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 June 30, 2000
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.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-4156005
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(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
9700 West Higgins Road, Suite 400, Rosemont, Illinois 60018
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(Address of Principal Executive Offices, Including Zip Code)
(847) 518-4000
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(Registrant's Telephone Number, Including Area Code)
N/A
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(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 August 8, 2000, there were 89,570,420 shares of Common Stock, par
value $.01 per share, of the registrant outstanding.
<PAGE>
GALILEO INTERNATIONAL, INC.
QUARTER ENDED JUNE 30, 2000
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Galileo International, Inc.
Condensed Consolidated Balance Sheets as of June 30,
2000 (unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Income for the
quarter and six months ended June 30, 2000 and 1999
(unaudited) 4
Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 2000 and 1999
(unaudited) 5
Condensed Consolidated Statement of Stockholders'
Equity for the six months ended June 30, 2000
(unaudited) 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 21
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 24
SIGNATURES 25
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, December 31,
2000 1999
---------- ----------
(Unaudited)
ASSETS
------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 12,157 $ 1,794
Accounts receivable, net 254,071 178,123
Other current assets 47,239 50,533
---------- ----------
Total current assets 313,467 230,450
Property and equipment, at cost:
Land 6,470 6,470
Buildings and improvements 75,380 72,219
Equipment 372,354 354,686
---------- ----------
454,204 433,375
Less accumulated depreciation 273,053 242,498
---------- ----------
Net property and equipment 181,151 190,877
Computer software, net 153,431 160,794
Intangible assets, net 771,306 572,136
Other noncurrent assets 113,950 100,936
---------- ----------
$1,533,305 $1,255,193
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 57,306 $ 48,034
Accrued commissions 50,862 33,722
Income taxes payable 25,064 2,785
Other accrued liabilities 123,321 113,712
Long-term debt, current portion 477 121,000
---------- ----------
Total current liabilities 257,030 319,253
Pension and postretirement benefits 75,557 68,466
Deferred tax liabilities 14,001 14,656
Other noncurrent liabilities 21,004 24,833
Long-term debt, less current portion 710,046 434,392
---------- ----------
Total liabilities 1,077,638 861,600
Stockholders' equity:
Special voting preferred stock: $.01 par value;
3 shares authorized; 3 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; 105,153,566 and 105,038,035 shares issued;
90,099,096 and 89,999,435 shares outstanding 1,051 1,050
Additional paid-in capital 682,899 671,615
Retained earnings 315,174 368,843
Unamortized restricted stock grants (2,362) (2,761)
Accumulated other comprehensive income (6,066) (2,866)
Common stock held in treasury, at cost: 15,054,470
and 15,038,600 shares (535,029) (642,288)
---------- ----------
Total stockholders' equity 455,667 393,593
---------- ----------
$1,533,305 $1,255,193
========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
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GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share data)
<TABLE>
Quarter Six Months
Ended June 30, Ended June 30,
---------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Electronic global distribution services $ 405,178 $ 380,213 $ 826,484 $ 765,442
Information services 20,166 18,609 39,598 37,371
---------- ---------- ----------- -----------
425,344 398,822 866,082 802,813
Operating expenses:
Cost of operations 154,776 132,315 288,780 264,445
Commissions, selling and administrative 176,013 162,492 356,747 313,537
Special charge - services agreement - - 19,725 -
Special charge - in-process research
and development write-off - - 7,000 -
---------- ---------- ----------- -----------
330,789 294,807 672,252 577,982
---------- ---------- ----------- -----------
Operating income 94,555 104,015 193,830 224,831
Other income (expense):
Interest expense, net (12,293) (650) (21,568) (1,440)
Other, net (2,484) 212 (4,868) 9,979
---------- ---------- ----------- -----------
Income before income taxes 79,778 103,577 167,394 233,370
Income taxes 36,618 41,328 76,834 93,115
---------- ---------- ----------- -----------
Net income $ 43,160 $ 62,249 $ 90,560 $ 140,255
========== ========== =========== ===========
Weighted average shares outstanding 91,154,649 104,485,999 90,916,802 104,584,445
========== ========== =========== ===========
Basic earnings per share $ 0.47 $ 0.60 $ 1.00 $ 1.34
========== ========== =========== ===========
Diluted weighted average shares outstanding 91,737,064 105,273,706 91,319,805 105,378,846
========== ========== =========== ===========
Diluted earnings per share $ 0.47 $ 0.59 $ 0.99 $ 1.33
========== ========== =========== ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months
Ended June 30,
----------------------
2000 1999
---- ----
Operating activities:
<S> <C> <C>
Net income $ 90,560 $140,255
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 100,726 82,022
Write-off of in-process research and development 7,000 -
Gain on sale of assets (48) (9,498)
Deferred income taxes, net (17,118) (2,924)
Changes in operating assets and liabilities,
net of effects from acquisition of businesses:
Accounts receivable, net (64,889) (49,831)
Other current assets 10,217 4,717
Noncurrent assets (2,764) (7,779)
Accounts payable and accrued commissions 21,314 5,554
Accrued liabilities 3,817 (25,207)
Income taxes payable 22,277 15,472
Noncurrent liabilities 8,866 16,025
Other 1,637 399
---------- ---------
Net cash provided by operating activities 181,595 169,205
Investing activities:
Purchase of property and equipment (15,853) (30,434)
Purchase and capitalization of computer software (17,287) (9,290)
Proceeds on sale of assets 227 9,529
Acquisition of businesses, net of $15,551 cash acquired (129,191) -
Other investing activities (27,421) (22,509)
---------- ---------
Net cash used in investing activities (189,525) (52,704)
Financing activities:
Borrowings under credit agreements 184,000 135,000
Repayments under credit agreements (30,000) (75,128)
Repurchase of common stock for treasury (119,583) (441,219)
Dividends paid to stockholders (16,312) (17,275)
Proceeds from exercise of employee stock options, net 406 1,799
Payments of capital lease obligations (61) (27,690)
Issuance of promissory note - 307,736
---------- ---------
Net cash provided by (used in) financing activities 18,450 (116,777)
Effect of exchange rate changes on cash (157) (1,204)
---------- ---------
Increase (decrease) in cash and cash equivalents 10,363 (1,480)
Cash and cash equivalents at beginning of period 1,794 9,828
---------- ---------
Cash and cash equivalents at end of period $ 12,157 $ 8,348
========== =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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, 1999 $ - $ 1,050 $ 671,615 $368,843
Comprehensive income:
Net income - - - 90,560
Other comprehensive income (loss), net of tax:
Unrealized holding losses on securities - - - -
Foreign currency translation adjustments - - - -
Other comprehensive income (loss)
Comprehensive income
Amortization of restricted stock grants - - - -
Issuance of 115,531 shares of common stock under
employee stock option plans - 1 405 -
Issuance of stock options upon acquisition of
Trip.com - - 10,879 -
Issuance of 5,499,630 shares of common stock from
treasury to acquire Trip.com - - - (127,917)
Repurchase of 5,515,500 shares of common stock
for treasury - - - -
Dividends paid ($0.18 per share) - - - (16,312)
------------ ------------ --------- ---------
Balance at June 30, 2000 $ - $ 1,051 $ 682,899 $315,174
============ ============ ========= =========
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, 1999 $ (2,761) $ (2,866) $(642,288) $393,593
Comprehensive income:
Net income - - - 90,560
Other comprehensive income (loss), net of tax:
Unrealized holding losses on securities - (718) - (718)
Foreign currency translation adjustments - (2,482) - (2,482)
---------
Other comprehensive income (loss) (3,200)
---------
Comprehensive income 87,360
Amortization of restricted stock grants 399 - - 399
Issuance of 115,531 shares of common stock under
employee stock option plans - - - 406
Issuance of stock options upon acquisition of
Trip.com - - - 10,879
Issuance of 5,499,630 shares of common stock from
treasury to acquire Trip.com - - 226,842 98,925
Repurchase of 5,515,500 shares of common stock
for treasury - - (119,583) (119,583)
Dividends paid ($0.18 per share) - - - (16,312)
------------ ------------ --------- ---------
Balance at June 30, 2000 $ (2,362) $ (6,066) $(535,029) $455,667
============ ============ ========= =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
6
<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. Certain
reclassifications have been made to the condensed consolidated financial
statements for the prior year to conform with the current presentation.
The results of operations for the quarter and six months ended June 30,
2000 are not necessarily indicative of the results to be expected for the year
ending December 31, 2000.
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, 1999 included in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 10, 2000.
NOTE 2 - BUSINESS ACQUISITIONS AND INVESTMENTS
In 1999, the Company acquired a minority equity interest in TRIP.com, Inc.
("TRIP.com"), an online travel services and technology provider. On March 10,
2000, the Company purchased the remaining 81% ownership interest in TRIP.com for
$214.9 million in a combined cash and stock transaction. The Company paid $105.1
million in cash and issued 5,499,630 shares of Common Stock, previously held in
treasury, valued at $98.9 million. In addition, the Company converted all
outstanding stock options of TRIP.com into the Company's stock options at an
estimated fair value of $10.9 million.
The following unaudited pro forma financial information presents a summary
of consolidated results of operations of the Company and TRIP.com as if the
acquisition had occurred on January 1, 1999 (dollars in millions, except per
share amounts):
7
<PAGE>
Six Months
Ended June 30,
-----------------
2000 1999
---- ----
Revenues $868.7 $807.7
Net income 84.3 105.1
Basic earnings per share 0.91 0.95
Diluted earnings per share 0.90 0.94
These unaudited pro forma results have been prepared for comparative
purposes only and include adjustments for additional amortization of goodwill
and other intangible assets. Additionally, the pro forma operating results
include pro forma interest expense on the assumed acquisition borrowings to
finance the cash portion of the TRIP.com acquisition; pro forma adjustments to
the provision for income taxes to reflect the effect of non-deductible
amortization of goodwill and other intangible assets; and pro forma adjustments
to the weighted average shares outstanding and diluted weighted average shares
outstanding used in the earnings per share calculations for the issuance of the
Company's Common Stock and the dilutive effect of TRIP.com stock options
outstanding, respectively.
The results of operations reflected in the pro forma information are not
necessarily indicative of the results which would have been reported if the
TRIP.com acquisition had occurred at the beginning of the periods presented, or
of the future operations of the consolidated entities.
On March 8, 2000, the Company acquired Terren Corporation ("Terren"), a
developer of client-server software for business databases, data communications
and information management. The purchase price of this acquisition was $2.6
million, consisting of $1.4 million in cash payments and the assumption of a
$1.2 million note payable. The pro forma effects of this acquisition are not
significant.
