connection with
the exercise of the Option, and the amounts available to the Company or such
Subsidiary for such withholding are insufficient, the Optionee shall pay the tax
or make provisions that are satisfactory to the Company or such Subsidiary for
the payment thereof. The Company will pay any and all issue and other taxes in
the nature thereof which may be payable by the Company in respect of any issue
or delivery upon a purchase pursuant to this Option.
11. Compliance with Law. The Company shall not be obligated to issue
any shares pursuant to this Option if, in the opinion of counsel to the Company,
the shares to be so issued are required to be registered or otherwise qualified
under the Securities Act of 1933, as amended, or under any other applicable
statute, regulation or ordinance affecting the sale of securities, unless and
until such shares have been so registered or otherwise qualified.
12. Adjustments. The Committee may make or provide for such
adjustments in the number of Optioned Shares covered by this Option, in the
Option Price applicable to such Option, and in the kind of shares covered
thereby, pursuant to [Article IX] [Section 11] of the Plan.
13. Relation to Other Benefits. Any economic or other benefit to the
Optionee under this Agreement shall not be taken into account in determining any
benefits to which the Optionee may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company or a
Subsidiary and shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Company or a Subsidiary.
14. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Optionee under this Agreement without the Optionee's consent.
15. Rights as a Stockholder. The Optionee shall have none of the
rights of a stockholder with respect to the shares of Common Stock subject to
this Option until such shares are issued to the Optionee upon exercise of the
Option.
16. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
17. Relation to Plan. This Agreement is subject to the terms and
conditions of the Plan. In the event of any inconsistent provisions between this
Agreement and the Plan, the Plan shall govern. The Committee acting pursuant to
the Plan, as constituted from time to time, shall, except as expressly provided
otherwise herein, have the right to determine any questions that arise in
connection with this Option or its exercise.
18. Successors and Assigns. In the event of a transfer or assignment
of this agreement by the Company or by the Optionee in accordance with the
provisions of Section 5 hereof, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of the Optionee, and the successors and
assigns of the Company.
19. Notices. Any notice to the Company provided for herein shall be
in writing to the Company, marked Attention: Senior Vice President, Human
Resources with a copy to Vice President, Legal at Galileo International, Inc.,
9700 West Higgins Road, Suite 400, Rosemont, Illinois 60018, and any notice to
the Optionee shall be addressed to said Optionee at his or her address currently
on file with the Company. Except as otherwise provided herein, any written
notice shall be deemed to be duly given if and when hand delivered, or five (5)
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three (3) business days
after having been sent by a nationally recognized overnight courier service such
as Federal Express, UPS or Purolator, addressed as aforesaid. Any party may
change the address to which notices are to be given hereunder by written notice
to the other party as herein specified, except that notices of changes of
address shall be effective only upon receipt.
20. Governing Law. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of Delaware,
without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer as of the day and year first above
written.
GALILEO
INTERNATIONAL, INC.
By:_________________________________
Its:_______________________________
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Agreement and accepts the Option granted hereunder, subject to
the terms and conditions of the Plan and the terms and conditions hereinabove
set forth.
Optionee
<PAGE>
Exhibit 10.7
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE 1997 NON-EMPLOYEE DIRECTOR
STOCK PLAN
THIS AGREEMENT (this "Agreement") is made as of ____________ (the "Date of
Grant") by and between Galileo International, Inc., a Delaware corporation (the
"Company"), and __________________ (the "Optionee").
1. Definitions. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Company's 1997 Non-Employee
Director Stock Plan (the "Plan").
2. Grant of Stock Option. Subject to and upon the terms, conditions,
and restrictions set forth in this Agreement and in the Plan, the Company hereby
grants to the Optionee as of the Date of Grant a stock option (the "Option") to
purchase _____________ shares of Company common stock, par value $.01 per share
(the "Common Stock") at a price of $
per share, subject to adjustment as hereinafter provided (the "Option Price").
The Option may be exercised from time to time in accordance with the terms of
this Agreement. The Option is intended to be a non-qualified stock option and
shall not be treated as an "incentive stock option" within the meaning of that
term under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any successor provision thereto.
3. Term of Option. The term of the Option shall commence on the Date
of Grant and, unless earlier terminated in accordance with Section 7 hereof,
shall expire ten (10) years from the Date of Grant.
4. Vesting of Option. Subject to the expiration or earlier
termination of the Option, the Optioned Shares granted hereby shall become
exercisable six (6) months from the Date of Grant. To the extent the Option is
exercisable, it may be exercised in whole or in part. In no event shall the
Optionee be entitled to acquire a fraction of one Optioned Share pursuant to
this Option.