On April 14, 2000, the Company acquired Travel Automation Services Limited
("Galileo UK"), the Company's national distribution company in the United
Kingdom, and terminated certain revenue sharing obligations for $30.0 million in
cash. The pro forma effects of this acquisition are not significant.
In connection with all of the above acquisitions, the Company incurred
expenses of $8.2 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 these 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 these
acquisitions are being amortized over 3 to 20 years. The resulting amortization
is included in cost of operations expenses. The results of operations and cash
flows of TRIP.com, Terren and Galileo UK have been consolidated with those of
the Company from the date of each acquisition.
8
<PAGE>
NOTE 3 - EARNINGS PER SHARE
Basic earnings per share for the quarter and six months ended June 30, 2000
and 1999 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 six months ended June 30, 2000
of 582,415, and 403,003, respectively. The increase in the weighted average
number of shares outstanding for the quarter and six months ended June 30, 1999
was 787,707 and 794,401, respectively.
NOTE 4 - SPECIAL CHARGES
In connection with the Company's 1997 acquisition of Apollo Travel Services
Partnership, the Company entered into an agreement (the "Services Agreement")
with United Airlines, US Airways, and Air Canada (collectively the "Service
Providers") to provide certain marketing services and other support to the
Company in the U.S. and Mexico. In exchange for these services, the Company
agreed to compensate the Service Providers if the Company achieved specific air
segment growth and booking fee price increases over a five-year period. Although
the Company was accruing its estimated price-related liability under the
Services Agreement based upon lower levels of historical and projected pricing,
as a result of the price increase in the U.S. and Mexico that became effective
on January 1, 2000, the Company now expects to owe the full price-related
obligation. On December 30, 1999, the Company was released by United Airlines
from the price-related obligation under the Services Agreement. In turn, GIO
Services, L.L.C. ("GIO Services"), a qualified special-purpose entity, was
created and funded with $97.3 million to assume the liability and pay United
Airlines in July 2002. During the quarter ended March 31, 2000, the Company
reassessed the future benefit of the services provided by US Airways. As a
result, the Company recorded a special charge of $19.7 million and transferred
$27.2 million to GIO Services to provide for payment of the price-related
obligation to US Airways in July 2002. The activities of GIO Services are
strictly limited to payment of these Services Agreement obligations. As a result
of these transactions, the Company has no further payment obligations to United
Airlines and US Airways related to booking fee price increases under the
Services Agreement.
The Company also recorded a special charge of $7.0 million during the
quarter ended March 31, 2000 to write off in-process research and development
costs related to the acquisition of TRIP.com.
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
9
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million of other costs, principally related to the closing of the remaining
Swindon, U.K. facilities. As of June 30, 2000, $16.1 million of severance
related costs have been paid and charged against the liability and 370 employees
have been terminated. The Company considers the realignment activities to be
substantially complete as of June 30, 2000. Also related to the closing of
Swindon, U.K. facilities, in 1993, the Company, formerly Covia Partnership,
combined with The Galileo Company Ltd. and consolidated its two data center
facilities resulting in the closing of the Swindon, U.K. data center. In
connection therewith, the estimated cost of the consolidation was charged to
expense. During 1999, the Company was successful in assigning a Swindon, U.K.
facility lease at market rates, resulting in recognition of an $11.3 million
($6.8 million after tax) one-time recovery of previously reserved facilities
expenses. At June 30, 2000 and December 31, 1999, the estimated remaining
liabilities for all of the above mentioned restructuring activities were $7.1
million and $10.2 million, respectively, and are included in the accompanying
condensed consolidated balance sheets.
NOTE 5 - DEBT
In March 2000, the Company entered into a new $200.0 million 16-month
credit agreement, which was partially utilized on March 10, 2000 to fund the
acquisition of the remaining ownership interest in TRIP.com. In April 2000, the
Company entered into a new $500.0 million credit agreement that expires in July
2001. This new agreement replaces the $200.0 million 16-month credit agreement
entered into in March 2000 and the existing $200.0 million 364-day credit
agreement that was due to expire in July 2000. Facility fees range from 10.0 to
22.5 basis points. As of June 30, 2000, the effective interest rate for amounts
outstanding under the $500.0 million credit agreement was 7.2%.
NOTE 6 - COMMITMENTS & CONTINGENCIES
During 1998, as part of the purchase price of S. D. Shepherd Systems, Inc.
("Shepherd Systems"), the Company recorded a $5.0 million contingent liability
for additional payments, due ratably over five years, based on a calculation of
the relevant calendar year's annual cash flow of Shepherd Systems. At December
31, 1999 the liability related to these payments was included in other
noncurrent liabilities. During the quarter ended June 30, 2000, based upon an
analysis of Shepherd Systems' historical and projected cash flow results, the
Company determined that no payments will be required. Accordingly, the
contingent liability has been written-off against the acquisition-related
goodwill of Shepherd Systems.
NOTE 7 - STOCKHOLDERS' EQUITY
For the six months ended June 30, 2000, the Company accounted for a $1.2
million unrealized holding loss on available-for-sale marketable equity
securities in accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in
10
<PAGE>
Debt and Equity Securities". The after tax effect of $0.7 million is included as
a separate component of Stockholders' Equity.
On April 21, 2000, the Board of Directors authorized a new $250.0 million
share repurchase program. The Company began purchasing shares under the new
program in June 2000, after completion of its $750.0 million program.
Repurchased shares are held in treasury to provide available shares for possible
resale in future public or private offerings, and for other general corporate
purposes. The purchases are funded through the Company's available working
capital and borrowing facilities. The amount, timing and price of any
repurchases of the Company's Common Stock depend on market conditions and other
factors. For the quarter ended June 30, 2000, the Company repurchased 2,736,900
of its shares in the open market at a total cost of $62.2 million. As of June
30, 2000, the Company held a total of 15,054,470 shares in treasury.
As disclosed in Note 2 - Business Acquisitions and Investments, the Company
exchanged 5,499,630 shares of its Common Stock as part of the consideration to
acquire TRIP.com. These shares were reissued from Common Stock held in treasury,
which resulted in a $127.9 million reduction to retained earnings. In addition,
as part of the consideration issued in the acquisition, the Company converted
all outstanding TRIP.com stock options into stock options of the Company
resulting in a $10.9 million increase to additional paid-in capital.
Comprehensive income for the six months ended June 30, 1999 was $141.7
million, comprised of net income of $140.3 million, unrealized holding gains on
securities of $0.9 million, and foreign currency translation adjustments of $0.5
million.
NOTE 8 - INTEREST IN EQUANT
At June 30, 2000, the Company owned 1,106,564 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). If these certificates were converted
into registered common stock of Equant, the market value at June 30, 2000 would
have been $47.6 million. The Company's carrying value of these depository
certificates was nominal at June 30, 2000 and December 31, 1999. Any future
disposal of such depository certificates may result in significant gains to the
Company. (1)
---------
(1) See Statement Regarding Forward-Looking Statements on page 20.
11
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NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION
Six Months
Ended June 30,
----------------
(In millions) 2000 1999
---- ----
Interest paid $ 24.0 $ 2.3
Income taxes paid 71.7 83.0
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 41,900 locations, as well as consumers,
corporations and 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.
We generate revenue from the provision of electronic global distribution
services and information services. During the six months ended June 30, 2000, we
generated 95.4% of our revenue from electronic global distribution services and
4.6% 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:
12
<PAGE>
Quarter Six Months
Ended June 30, Ended June 30,
-------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
Percentage of Revenue
---------------------
U.S. Market 38.3 % 41.3 % 39.1 % 41.8 %
All Other Markets 61.7 58.7 60.9 58.2
-------------------- -------------------
100.0 % 100.0 % 100.0 % 100.0 %
==================== ===================
Worldwide Bookings
------------------
(in millions)
U.S. Market:
Air 29.5 32.6 63.2 68.6
Car/Hotel/Leisure 6.0 6.1 11.8 11.8
------------------ ------------------
Total Bookings 35.5 38.7 75.0 80.4
All Other Markets:
Air 52.9 52.0 107.7 105.7
Passive Booking Adjustment-Japan (1) 0.9 - 1.9 -
------------------ ------------------
Adjusted Air 53.8 52.0 109.6 105.7
Car/Hotel/Leisure 1.6 1.5 3.2 3.0
------------------ ------------------
Total Bookings 55.4 53.5 112.8 108.7
Total Worldwide Bookings 90.9 92.2 187.8 189.1
================== ==================
(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.
SECOND QUARTER 2000 COMPARED TO SECOND QUARTER 1999
REVENUES. Revenues increased $26.6 million, or 6.7%, to $425.4 million for
the quarter ended June 30, 2000 from $398.8 million for the quarter ended June
30, 1999. Our electronic global distribution services revenues grew $25.0
million, or 6.6%. Total airline booking revenue increased 5.5% over the quarter
ended June 30, 1999 primarily due to booking fee price increases that went into
effect in January 2000, and other yield improvements. Remaining net increases in
our electronic global distribution services revenues were principally due to the
inclusion of TRIP.com and Galileo UK revenues since the dates of their
respective acquisitions, and increased
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sales of certain marketing services. Partially offsetting these increases were
lower subscriber fees resulting from a decrease in our U.S. market share and an
increasing trend for travel agencies to utilize their own computer equipment.
Worldwide bookings decreased 1.4% year over year. International booking
volumes increased 1.8% and U.S. booking volumes decreased 8.2% 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 3.5% for the quarter. The increase in
international booking volumes was driven by continued strong growth in many
international markets, including double-digit gains in India, Greece and Brazil.
The decline in U.S. booking volumes was primarily due to a decrease in our
U.S. market share which we believe was principally attributable to the effect of
our field sales force transition in 1999 and the increasing impact of the shift
in bookings to Internet travel sites. With a new U.S. sales force in place, we
are aggressively executing growth plans for new and renewal business in the
traditional travel agency channel and expect to strengthen our U.S. market
position in the second half of 2000. (1) However, growth in traditional travel
agency bookings may be mitigated by the accelerating shift of bookings to the
Internet channel where our market share is currently lower. (1) In the Internet
channel, our strategy is to have multiple points of presence by serving as the
booking engine behind several Internet travel sites such as UAL.com,
Biztravel.com and Beyoo.com, and by expanding the presence of our own sites
including Galileo.com and TRIP.com. (1)
COST OF OPERATIONS. Cost of operations expenses increased $22.5 million, or
17.0%, to $154.8 million for the quarter ended June 30, 2000 from $132.3 million
for the quarter ended June 30, 1999. The increase was primarily attributable to
amortization of goodwill and other intangibles related to the acquisition of
TRIP.com, and higher network communication costs related to our ongoing
migration to a single Internet protocol. The remaining increase was primarily
due to TRIP.com and Galileo UK wages and other costs since their respective
acquisition dates. Partially offsetting these increases were lower subscriber
maintenance and installation expenses related to the decrease in subscriber fee
revenue noted above.
COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $13.5 million, or 8.3%, to $176.0 million for
the quarter ended June 30, 2000 from $162.5 million for the quarter ended June
30, 1999. Commissions paid to national distribution companies ("NDCs") and
subscriber incentive payments increased $10.0 million, or 8.9%, to $122.0
million for the quarter ended June 30, 2000 from $112.0 million for the quarter
ended June 30, 1999. The growth in electronic global distribution services
revenues resulted in increased commissions to NDCs, which are generally based on
a percentage of booking fee revenues, and have therefore grown at a rate
consistent with the growth in booking fees by country. This increase in
commissions was primarily offset by the elimination of commissions paid to
Galileo UK subsequent to this acquisition, as we no longer pay commissions but
instead incur the direct costs of operating in this market. Incentive payments,
----------
(1) See Statement Regarding Forward-Looking Statements on page 20.
14
<PAGE>
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 regional accounts, and the
renegotiation of existing contracts. Although subscriber incentives continue to
grow, the rate of growth has slowed compared to the prior year. Remaining
commissions, selling and administrative expenses increased primarily due to
TRIP.com and Galileo UK wages, marketing and advertising, and other expenses
since their respective acquisition dates, partially offset by decreases in
service agreement expenses and other marketing and advertising expenses.
OTHER EXPENSE, NET. Other expense, net includes interest expense net of
interest income, foreign exchange gains or losses, and other non-operating
items. Other expense, net increased $14.4 million to $14.8 million for the
quarter ended June 30, 2000 from $0.4 million for the quarter ended June 30,
1999. This increase was primarily the result of higher interest expense arising
from higher average debt levels in 2000 to fund the acquisition of TRIP.com and
to repurchase Common Stock for treasury. The remaining increase was primarily
due to $2.6 million in foreign exchange losses for the quarter ended June 30,
2000, resulting from unfavorable euro and British pound sterling forward
contracts and holding losses. The net impact of foreign currency forward
contracts and transactions in 1999 was not material.
INCOME TAXES. Income taxes decreased $4.7 million, or 11.4%, to $36.6
million for the quarter ended June 30, 2000 from $41.3 million for the quarter
ended June 30, 1999. The decrease was a result of lower income before income
taxes for the quarter ended June 30, 2000 compared to the quarter ended June 30,
1999, partially offset by a higher effective tax rate. Our effective tax rate
was approximately 46% in 2000 and 40% in 1999. This increase in the effective
tax rate was due to non-deductible amortization of intangibles arising from the
acquisition of TRIP.com.
NET INCOME. Net income decreased $19.1 million, or 30.7%, to $43.2 million
for the quarter ended June 30, 2000 from $62.3 million for the quarter ended
June 30, 1999. Net income as a percentage of revenues decreased to 10.1% for the
quarter ended June 30, 2000 from 15.6% for the quarter ended June 30, 1999. The
net income and net margin decreases were primarily due to the amortization of
goodwill and other intangibles related to the acquisition of TRIP.com.
15
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SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
REVENUES. Revenues increased $63.3 million, or 7.9%, to $866.1 million for
the six months ended June 30, 2000 from $802.8 million for the six months ended
June 30, 1999. Our electronic global distribution services revenues grew $61.0
million, or 8.0%. Total airline booking revenue increased 7.8% over the six
months ended June 30, 1999 primarily due to booking fee price increases that
went into effect in March 1999 and January 2000, and other yield improvements.
Remaining net increases in our electronic global distribution services revenues
were principally due to the inclusion of TRIP.com and Galileo UK revenues since
the date of their respective acquisitions, and increased sales of certain
marketing services. Partially offsetting these increases were lower subscriber
fees resulting from a decrease in our U.S. market share and an increasing trend
for travel agencies to utilize their own computer equipment.
Worldwide bookings declined 0.7% year over year. International booking
volumes increased 2.0% and U.S. booking volumes decreased 6.7% 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 3.8% for the six months ended June 30,
2000. The increase in international booking volumes for the period was driven by
continued strong growth in many international markets, including double-digit
gains in India and Brazil.
The decline in U.S. booking volumes was primarily due to a decrease in our
U.S. market share which we believe was principally attributable to the effect of
our field sales force transition in 1999 and the increasing impact of the shift
in bookings to Internet travel sites. With a new U.S. sales force in place, we
are aggressively executing growth plans for new and renewal business in the
traditional travel agency channel and expect to strengthen our U.S. market
position in the second half of 2000. (1) However, growth in traditional travel
agency bookings may be mitigated by the accelerating shift of bookings to the
Internet channel where our market share is currently lower. (1) In the Internet
channel, our strategy is to have multiple points of presence by serving as the
booking engine behind several Internet travel sites such as UAL.com,
Biztravel.com and Beyoo.com, and by expanding the presence of our own sites
including Galileo.com and TRIP.com. (1)
COST OF OPERATIONS. Cost of operations expenses increased $24.4 million, or
9.2%, to $288.8 million for the six months ended June 30, 2000 from $264.4
million for the six months ended June 30, 1999. The increase was primarily
attributable to the amortization of goodwill and other intangibles related to
the acquisition of TRIP.com, and higher network communication costs related to
our ongoing migration to a single Internet protocol. Also, cost of operations
expenses include TRIP.com and Galileo UK expenses subsequent to their respective
acquisition dates. These increases were partially offset by net cost savings
from the 1999 Swindon, U.K. realignment and lower subscriber maintenance and
installation expenses related to the decrease in subscriber fee revenue noted
above.
---------
(1) See Statement Regarding Forward-Looking Statements on page 20.
16
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COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $43.3 million, or 13.8%, to $356.8 million for
the six months ended June 30, 2000 from $313.5 million for the six months ended
June 30, 1999. Commissions paid to NDCs and subscriber incentive payments
increased $36.3 million, or 16.7%, to $253.3 million for the six months ended
June 30, 2000 from $217.0 million for the six months ended June 30, 1999. The
growth in electronic global distribution services revenues resulted in increased
commissions to NDCs, which are generally based on a percentage of booking fee
revenues, and have therefore grown at a rate consistent with the growth in
booking fees by country. This increase was partially offset by the elimination
of commissions paid to Galileo UK subsequent to this acquisition, as we no
longer pay commissions but instead incur the direct costs of operating in this
market. Incentive payments, which are provided to subscribers in order to
maintain and expand our travel agency customer base, increased principally due
to the initiation of new contracts with multinational and key regional accounts,
and the renegotiation of existing contracts. Although subscriber incentives
continue to grow, the rate of growth has slowed compared to the prior year.
Remaining commissions, selling and administrative expenses increased primarily
due to TRIP.com and Galileo UK wages, marketing and advertising, and other
expenses since their respective acquisition dates.
SPECIAL CHARGES. In the first quarter of 2000, we recorded a special charge
of $19.7 million related to the extinguishment of a portion of our liability
arising from our Services Agreement with US Airways. As a result, we have no
further payment obligations to US Airways related to price increases under the
Services Agreement. (See Note 4 - Special Charges, on page 9, for further
discussion of this charge.)
We also recorded a special charge of $7.0 million during the first quarter
of 2000 to write off in-process research and development costs related to our
acquisition of TRIP.com.
OTHER EXPENSE, NET. Other expense, net includes interest expense net of
interest income, foreign exchange gains or losses, and other non-operating
items. Other expense, net increased $34.9 million to $26.4 million in expense
for the six months ended June 30, 2000 from $8.5 million in income for the six
months ended June 30, 1999. This increase was primarily the result of higher
interest expense arising from higher average debt levels in 2000 to fund the
acquisition of TRIP.com and to repurchase Common Stock for treasury. Also
contributing to the increase was $4.2 million in foreign exchange losses for the
six months ended June 30, 2000, resulting from unfavorable euro and British
pound sterling forward contracts and holding losses. The net impact of foreign
currency forward contracts and transactions in 1999 was not material. In
addition, a $9.4 million gain was recognized in the first quarter of 1999 from
the sale of a portion of the shares we owned in Equant.
INCOME TAXES. Income taxes decreased $16.3 million, or 17.5%, to $76.8
million for the six months ended June 30, 2000 from $93.1 million for the six
months ended June 30, 1999. The decrease was a result of lower income before
income taxes for the six months ended June 30, 2000 compared to the six months
ended June 30, 1999, partially offset by a higher effective tax rate in 2000.
Our effective tax rate was approximately 46% in 2000 and 40% in 1999. This
17
<PAGE>
increase in the effective tax rate was due to non-deductible amortization of
intangibles arising from the acquisition of TRIP.com.
NET INCOME. Net income decreased $49.7 million, or 35.4%, to $90.6 million
for the six months ended June 30, 2000 from $140.3 million for the six months
ended June 30, 1999. Net income as a percentage of revenues decreased to 10.5%
for the six months ended June 30, 2000 from 17.5% for the six months ended June
30, 1999. The decreases in our net income and net margin were principally the
result of a one-time special charge related to the US Airways Services Agreement
and the amortization of intangibles and the write-off of in-process research and
development costs in connection with the TRIP.com acquisition. In addition, the
quarter ended March 31, 1999 included an after-tax gain of $5.7 million from the
sale of a portion of the shares we owned in Equant.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $12.2 million and working capital totaled
$56.4 million at June 30, 2000. At December 31, 1999, cash and cash equivalents
totaled $1.8 million and working capital totaled ($88.8) million. Excluding
$121.0 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 $32.2 million at December 31, 1999. Cash and cash equivalents
increased $10.4 million during the six months ended June 30, 2000 primarily due
to cash generated from operations and additional borrowings under credit
agreements, partially offset by cash used in investing activities and for
repurchases of Common Stock for treasury.
Net cash used in investing activities for the six months ended June 30,
2000 principally related to $129.2 million in net cash used to acquire TRIP.com,
Terren and Galileo UK. The remaining investing activities relate to purchases of
mainframe data processing and network equipment, purchases of computer equipment
provided to our travel agency subscribers, and investments in companies aligned
with our strategic direction. Capital expenditures, excluding the capitalization
of internally developed software, were $25.7 million for the six months ended
June 30, 2000 compared to $33.3 million for the six months ended June 30, 1999.