5. Transferability of Option.
(a) Except as provided in Section 5(b) below, the Option granted hereby
shall be neither transferable nor assignable by the Optionee other than in
accordance with the Company's Beneficiary Designation Form, by will or by the
laws of descent and distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee, or in the event of his or her legal
incapacity, by his or her guardian or legal representative acting on behalf of
the Optionee in a fiduciary capacity under state law and court supervision. Any
purported transfer or encumbrance in violation of the provisions of this Section
5 shall be void, and the other party to any such purported transaction shall not
obtain any rights to or interest in the Option.
(b) Notwithstanding Section 5(a) above, the Option may be transferable by
the Optionee, without payment of consideration therefor, to any one or more
members of the immediate family of Optionee (as defined in Rule 16a-1(e) under
the Securities Exchange Act of 1934), or to one or more trusts established
solely for the benefit of such members of the immediate family or to
partnerships in which the only partners are such members of the immediate family
of the Optionee; provided, however, that (i) such transfer will not be effective
until notice of such transfer is delivered to the Company and such transfer is
thereafter effected in accordance with any terms and conditions that shall have
been made applicable thereto by the Company or the Administrator and (ii) that
any such transferee is subject to the same terms and conditions hereunder as the
Optionee.
6. Notice of Exercise; Payment.
(a) To the extent then exercisable, the Option may be exercised by written
notice to the Company or by telephone authorization pursuant to prescribed
procedures to the third party administrator approved by the Company stating the
number of Optioned Shares for which the Option is being exercised and the
intended manner of payment. The date of such notice shall be the exercise date.
Payment equal to the aggregate Option Price of the Optioned Shares being
exercised shall be tendered in full with the notice of exercise to the Company
either (i) in cash or by check acceptable to the Company, or (ii) to the extent
permitted by applicable law, by the tender to the Company of shares of Common
Stock owned by the Optionee for at least 6 months having an aggregate fair
market value on the date of exercise equal to the total Option Price, such fair
market value to be determined based on the Fair Market Value as of the last
business day preceding the date of exercise or (iii) by any combination of the
payment methods specified in clauses (i) and (ii) hereof. In the event of
payment in shares of Common Stock already owned, such shares shall be endorsed
appropriately for transfer to the Company. With the agreement of the Company,
the requirement of payment in cash shall be deemed satisfied if the Optionee
makes arrangements that are satisfactory to the Company with a broker that is a
member of the National Association of Securities Dealers, Inc. to sell a
sufficient number of Optioned Shares which are being purchased pursuant to the
exercise, so that the net proceeds of the sale transaction will at least equal
the amount of the aggregate Option Price. As a further condition precedent to
the exercise of this Option, the Optionee shall comply with all regulations and
the requirements of any regulatory authority having control of, or supervision
over, the issuance of shares of Common Stock and in connection therewith shall
execute any documents that the Committee shall in its sole discretion deem
necessary or advisable.
(b) In the event the Optionee resides outside of the United States, the
Optionee hereby authorizes the third party administrator approved by the Company
to pay any proceeds of sales of shares of Common Stock acquired by exercise to
the Company for remittance to the Optionee in the currency applicable to the
country in which the Optionee resides, net of any required taxes or other proper
charges.
7. Conditions and Limitations on Right to Exercise Option.
Notwithstanding the provisions of Sections 3 and 4 hereof,
(a) Except as otherwise provided in Section 7(b) hereof, this Option may
not be exercised unless the Optionee is, at the time of exercise, a Non-Employee
Director of the Company and has served as a Non-Employee Director of the Company
continuously since the Date of Grant; and
(b) (i) If the Optionee ceases to serve as a Non-Employee Director of the
Company (other than by reason of the Optionee's retirement on or after attaining
the age of 65 (or such earlier date as such Optionee is permitted under the
Company's retirement policy), death, or disability (as defined in the Company's
Long-Term Disability Plan)), the Option granted hereby, to the extent the
Optionee was entitled to exercise it at the date of termination, may be
exercised at any time within three (3) months after such termination (the
"Exercise Period") but in no event shall the Option be exercisable at any time
after the date of expiration of the Option. Any part of the Option not so
exercised within the Exercise Period shall expire.