Net cash used in financing activities for the six months ended June 30,
2000 included repurchases of Common Stock for treasury totaling $119.6 million
and $16.3 million in dividends paid to our stockholders. We paid $0.09 per share
cash dividends on February 18, 2000 to stockholders of record as of February 4,
2000, and on May 19, 2000 to stockholders of record as of May 5, 2000. In April
2000, we entered into a new $500.0 million credit agreement that expires in July
2001. This new agreement replaces the $200.0 million 16-month credit agreement
entered into in March 2000 and our existing $200.0 million 364-day credit
agreement that was due to expire in July 2000. During the six months ended June
30, 2000, net borrowings under our credit agreements totaled $154.0 million and
we had $225.0 million available under our revolving credit facilities at June
30, 2000.
18
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We expect that future cash requirements will principally be for capital
expenditures, repayments of indebtedness, repurchases of our Common Stock for
treasury, and potential acquisitions that are aligned with our strategic
direction. (1) We believe that cash generated by operating activities will be
sufficient to fund our future cash requirements, except that significant
acquisitions, investments, or share repurchases may require additional
borrowings or other financing alternatives. (1)
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 April 21, 2000, the
Board of Directors authorized a new $250.0 million share repurchase program. We
began purchasing shares under the new program in June 2000, after completion of
our $750.0 million program. On July 20, 2000, we declared a cash dividend of
$0.09 per share to be paid on August 18, 2000 to stockholders of record as of
August 4, 2000. The declaration and payment of future dividends, as well as the
amount thereof, and the amount of future repurchases of our Common Stock beyond
authorized amounts 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 declare and pay any future
dividends or repurchase additional shares of our Common Stock. (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" ("Statement 133"), 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)
----------
(1) See Statement Regarding Forward-Looking Statements on page 20.
19
<PAGE>
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Statements in this report that are not strictly historical, including
statements as to plans, objectives and future performance, 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(R)and Galileo(R) systems; circumstances relating to our investment in
technology, including our ability to timely develop and achieve market
acceptance of new products; our ability to successfully expand our operations
and service offerings in new markets, including the on-line travel market; our
ability to manage administrative, technical and operational issues presented by
our expansion plans and acquisitions of other businesses; our ability to
complete the transition to a new, Internet protocol-based network as planned,
and for the cost and within the time frame currently estimated; the results of
our international operations and expansion into developing and new computerized
reservation system ("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, security breaches or other
calamities that may cause significant damage to our Data Center facility.
20
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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 derivative 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 June 30, 2000, we have entered into foreign exchange
forward contracts that provide for purchases of GBP 3.8 million, CAD 1.0
million, and EUR 7.0 million at various dates throughout 2000. At June 30, 2000
and December 31, 1999, the notional principal amounts of outstanding forward
contracts were $13.6 million and $19.6 million, respectively. The fair value of
outstanding forward contracts at June 30, 2000 and December 31, 1999 was $(0.6)
million and $0.03 million, respectively.
As of June 30, 2000, we were party to a $500.0 million 16-month credit
agreement and a $400.0 million five-year credit agreement (collectively, the
"Credit Agreements") with a group of banks. Interest on the borrowings may be
either Base Rate, CD Rate or LIBOR Rate based. For the six months ended June 30,
2000, the effective interest rate for loans outstanding under the Credit
Agreements was 6.71%. If interest rates had averaged 10% higher in the first six
months of 2000, our interest expense would have hypothetically increased by $2.1
million. This amount was calculated by applying the hypothetical increase to the
applicable interest rates and outstanding principal throughout the six months
ended June 30, 2000.
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 June 30, 2000 and
December 31, 1999, we had outstanding interest rate swap agreements with a total
notional value of $34.4 million with fixed interest rates averaging 5.87%. The
fair value of outstanding swap agreements at June 30, 2000 and December 31, 1999
was $1.1 million and $1.0 million, respectively.
We are also exposed to equity price risks on the marketable equity
securities we hold for strategic purposes. Assuming a 20% adverse change in the
June 30, 2000 equity prices of our marketable securities, our financial position
would not be materially affected.
---------
(1) See Statement Regarding Forward-Looking Statements on page 20.
21
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company was held on
May 18, 2000. On March 22, 2000, the record date for the Annual
Meeting, the Company had issued and outstanding two classes of
voting securities: 93,729,416 shares of Common Stock and three
shares of Special Voting Preferred Stock. Each Common Stock
share is entitled to one vote in the election of directors and
other matters submitted to a vote of stockholders. As of May
18, 2000 the Special Voting Preferred Stock was divided into
three series, each series consisting of one share and entitling
the holder thereof to elect one director so long as certain
share ownership thresholds are maintained. Pursuant to the
provisions of the Special Voting Preferred Stock as of May 18,
2000, the holders were entitled to elect a total of three of the
nine members of the Board of Directors. The respective holders
of the Special Voting Preferred Stock are entitled to elect
their director designee, voting as a separate class. At the
Annual Meeting, the common stockholders elected two directors,
and prior to the Annual Meeting, Covia L.L.C., a subsidiary of
United Airlines, as holder of one share of Special Voting
Preferred Stock elected one director as set forth in (c) below.
All such elections were effective May 18, 2000.
(c) Set forth below is the tabulation of the votes on each nominee
for election as a director:
Name For Withheld Authority
---- --- ------------------
COMMON STOCK James E. Barlett 75,624,903 6,425,605
Kenneth Whipple 81,566,736 483,772
SPECIAL VOTING
PREFERRED STOCK Graham W. Atkinson 1 0
Set forth below is the tabulation of the votes to approve the
Galileo International, Inc. Employee Stock Purchase Plan:
For Against Withheld Broker Non-Vote
--- ------- -------- ---------------
81,569,5999 443,593 27,316 0
22
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ITEM 5. OTHER INFORMATION
In March 2000, we announced the launch of Quantitude, Inc. ("Quantitude"),
a new, wholly owned telecommunications subsidiary. Quantitude is building an
end-to-end private network on a standard Internet protocol platform (TCP/IP) to
deliver global Internet, Virtual Private Network, and telecommunications network
services to a variety of customers. Most endpoints are scheduled to be connected
in the first two years, and the entire effort is expected to be completed in
three years. (1) We will transfer asset ownership of our existing network and
network personnel to Quantitude, which will provide current and future network
services to the Company. (1)
On May 23, 2000 Cheryl Ballenger was promoted to Executive Vice President,
Finance, Chief Financial Officer and Treasurer. Ms. Ballenger replaced Paul H.
Bristow, who resigned effective March 15, 2000.
----------
(1) See Statement Regarding Forward-Looking Statements on page 20.
23
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit Number Exhibit Description
-------------- -------------------
10.1 Amendment No. 4 to Galileo International, Inc. Guaranty
10.2 $500,000,000 Credit Agreement Dated April 13, 2000
10.3 Amendment No. 6 to $400,000,000 Five-Year Credit Agreement
*10.4 Galileo International Management Incentive Plan - 2000 Plan
Summary
*10.5 Galileo International, Inc. Employee Stock Purchase Plan (1)
27.1 Financial Data Schedule
* Management contract or compensatory plan or arrangement
(1) Incorporated by reference to Exhibit 4.1 of the Company's Registration
Statement on Form S-8 filed on June 29, 2000.
(b) Reports on Form 8-K - The Company filed one report on Form 8-K/A with
the Securities and Exchange Commission on May 23, 2000 with respect
to Item 2.
24
<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: August 11, 2000 By: /s/ Cheryl M. Ballenger
Cheryl M. Ballenger
Executive Vice President, Finance,
Chief Financial Officer and
Treasurer
25
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GALILEO INTERNATIONAL, INC.
Exhibit Index
Exhibit Number Exhibit Description
-------------- -------------------
10.1 Amendment No. 4 to Galileo International, Inc. Guaranty
10.2 $500,000,000 Credit Agreement Dated April 13, 2000
10.3 Amendment No. 6 to $400,000,000 Five-Year Credit Agreement
*10.4 Galileo International Management Incentive Plan - 2000 Plan
Summary
*10.5 Galileo International, Inc. Employee Stock Purchase Plan (1)
27.1 Financial Data Schedule
* Management contract or compensatory plan or arrangement
(1) Incorporated by reference to Exhibit 4.1 of the Company's Registration
Statement on Form S-8 filed on June 29, 2000.
26
<PAGE>
Exhibit 10.1
Amendment No. 4
to
Guaranty Agreement
Amendment dated as of May 19, 2000 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. Amendments.
(a) Section 3.01 is amended as follows:
(1) Subsection (h)is redesignated Subsection (j).
(2) The following subsections are hereby added immediately
prior to redesignated subsection (j):
h) promptly from time to time if Pricing Schedule B
is the Pricing Schedule under the Credit Agreement, notice of
any change in the rating of the Guarantor's senior, unsecured
long-term debt securities (without credit enhancement) by S&P
or Moody's;
(i) promptly after any officer of the Guarantor
obtains knowledge thereof, notice of the commencement of, or
any material development in, any litigation, arbitration or
other proceeding affecting the Guarantor or any Subsidiary,
including pursuant to any applicable Environmental Laws, which
has had or is reasonably likely to have a Material Adverse
Effect; and
(b) Section 3.11 is amended to read in its entirety as follows:
Section 3.11. Restricted Payments. Neither the
Guarantor nor any Subsidiary will make any Restricted
Payment, provided that the Guarantor may (a) repurchase
shares of its common stock so long as the aggregate
amount expended for all such repurchases subsequent to
October 31, 1998 (excluding repurchases permitted by
clause (c) below) does not exceed $750,000,000,
(b) repurchase additional shares of its common stock so
long as (i) the aggregate amount expended for all such
purchases (including repurchases permitted by clause (a)
above but excluding repurchases permitted by clause (c)
below) subsequent to October 31, 1998 does not exceed
$1,000,000,000, (ii) as of the date of any such
purchase, the ratio of (x) Consolidated Debt (including
any Debt incurred to make such purchase) to
(y) Consolidated EBITDA for the most recent period of
four consecutive fiscal quarters of the Guarantor and
its Consolidated Subsidiaries for which the Guarantor
has delivered financial statements pursuant to
Section 3.01 is less than 1.5 to 1.0, and (iii) no
Default exists or will result therefrom and (c) make
Restricted Payments from time to time with respect to
any year in an aggregate amount not to exceed 50% of
Consolidated Net Income for such year.
(c) The figure "$50,000,000" in Section 3.13 is changed to
"$75,000,000".
(d) The definition of "Change in Ownership or Control" in
Section 5.01 is amended as follows:
(1) Clause (i)of the definition is deleted, and clauses
(ii) and (iii) are renumbered (i) and (ii), respectively.
(2) The words "one or more members of the Existing Ownership
Group" are replaced with the words "UAL Corporation and its
affiliates".
(e) The definition of "Continuing Director" in Section 5.01 is
amended by the deletion of clause (ii) and the redesignation of clause
(iii) as clause (ii).
(f) The definition of "Existing Ownership Group" in Section 5.01
is hereby deleted.
(g) The definition of "Restricted Payment" in Section 5.01 is
amended by the deletion of the following proviso:
; provided that repurchases by the Guarantor of shares
of its common stock subsequent to October 31, 1998 shall
not constitute Restricted Payments to the extent that
the aggregate amount expended for such repurchases
subsequent to October 31, 1998 does not exceed
$750,000,000.
(e) The phrase "Schedule III: in the definition of "Transaction
Documents" is changed to "Schedule II".
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/ Cheryl M. Ballenger
Title Executive Vice President,
Finance, CFO & Treasurer
Bank of Montreal, individually and as
Agent
By: /s/ Bruce A. Pietka
Title Director
Exhibit 10.2
CREDIT AGREEMENT
dated as of
April 13, 2000
among
Galileo International, Inc.,
The Banks Parties Hereto,
The Letter of Credit Issuing Banks Named Herein,
Credit Lyonnais New York Branch,
as Syndication Agent,
ABN AMRO Bank N.V.,
as Documentation Agent,
and
Bank of America, N.A.,
as Administrative Agent
________________________
Banc of America Securities LLC,
Lead Arranger and Book Manager
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
Section 1.01. Definitions 1
Section 1.02. Accounting Terms and Determinations 13
Section 1.03. Types of Borrowings 14
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend 14
Section 2.02. Notice of Committed Borrowing 15
Section 2.03. Money Market Borrowings 15
Section 2.04. Notice to Banks; Funding of Loans 19
Section 2.05. Notes 20
Section 2.06. Maturity of Loans 20
Section 2.07. Interest Rates 20
Section 2.08. Fees 23
Section 2.09. Optional Termination or Reduction of Commitments 23
Section 2.10. Method of Electing Interest Rates 24
Section 2.11. Mandatory Termination of Commitments 25
Section 2.12. Optional Prepayments 25
Section 2.13. General Provisions as to Payments 26
Section 2.14. Funding Losses 26
Section 2.15. Computation of Interest and Fees 27
Section 2.16. Regulation D Compensation 27
Section 2.17. Letters of Credit 27
ARTICLE 3
Conditions
Section 3.01. First Borrowing or Issuance 31
Section 3.02. Each Borrowing and Issuance 31
Section 3.03. Certain Borrowings and Issuances 32
ARTICLE 4
Representations and Warranties
Section 4.01. Corporate Existence and Power 32
Section 4.02. Corporate and Governmental Authorization; No Contravention 32
Section 4.03. Binding Effect 33
Section 4.04. Financial Information 33
Section 4.05. Litigation 33
Section 4.06. Compliance with ERISA 33
Section 4.07. Compliance with Laws 34
Section 4.08. Environmental Matters 34
Section 4.09. Taxes 34
Section 4.10. Subsidiaries 34
Section 4.11. Regulatory Restrictions on Borrowing 35
Section 4.12. Full Disclosure 35
ARTICLE 5
Covenants
Section 5.01. Information 35
Section 5.02. Payment of Obligations 38
Section 5.03. Maintenance of Property; Insurance 38
Section 5.04. Conduct of Business and Maintenance of Existence 38
Section 5.05. Compliance with Laws 38
Section 5.06. Inspection of Property, Books and Records 39
Section 5.07. Mergers and Sales of Assets 39
Section 5.08. Use of Proceeds 39
Section 5.09. Negative Pledge 39
Section 5.10. Interest Coverage Ratio 40
Section 5.11. Restricted Payments 40
Section 5.12. Transactions with Affiliates 41
Section 5.13. Debt of Subsidiaries 41
Section 5.14. Cash Flow Ratio 41
ARTICLE 6
Defaults
Section 6.01. Events of Default 42
Section 6.02. Notice of Default 44
Section 6.03. Cash Cover 44
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization 44
Section 7.02. Agent and Affiliates 44
Section 7.03. Action by Agent 44
Section 7.04. Consultation with Experts 45
Section 7.05. Liability of Agent 45
Section 7.06. Indemnification 45
Section 7.07. Credit Decision 45
Section 7.08. Successor Agent 46
Section 7.09. Agent's Fee; Arranger Fee 46
Section 7.10. Syndication Agent; Documentation Agency 46
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair 47
Section 8.02. Illegality 47
Section 8.03. Increased Cost and Reduced Return 48
Section 8.04. Taxes 49
Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans 51
Section 8.06. Substitution of Bank 52
ARTICLE 9
Miscellaneous
Section 9.01. Notices 52
Section 9.02. No Waivers 52
Section 9.03. Expenses; Indemnification 52
Section 9.04. Sharing of Set-offs 53
Section 9.05. Amendments and Waivers 53
Section 9.06. Successors and Assigns 54
Section 9.07. Collateral 56
Section 9.08. Governing Law; Submission to Jurisdiction 56
Section 9.09. Counterparts; Integration; Effectiveness 56
Section 9.10. WAIVER OF JURY TRIAL 56
Section 9.11. Confidentiality 57
COMMITMENT SCHEDULE
PRICING SCHEDULE A
PRICING SCHEDULE B
EXHIBIT A - Note
EXHIBIT B - Money Market Quote Request
EXHIBIT C - Invitation for Money Market Quotes
EXHIBIT D - Money Market Quote
EXHIBIT E - Opinion of Counsel for the Borrower
EXHIBIT F - Assignment and Assumption Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of April 13, 2000 is among GALILEO
INTERNATIONAL, INC., the BANKS from time to time parties hereto, the LETTER
OF CREDIT ISSUING BANKS from time to time parties hereto, CREDIT LYONNAIS NEW
YORK BRANCH, as syndication agent, ABN AMRO BANK N.V., as documentation
agent, and BANK OF AMERICA, N.A., as administrative agent (in such capacity,
the "Agent").
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to the Borrower) duly completed by such Bank.
"Affiliate" means, at any time, (i) any Person that at such time
beneficially owns, directly or indirectly, 25% or more of the Ordinary Voting
Stock, (ii) any Person that, at such time, directly, or indirectly through
one or more intermediaries, controls the Borrower or (iii) any Person (other
than the Borrower or a Subsidiary) which is controlled by or is under common
control with a Person described in clause (i) or (ii).
"Agent" means Bank of America, N.A. in its capacity as administrative
agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case of
its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Assignee" has the meaning set forth in subsection 9.06(c).
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to subsection 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 0.5% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest at the
Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice
of Interest Rate Election or the provisions of Article 8 or (ii) an overdue
amount which was a Base Rate Loan immediately before it became overdue.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer
Plan and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"Borrower" means Galileo International, Inc., a Delaware corporation,
and its successors.
"Borrowing" has the meaning set forth in Section 1.03.
"Cash Flow Ratio" means at any date the ratio of (i) Consolidated Debt
at such date to (ii) Consolidated EBITDA for the four consecutive fiscal
quarters of the Borrower and its Consolidated Subsidiaries ending on such
date.
"Change in Ownership or Control" shall be deemed to have occurred if,
without the prior written consent of the Required Banks, at any time on or
after the Effective Date: (i) any Person or group (within the meaning of Rule
13d-5 under the Securities Exchange Act of 1934, as amended), other than UAL
Corporation and its Affiliates, shall beneficially own, directly or
indirectly, a percentage of the Ordinary Voting Stock that is at such time in
excess of 25% of the Ordinary Voting Stock outstanding at such time; or (ii)
the Continuing Directors shall fail to constitute a majority of the Board of
Directors of the Borrower at such time.
"Closing Date" means the date on or after the Effective Date on which
the initial Borrowing or issuance of a Letter of Credit under this Agreement
occurs.
"Commitment" means (i) with respect to each Bank listed on the
signature pages hereof, the amount set forth opposite its name on the
Commitment Schedule attached hereto and (ii) with respect to each Assignee
which becomes a Bank pursuant to subsection 9.06(c), the amount of the
Commitment thereby assumed by it, in each case as such amount may be reduced
from time to time pursuant to Section 2.09 or subsection 9.06(c) or increased
from time to time pursuant to subsection 9.06(c).
"Committed Loan" means a loan made by a Bank pursuant to Section 2.01,
provided that, if any such loan or loans (or portions thereof) are combined
or subdivided pursuant to a Notice of Interest Rate Election, the term
"Committed Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated EBIT" means, for any fiscal period, Consolidated Net
Income (exclusive of the effect of any extraordinary gain (or loss)) for such
period plus, to the extent deducted in determining Consolidated Net Income
for such period, the aggregate amount of (i) Consolidated Interest Expense
and (ii) income tax expense.
"Consolidated EBITDA" means, for any fiscal period, Consolidated EBIT
for such period plus, to the extent deducted in determining Consolidated Net
Income for such period, the aggregate amount of depreciation, amortization
and other similar non-cash charges.
"Consolidated Interest Expense" means, for any period, the interest
expense of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
"Consolidated Net Income" means, for any fiscal period, the net income
of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis for such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower
in its consolidated financial statements if such statements were prepared as
of such date.
"Consolidated Tangible Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries less
their consolidated Intangible Assets, all determined as of such date. For
purposes of this definition, the term "Intangible Assets" means the amount
(to the extent reflected in determining such consolidated stockholders'
equity) of (i) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within twelve months after the acquisition of such business)
subsequent to December 31, 1996 in the book value of any asset owned by the
Borrower or a Consolidated Subsidiary, (ii) all investments in unconsolidated
Subsidiaries and all equity investments in Persons which are not Subsidiaries
and (iii) all unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses and other intangible assets.
"Continuing Director" means, at any date, an individual (i) who is a
member of the Board of Directors of the Borrower on the Effective Date or
(ii) who has been nominated to be a member of such Board of Directors by a
majority of the other Continuing Directors then in office.
"Control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all non-contingent obligations (and, for purposes of Section 5.09 and the
definitions of the terms "Material Debt" and "Material Financial
Obligations", all contingent obligations) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (vi) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person
and (vii) all Debt of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.