(ii) If the Optionee's service on the Board of Directors is terminated by
reason of the Optionee's retirement on or after attaining the age of 65 (or such
earlier date as such Optionee is permitted under the Company's retirement
policy), death or disability (as defined in the Company's Long-Term Disability
Plan), all or any part of the Option that has not yet been exercised, whether
otherwise eligible for immediate exercise by the terms of this Agreement or not,
may be exercised at any time within twelve (12) months after such termination
but in no event shall the Option be exercisable at any time after the date of
expiration of the Option.
8. Acceleration of Option. Notwithstanding the provisions of Section
4, the Option granted hereby shall become immediately exercisable in full in the
event of (i) the Optionee's death if such death occurs while the Optionee is
serving as a Non-Employee Director of the Company, or (ii) the Optionee's
retirement on or after attaining the age of 65 (or such earlier date as such
Optionee is permitted under the Company's retirement policy), or (iii)
disability (as defined in the Company's Long-Term Disability Plan) of the
Optionee if the Optionee becomes disabled while serving as a Non-Employee
Director of the Company or (iv) a separation of the Optionee's service with the
Company as mutually agreed between the Optionee and the Company in a signed
writing.
9. Compliance with Law. The Company shall not be obligated to issue
any shares pursuant to this Option if, in the opinion of counsel to the Company,
the shares to be so issued are required to be registered or otherwise qualified
under the Securities Act of 1933, as amended, or under any other applicable
statute, regulation or ordinance affecting the sale of securities, unless and
until such shares have been so registered or otherwise qualified.
10. Adjustments. The Committee may make or provide for such
adjustments in the number of Optioned Shares covered by this Option, in the
Option Price applicable to such Option, and in the kind of shares covered
thereby, pursuant to Section 8(b) of the Plan.
11. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Optionee under this Agreement without the Optionee's consent.
12. Rights as a Stockholder. The Optionee shall have none of the
rights of a stockholder with respect to the shares of Common Stock subject to
this Option until such shares are issued to the Optionee upon exercise of the
Option.
13. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
14. Relation to Plan. This Agreement is subject to the terms and
conditions of the Plan. In the event of any inconsistent provisions between this
Agreement and the Plan, the Plan shall govern. The Administrator acting pursuant
to the Plan, shall, except as expressly provided otherwise herein, have the
right to determine any questions that arise in connection with this Option or
its exercise.
15. Successors and Assigns. In the event of a transfer or assignment
of this agreement by the Company or by the Optionee in accordance with the
provisions of Section 5 hereof, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of the Optionee, and the successors and
assigns of the Company.
12. Notices. Any notice to the Company provided for herein shall be
in writing to the Company, marked Attention: Senior Vice President, Human
Resources, with a copy to Vice President, Legal at Galileo International, Inc.,
9700 West Higgins Road, Suite 400, Rosemont, Illinois 60018, and any notice to
the Optionee shall be addressed to said Optionee at his or her address currently
on file with the Company. Except as otherwise provided herein, any written
notice shall be deemed to be duly given if and when hand delivered, or five (5)
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three (3) business days
after having been sent by a nationally recognized overnight courier service such
as Federal Express, UPS or Purolator, addressed as aforesaid. Any party may
change the address to which notices are to be given hereunder by written notice
to the other party as herein specified, except that notices of changes of
address shall be effective only upon receipt.
13. Governing Law. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of Delaware,
without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer as of the day and year first above
written.
GALILEO INTERNATIONAL, INC.
By:_________________________________
Its:_______________________________
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Agreement and accepts the Option granted hereunder, subject to
the terms and conditions of the Plan and the terms and conditions hereinabove
set forth.
Optionee
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27.1
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Form 10-Q for the quarter ended September 30, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001039300
<NAME> Galileo International, Inc.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 12,866
<SECURITIES> 0
<RECEIVABLES> 230,638
<ALLOWANCES> 9,745
<INVENTORY> 0
<CURRENT-ASSETS> 279,752
<PP&E> 483,003
<DEPRECIATION> 311,141
<TOTAL-ASSETS> 1,293,644
<CURRENT-LIABILITIES> 309,641
<BONDS> 434,392
0
0
<COMMON> 1,050
<OTHER-SE> 421,860
<TOTAL-LIABILITY-AND-EQUITY> 1,293,644
<SALES> 0
<TOTAL-REVENUES> 384,692
<CGS> 0
<TOTAL-COSTS> 288,120
<OTHER-EXPENSES> 6,310
<LOSS-PROVISION> 690
<INTEREST-EXPENSE> 6,808
<INCOME-PRETAX> 90,262
<INCOME-TAX> 36,014
<INCOME-CONTINUING> 54,248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,248
<EPS-BASIC> 0.58
<EPS-DILUTED> 0.58
</TABLE>