"Dollars" and the symbol "$" mean lawful money of the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City, Chicago and Charlotte
are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Agent.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 9.09.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other redemption thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 (b) or (c) of
the Internal Revenue Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, are treated as a single employer under Section 414
of the Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or (ii) an overdue amount which was a
Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Margin means a rate per annum determined in accordance
with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined pursuant to
subsection 2.07(b) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the interest
rate on Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Agreements" means (i) the Credit Agreement dated as of March
8, 2000 among the Borrower, various financial institutions and Bank of
America, N.A., as Agent, and (ii) the Second Amended and Restated Credit
Agreement dated as of July 21, 1999 among the Borrower, various financial
institutions, Morgan Guaranty Trust Company of New York, as Administrative
Agent, Bank of America, N.A. (then known as Bank of America National Trust
and Savings Association), as Syndication Agent, and Bank of Montreal, as
Documentation Agent.
"Facility Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor publication, "H.15(519)") on the preceding Domestic Business
Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant
day such rate is not so published on any such preceding Domestic Business
Day, the rate for such day will be the arithmetic mean as determined by the
Agent of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by
the Agent.
"Fixed Rate Loans" means Euro-Dollar Loans or Money Market Loans
(excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01) or any combination of the foregoing.
"Group of Loans" means at any time a group of Loans consisting of (i)
all Committed Loans which are Base Rate Loans at such time or (ii) all
Euro-Dollar Loans having the same Interest Period at such time, provided
that, if a Committed Loan of any particular Bank is converted to or made as a
Base Rate Loan pursuant to Article 8, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in if it had
not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the holder
of such Debt of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in subsection 9.03(b).
"Interest Coverage Ratio" means at any date the ratio of (i)
Consolidated EBIT for the four consecutive fiscal quarters of the Borrower
and its Consolidated Subsidiaries ending on such date to (ii) Consolidated
Interest Expense for such period.
"Interest Period" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice
of Borrowing or on the date specified in the applicable Notice of Interest
Rate Election and ending one, two, three or six months thereafter, as the
Borrower may elect in the applicable notice, provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall, subject to clause (c)
below, be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) the Borrower may not elect any Interest Period which would
end after the Termination Date; and
(2) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending 14, 45 or 75 days thereafter or such whole number of
months thereafter as the Borrower may elect in accordance with Section 2.03,
provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall, subject to clause (c)
below, be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) the Borrower may not elect any Interest Period which would
end after the Termination Date; and
(3) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 14
days) as the Borrower may elect in accordance with Section 2.03, provided
that:
(a) any Interest Period which would end on a day which is not a
Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) the Borrower may not elect any Interest Period which would
otherwise end after the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Issuing Bank" means Bank of America, N.A. or any other Bank that may
agree to issue letters of credit hereunder, in each case as issuer of letters
of credit hereunder.
"Letter of Credit" means a standby letter of credit to be issued
hereunder by an Issuing Bank.
"Letter of Credit Fee Rate" means a rate per annum determined in
accordance with the Pricing Schedule.
"Letter of Credit Liabilities" means, for any Bank and at any time, the
sum of (i) the amounts then owing to such Bank (including in its capacity as
an Issuing Bank) by the Borrower to reimburse it in respect of amounts drawn
under Letters of Credit and (ii) such Bank's ratable participation in the
aggregate amount then available for drawing under all Letters of Credit.
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan or a Money Market
Loan and "Loans" means Base Rate Loans, Euro-Dollar Loans or Money Market
Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in subsection
2.07(b).
"Material Adverse Effect" means any material adverse effect on (i) the
business, financial condition or results of operations of the Borrower and
its Consolidated Subsidiaries, considered as a whole, (ii) the ability of the
Borrower to perform its obligations under the terms of this Agreement and the
Notes or (iii) the rights and obligations of the Agent and the Banks under
this Agreement and the Notes.
"Material Debt' means Debt (other than (i) the Notes and (ii) Debt
owing to the Borrower or to a wholly-owned Subsidiary of the Borrower) of the
Borrower and/or one or more of its Subsidiaries, arising in one or more
related or unrelated transactions, in an aggregate principal or face amount
exceeding $10,000,000.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment or collateralization obligations in respect of
Derivatives Obligations (other than (i) the Notes and (ii) Debt or other
obligations owing to the Borrower or to a wholly-owned Subsidiary of the
Borrower) of the Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, exceeding in the aggregate
$25,000,000. For purposes of determining Material Financial Obligations at
any time, the "principal or face amount" of the obligations of the Borrower
or any Subsidiary in respect of any Derivative Obligations at such time shall
be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such
Derivative Obligations were terminated at such time.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $10,000,000.
"Money Market Absolute Rate" has the meaning set forth in subsection
2.03(d)(ii)(D)
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it
may hereafter designate as its Money Market Lending Office by notice to the
Borrower and the Agent, provided that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case all references
herein to the Money Market Lending Office of such Bank shall be deemed to
refer to either or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to
a LIBOR Auction (including such a loan bearing interest at the Base Rate
pursuant to Section 8.01).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in subsection
2.03(d)(ii)(C).
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group
during such five year period.
"Notes" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in
subsection 2.03(f)).
"Notice of Interest Rate Election" has the meaning set forth in Section
2.10.
"Notice of Issuance" has the meaning set forth in subsection 2.17(b).
"Ordinary Voting Stock" means common stock or other voting securities
of the Borrower (other than the Special Voting Preferred Stock).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in subsection 9.06(b).
"Payment Office" means the office or account of the Agent at or to
which payments hereunder are to be made, which shall be the office of the
Agent referred to in Section 9.01.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA Group.
"Pricing Schedule" means (i) Pricing Schedule A attached hereto and
(ii) on and after the date Borrower shall have received a rating on its
senior, unsecured long-term debt securities (without credit enhancement) by
S&P or Moody's, Pricing Schedule B attached hereto.
"Prime Rate" means the rate of interest publicly announced by Bank of
America, N.A. in Charlotte, North Carolina from time to time as its Prime
Rate.
"Quarterly Date" means each March 31, June 30, September 30 and
December 31.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing more than 50% of the aggregate unpaid
principal amount of the Loans.
"Restricted Payment" means (a) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely
in shares of its capital stock or rights to receive shares of its capital
stock) or (b) any payment on account of the purchase, redemption, retirement
or acquisition of (i) any shares of the Borrower's capital stock or (ii) any
option, warrant or other right to acquire shares of the Borrower's capital
stock (but not including payments of principal, premium (if any) or interest
made pursuant to the terms of convertible debt securities prior to
conversion).
"Revolving Credit Period" means the period from and including the
Effective Date to but not including the Termination Date.
"S&P" means Standard & Poor's Rating Services.
"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such
Person; unless otherwise specified, the term "Subsidiary" means a Subsidiary
of the Borrower.
"Termination Date" means July 24, 2001, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed
by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair
market value of all Plan assets allocable to such liabilities under Title IV
of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Utilization Fee Rate" means a rate per annum determined in accordance
with the Pricing Schedule.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred to by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks, provided that, if the Borrower notifies
the Agent that the Borrower wishes to amend any covenant in Article 5 to
eliminate the effect of any change in generally accepted accounting
principles on the operation of such covenant (or if the Agent notifies the
Borrower that the Required Banks wish to amend Article 5 for such purpose),
then the Borrower's compliance with such covenant shall be determined on the
basis of generally accepted accounting principles in effect immediately
before the relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant is amended
in a manner satisfactory to the Borrower and the Required Banks.
Section 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to the Borrower pursuant
to Article 2 on the same date, all of which Loans are of the same type
(subject to Article 8) and, except in the case of Base Rate Loans, have the
same initial Interest Period. Borrowings are classified for purposes of this
Agreement either by reference to the pricing of Loans comprising such
Borrowing (e.g., a "Fixed Rate Borrowing" is a Euro-Dollar Borrowing or a
Money Market Borrowing (excluding any such Borrowing consisting of Money
Market LIBOR Loans bearing interest at the Base Rate pursuant to Section
8.01), and a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar
Loans) or by reference to the provisions of Article 2 under which
participation therein is determined (i.e., a "Committed Borrowing" is a
Borrowing under Section 2.01 in which all Banks participate in proportion to
their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of
their bids in accordance therewith).
ARTICLE 2
The Credits
Section 2.01. Commitments to Lend. During the Revolving Credit
Period, each Bank severally agrees, on the terms and conditions set forth in
this Agreement, to make loans to the Borrower pursuant to this Section from
time to time in amounts such that the aggregate principal amount of Committed
Loans by such Bank and Letter of Credit Liabilities of such Bank at any one
time outstanding shall not exceed the amount of its Commitment. Each
Borrowing under this Section shall be in Dollars and be in an aggregate
principal amount of $5,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be in the aggregate amount available in
accordance with Section 3.02 and 3.03) and shall be made from the several
Banks ratably in proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this Section, prepay Loans to
the extent permitted by Section 2.12 and reborrow at any time during the
Revolving Credit Period under this Section.
Section 2.02. Notice of Committed Borrowing. The Borrower shall give
the Agent notice (a "Notice of Committed Borrowing") not later than 10:30
A.M. (New York City time) on (x) the date of each Base Rate Borrowing and (y)
the third Euro-Dollar Business Day before each Euro-Dollar Borrowing,
specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar Business
Day in the case of a Euro-Dollar Borrowing;
(b) the aggregate amount of such Borrowing;
(c) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or a Euro-Dollar Rate; and
(d) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
Section 2.03. Money Market Borrowings. (a) The Money Market Option.
In addition to Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks during the Revolving
Credit Period to make offers to make Money Market Loans to the Borrower in
Dollars. The Banks may, but shall have no obligation to, make such offers and
the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall
transmit to the Agent by facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received not later
than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business
Day prior to the date of Borrowing proposed therein, in the case of a LIBOR
Auction or (y) the Domestic Business Day next preceding the date of Borrowing
proposed therein, in the case of an Absolute Rate Auction (or, in either
case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date
of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be
a Euro-Dollar Business Day in the case of a LIBOR Auction or a
Domestic Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of the term
"Interest Period", and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market Absolute
Rate.
The Borrower may request offers to make Money Market Loans for more
than one Interest Period in a single Money Market Quote Request. No Money
Market Quote Request shall be given within five Euro-Dollar Business Days (or
such other number of days as the Borrower and the Agent may agree) of any
other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt
of a Money Market Quote Request, the Agent shall send to the Banks by
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the
Money Market Loans to which such Money Market Quote Request relates in
accordance with this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make
Money Market Loans in response to any Invitation for Money Market Quotes.
Each Money Market Quote must comply with the requirements of this subsection
(d) and must be submitted to the Agent by facsimile transmission at its
offices specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M.
(New York City time) on the fourth Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction, or (y) 9:30 A.M.
(New York City time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective), provided that Money Market Quotes submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Agent or such affiliate notifies the Borrower of
the terms of the offer or offers contained therein not later than (x) one
hour prior to the deadline for the other Banks, in the case of a LIBOR
Auction or (y) 15 minutes prior to the deadline for the other Banks, in the
case of an Absolute Rate Auction. Subject to Articles 3 and 6, any Money
Market Quote so made shall be irrevocable except with the written consent of
the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form
of Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing;
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w)
may be greater than or less than the Commitment of the quoting
Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000,
(y) may not exceed the principal amount of Money Market Loans for
which offers were requested and (z) may be subject to an
aggregate limitation as to the principal amount of Money Market
Loans for which offers being made by such quoting Bank may be
accepted;
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th of
1%) to be added to or subtracted from such base rate;
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan; and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii) above;
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
2.03(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the Borrower
of the terms (x) of any Money Market Quote submitted by a Bank that is in
accordance with subsection 2.03(d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted solely to
correct a manifest error in such former Money Market Quote. The Agent's
notice to the Borrower shall specify (A) the aggregate principal amount of
Money Market Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request, (B) the
respective principal amounts and Money Market Margins or Money Market
Absolute Rates, as the case may be, so offered and (C) if applicable,
limitations on the aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date
of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective), the Borrower shall
notify the Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to subsection 2.03(e). In the case of acceptance,
such notice (a "Notice of Money Market Borrowing") shall specify the
aggregate principal amount of offers for each Interest Period that are
accepted. The Borrower may accept any Money Market Quote in whole or in part,
provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the principal amount of each Money Market Borrowing must
be $5,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be; and
(iv) the Borrower may not accept any offer that is described in
subsection 2.03(d)(iii) or that otherwise fails to comply in any
material respect with the requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks with
the same Money Market Margins or Money Market Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted
shall be allocated by the Agent among such Banks as nearly as possible (in
multiples of $1,000,000, as the Agent may deem appropriate) in proportion to
the aggregate principal amounts of such offers. Determinations by the Agent
of the amounts of Money Market Loans shall be conclusive in the absence of
manifest error.
Section 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt
of a Notice of Borrowing, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's share (if any) of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Bank participating therein shall make available its
share of such Borrowing, in Federal or other immediately available funds, to
the Agent at the Payment Office. Unless the Agent determines that any
applicable condition specified in Article 3 has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower at
the Payment Office.
(c) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection 2.04(b) and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent that such Bank shall not have so made such share
available to the Agent, such Bank and the Borrower severally agree to repay
to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the
Federal Funds Rate. If such Bank shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Loan included in
such Borrowing for purposes of this Agreement.
Section 2.05. Notes. (a) The Loans of each Bank shall be evidenced
by a single Note payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent, request
that its Loans of a particular type be evidenced by a separate Note in an
amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto with
appropriate modifications to reflect the fact that it evidences solely Loans
of the relevant type. Each reference in this Agreement to the "Note" of such
Bank shall be deemed to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to subsection 3.01(a),
the Agent shall forward such Note to such Bank. Each Bank shall record the
date, amount and type of each Loan made by it and the date and amount of each
payment of principal made by the Borrower with respect thereto, and may, if
such Bank so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding, provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by
the Borrower to so endorse its Note and to attach to and make a part of its
Note a continuation of any such schedule as and when required.
Section 2.06. Maturity of Loans. (a) Each Committed Loan shall
mature, and the principal amount thereof shall be due and payable, together
with accrued interest thereon, on the Termination Date.
(b) Each Money Market Loan included in any Money Market Borrowing
shall mature, and the principal amount thereof shall be due and payable,
together with accrued interest thereon, on the last day of the Interest
Period applicable to such Borrowing.
Section 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Loan is made to but excluding the date on which such
Loan becomes due, at a rate per annum equal to the Base Rate for such day.
Such interest shall be payable quarterly in arrears on each Quarterly Date
and, with respect to the principal amount of any Base Rate Loan converted to
a Euro-Dollar Loan, on each date a Base Rate Loan is so converted. At the
request of the Required Banks if (and for so long as) an Event of Default
exists, any Base Rate Loan (and to the extent permitted by law, any overdue
interest thereon) shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest Period
means
(i) the rate per annum (carried out to the fifth decimal place)
equal to the rate determined by the Agent to be the offered rate that
appears on the page of the Telerate Screen that displays an average
British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Euro-Dollar Business Days prior to the
first day of such Interest Period, or
(ii) If the rate referenced in the preceding subsection (i) does
not appear on such page or service or such page or service shall cease
to be available, the rate per annum (carried out to the fifth decimal
place) equal to the rate determined by the Agent to be the offered rate
on such other page or other service that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars
(for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Euro-Dollar Business Days prior to the
first day of such Interest Period, or
(iii) If the rates referenced in the preceding subsections (i)
and (ii) are not available, the rate per annum determined by the Agent
as the rate of interest at which Dollar deposits (for delivery on the
first day of such Interest Period) in same day funds in the approximate
amount of the applicable Euro-Dollar Loan of Bank of America, N.A. (or,
in the case of a Money Market LIBOR Borrowing in which Bank of America,
N.A. is not participating, the approximate amount of the largest loan
of any Bank included in such Borrowing) and with a term equivalent to
such Interest Period would be offered by the London Branch of Bank of
America, N.A. to major banks in the offshore Dollar market at their
request at approximately 11:00 a.m. (London time) two Euro-Dollar
Business Days prior to the first day of such Interest Period.
(c) At the request of the Required Banks if (and for so long as) an
Event of Default exists, all Euro-Dollar Loans (and to the extent permitted
by law, any overdue interest thereon) shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the higher of (i) the
sum of 2% plus the Euro-Dollar Margin for such day plus the quotient obtained
(rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing
(x) the rate per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period
of time not longer than three months as the Agent may select) deposits in
Dollars in an amount reasonably selected by the Agent are offered to Bank of
America, N.A. in the London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause 8.01(a) or 8.01(b)
shall exist, at a rate per annum equal to the sum of 2% plus the rate
applicable to Base Rate Loans for such day) and (ii) the sum of 2% plus the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Loan at the date such payment was due.
(d) Subject to Section 8.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance
with subsection 2.07(b) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin
quoted by the Bank making such Loan in accordance with Section 2.03. Each
Money Market Absolute Rate Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a
rate per annum equal to the Money Market Absolute Rate quoted by the Bank
making such Loan in accordance with Section 2.03. Such interest shall be
payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of three months
after the first day thereof. Any overdue principal of or interest on any
Money Market Loan shall bear interest, payable on demand, for each day until
paid, at a rate per annum equal to the sum of 2% plus the Base Rate for such
day.
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
Section 2.08. Fees. (a) The Borrower shall pay to the Agent for the
account of the Banks ratably a facility fee at the Facility Fee Rate
(determined daily in accordance with the Pricing Schedule). Such facility fee
shall accrue (i) from and including the Effective Date to but excluding the
date of termination of the Commitments in their entirety, on the daily
aggregate amount of the Commitments (whether used or unused) and (ii) from
and including such date of termination to but excluding the date the Loans
and Letter of Credit Liabilities shall be repaid in their entirety, on the
daily aggregate outstanding principal amount of the Loans and Letter of
Credit Liabilities.
(b) The Borrower shall pay to the Agent (i) for the account of the
Banks ratably a letter of credit fee accruing daily on the aggregate amount
then available for drawing under all Letters of Credit at the Letter of
Credit Fee Rate (determined daily in accordance with the Pricing Schedule)
and (ii) for the account of each Issuing Bank a letter of credit fronting fee
accruing daily on the aggregate amount then available for drawing under all
Letters of Credit issued by such Issuing Bank at a rate per annum mutually
agreed from time to time by the Borrower and such Issuing Bank.
(c) For any date on which (i) Pricing Schedule B is the Pricing
Schedule and (ii) the aggregate outstanding amount of all Loans plus the
aggregate amount of all Letter of Credit Liabilities (the "Total
Outstandings") exceeds 50% of the aggregate amount of the Commitments, the
Borrower shall pay to the Agent for the account of the Banks ratably a
utilization fee at the Utilization Fee Rate (determined daily in accordance
with the Pricing Schedule) on the Total Outstandings. Such utilization fee
shall accrue, whenever applicable, from and including the Effective Date to
but excluding the date the Loans and Letter of Credit Liabilities shall be
repaid in their entirety.
(d) Accrued fees under this Section shall be payable quarterly in
arrears on each Quarterly Date and on the date of termination of the
Commitments in their entirety (and, if later, the date the Loans and Letter
of Credit Liabilities shall be repaid in their entirety).
Section 2.09. Optional Termination or Reduction of Commitments.
During the Revolving Credit Period, the Borrower may, upon at least three
Domestic Business Days' notice to the Agent, (i) terminate the Commitments at
any time, if no Loans or Letter of Credit Liabilities are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or a larger multiple of $1,000,000, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans and Letter of Credit Liabilities.
Section 2.10. Method of Electing Interest Rates. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the
type of rate specified by the Borrower in the applicable Notice of Committed
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject in
each case to the provisions of Article 8 and the last sentence of this
subsection (a)), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar
Business Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Base Rate Loans or elect to continue such
Loans as Euro-Dollar Loans for an additional Interest Period, subject
to Section 2.14 in the case of any such conversion or continuation
effective on any day other than the last day of the then current
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a) "Notice of
Interest Rate Election") to the Agent not later than 10:30 A.M. (New York
City time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Group of Loans, provided that (i)
such portion is allocated ratably among the Loans comprising such Group and
(ii) the portion to which such Notice applies, and the remaining portion to
which it does not apply, are each $5,000,000 or any larger multiple of
$1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the
applicable clause of subsection 2.10(a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if the Loans being converted are
to be Fixed Rate Loans, the duration of the next succeeding Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of the term "Interest Period".
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection 2.10(a) above, the Agent shall promptly
notify each Bank of the contents thereof and such notice shall not thereafter
be revocable by the Borrower. If no Notice of Interest Rate Election is
timely received prior to the end of an Interest Period for any Group of
Loans, the Borrower shall be deemed to have elected that such Group of Loans
be converted to Base Rate Loans as of the last day of such Interest Period.
(d) An election by the Borrower to change or continue the rate of
interest applicable to any Group of Loans pursuant to this Section shall not
constitute a "Borrowing" subject to the provisions of Section 3.02.
Section 2.11. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable on such
date.
Section 2.12. Optional Prepayments. (a) Subject in the case of any
Fixed Rate Loan to Section 2.14, the Borrower may, upon at least one Domestic
Business Day's notice to the Agent, prepay any Group of Base Rate Loans (or
any Money Market Borrowing bearing interest at the Base Rate pursuant to
Section 8.01) or upon at least three Euro-Dollar Business Days' notice to the
Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any
time, or from time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the Loans of the
several Banks included in such Group (or Borrowing).
(b) Except as provided in subsection 2.12(a) above, the Borrower may
not prepay all or any portion of the principal amount of any Money Market
Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
Section 2.13. General Provisions as to Payments. (a) The Borrower
shall make each payment of principal of, and interest on, the Loans and of
fees hereunder, not later than 12:00 Noon (New York City time) on the date
when due, in Federal or other immediately available funds, to the Agent at
the Payment Office. The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for the account of
the Banks. Whenever any payment of principal of, or interest on, the Base
Rate Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on,
the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent that the Borrower shall not have so made such payment, each
Bank shall repay to the Agent forthwith on demand such amount distributed to
such Bank together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate.
Section 2.14. Funding Losses. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted (pursuant to Article 2, 6 or 8 otherwise) on any day other than the
last day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to subsection 2.07(c), or if the Borrower
fails to borrow, prepay, convert or continue any Fixed Rate Loans after
notice has been given to any Bank in accordance with Section 2.04, subsection
2.10(c) or 2.12(c), the Borrower shall reimburse each Bank within 15 Domestic
Business Days after demand for any resulting loss or expense incurred by it
(or by an existing or prospective Participant in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties, but excluding loss of margin for the period
after any such payment or conversion or failure to borrow, prepay, convert or
continue, provided that such Bank shall have delivered to the Borrower and
the Agent a certificate as to the amount of such loss or expense, which
certificate shall set forth the method of determining such loss or expense in
reasonable detail and shall be conclusive in the absence of manifest error.
Section 2.15. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
Section 2.16. Regulation D Compensation. Each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of
such Bank at a rate per annum determined by such Bank up to but not exceeding
the excess of (i) (A) the applicable London Interbank Offered Rate divided by
(B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable
London Interbank Offered Rate. Any Bank wishing to require payment of such
additional interest (x) shall so notify the Borrower and the Agent, in which
case such additional interest on the Euro-Dollar Loans of such Bank shall be
payable to such Bank at the place indicated in such notice with respect to
each Interest Period commencing at least three Euro-Dollar Business Days
after the giving of such notice and (y) shall notify the Borrower at least
five Euro-Dollar Business Days prior to each date on which interest is
payable on the Euro-Dollar Loans of the amount then due it under this Section.
Section 2.17. Letters of Credit. (a) Subject to the terms and
conditions hereof, each Issuing Bank agrees to issue Letters of Credit
hereunder denominated in Dollars from time to time before the fifth Domestic
Business Day prior to the Termination Date upon the request of the Borrower;
provided that, immediately after each Letter of Credit is issued, (i) the
aggregate amount of the Letter of Credit Liabilities shall not exceed
$20,000,000 and (ii) the aggregate amount of the Letter of Credit Liabilities
plus the aggregate outstanding amount of all Loans shall not exceed the
aggregate amount of the Commitments. Upon the date of issuance by an Issuing
Bank of a Letter of Credit, the Issuing Bank shall be deemed, without further
action by any party hereto, to have sold to each Bank, and each Bank shall be
deemed, without further action by any party hereto, to have purchased from
the Issuing Bank, a participation in such Letter of Credit and the related
Letter of Credit Liabilities in the proportion their respective Commitments
bear to the aggregate Commitments.
(b) The Borrower shall give the Issuing Bank notice at least three
Domestic Business Days prior to the requested issuance of a Letter of Credit
(or such lesser notice period as shall be acceptable to the Issuing Bank)
specifying the date such Letter of Credit is to be issued, and describing the
terms of such Letter of Credit and the nature of the transactions to be
supported thereby (such notice, including any such notice given in connection
with the extension of a Letter of Credit, a "Notice of Issuance"). Upon
receipt of a Notice of Issuance, the Issuing Bank shall promptly notify the
Agent, and the Agent shall promptly notify each Bank of the contents thereof
and of the amount of such Bank's participation in such Letter of Credit. The
issuance by the Issuing Bank of each Letter of Credit shall, in addition to
the conditions precedent set forth in Article 3, be subject to the conditions
precedent that such Letter of Credit shall be in such form and contain such
terms as shall be reasonably satisfactory to the Issuing Bank and that the
Borrower shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as the Issuing Bank shall have
reasonably requested. The Borrower shall also pay to the Issuing Bank for its
own account issuance, drawing, amendment and extension charges in the amounts
and at the times as agreed between the Borrower and the Issuing Bank. The
extension or renewal of any Letter of Credit shall be deemed to be an
issuance of such Letter of Credit, and if any Letter of Credit contains a
provision pursuant to which it is deemed to be extended unless notice of
termination is given by the Issuing Bank, the Issuing Bank shall timely give
such notice of termination unless it has theretofore timely received a Notice
of Issuance and the other conditions to issuance of a Letter of Credit have
also theretofore been met with respect to such extension. No Letter of Credit
shall have a term of more than two years, provided that a Letter of Credit
may contain a provision pursuant to which it is deemed to be extended on an
annual basis unless notice of termination is given by the Issuing Bank, and
provided further that no Letter of Credit shall have a term extending or be
so extendible beyond the date which is five Domestic Business Days prior to
the Termination Date.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
notice of a drawing under such Letter of Credit, the Issuing Bank shall
notify the Agent and the Agent shall promptly notify the Borrower and each
other Bank as to the amount to be paid as a result of such demand or drawing
and the payment date. The Borrower shall be irrevocably and unconditionally
obligated within three Domestic Business Days to reimburse the Issuing Bank
for any amounts paid by the Issuing Bank upon any drawing under any Letter of
Credit, without presentment, demand, protest or other formalities of any
kind. All such amounts paid by the Issuing Bank and remaining unpaid by the
Borrower (even if paid by the Banks as required below) shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
rate applicable to Base Rate Loans for such day plus, for each such day more
than three Domestic Business Days after the related date of drawing, 2% per
annum. In addition, each Bank will pay to the Agent, for the account of the
Issuing Bank, immediately upon the Issuing Bank's demand at any time during
the period commencing after such drawing until reimbursement therefor in full
by the Borrower, an amount equal to such Bank's ratable share of such drawing
(in proportion to its participation therein), together with interest on such
amount for each day from the date of the Issuing Bank's demand for such
payment (or, if such demand is made after 12:00 Noon (New York City time) on
such date, from the next succeeding Domestic Business Day) to the date of
payment by such Bank of such amount at the Federal Funds Rate. The Issuing
Bank will pay to each Bank ratably all amounts received from the Borrower for
application in payment of its reimbursement obligations in respect of any
Letter of Credit and any interest thereon, but only to the extent (and, in
the case of interest, for the time period after which) such Bank has made
payment to the Issuing Bank in respect of such Letter of Credit pursuant
hereto.
(d) The obligations of the Borrower and each Bank under subsection
2.17(c) above shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any Letter of Credit or any document related hereto or thereto;
(ii) any amendment or waiver of or any consent to departure from
all or any of the provisions of this Agreement or any Letter of Credit or any
document related hereto or thereto;
(iii) the use which may be made of the Letter of Credit by,
or any acts or omission of, a beneficiary of a Letter of Credit (or any
Person for whom the beneficiary may be acting);
(iv) the existence of any claim, set-off, defense or other
rights that the Borrower may have at any time against a beneficiary of a
Letter of Credit (or any Person for whom the beneficiary may be acting), the
Banks (including the Issuing Bank) or any other Person, whether in connection
with this Agreement or any Letter of Credit or any document related hereto or
thereto or any unrelated transaction;
(v) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever;
(vi) payment under a Letter of Credit against presentation to
the Issuing Bank of a draft or certificate that does not comply with the
terms of the Letter of Credit; or
(vii) any other act or omission to act or delay of any kind
by any Bank (including the Issuing Bank), the Agent or any other Person or
any other event or circumstance whatsoever that might, but for the provisions
of this subsection (vii), constitute a legal or equitable discharge of the
Borrower's or the Bank's obligations hereunder.
(e) The Borrower hereby indemnifies and holds harmless each Bank
(including each Issuing Bank) and the Agent from and against any and all
claims, damages, losses, liabilities, costs or expenses which such Bank or
the Agent may incur (including, without limitation, any claims, damages,
losses, liabilities, costs or expenses which the Issuing Bank may incur by
reason of or in connection with the failure of any other Bank to fulfill or
comply with its obligations to such Issuing Bank hereunder (but nothing
herein contained shall affect any rights the Borrower may have against such
defaulting Bank)), and none of the Banks (including an Issuing Bank) nor the
Agent nor any of their officers or directors or employees or agents shall be
liable or responsible, by reason of or in connection with the execution and
delivery or transfer of or payment or failure to pay under any Letter of
Credit, including, without limitation, any of the circumstances enumerated in
subsection 2.17(d) above, as well as (i) any error, omission, interruption or
delay in transmission or delivery of any messages, by mail, cable, telegraph
or otherwise, (ii) any error in interpretation of technical terms, (iii) any
loss or delay in the transmission of any document required in order to make a
drawing under a Letter of Credit, (iv) any consequences arising from causes
beyond the control of the Issuing Bank, including, without limitation, any
government acts, or any other circumstances whatsoever in making or failing
to make payment under such Letter of Credit, provided that the Borrower shall
not be required to indemnify the Issuing Bank for any claims, damages,
losses, liabilities, costs or expenses, and the Borrower shall have a claim
for direct (but not consequential) damages, losses, liabilities, costs and
expenses suffered by it, to the extent found by a court of competent
jurisdiction to have been caused by (x) the willful misconduct or gross
negligence of the Issuing Bank in determining whether a request presented
under any Letter of Credit complied on its face with the terms of such Letter
of Credit or (y) the Issuing Bank's failure to pay under any Letter of Credit
after the presentation to it of a request strictly complying with the terms
and conditions of the Letter of Credit. Nothing in this subsection (e) is
intended to limit the obligations of the Borrower under any other provision
of this Agreement. To the extent the Borrower does not indemnify an Issuing
Bank as required by this subsection, the Banks agree to do so ratably in
accordance with their Commitments.
ARTICLE 3
Conditions
The obligation of any Bank to make a Loan on the occasion of any
Borrowing or of an Issuing Bank to issue a Letter of Credit upon request
therefor is subject to the satisfaction of the following conditions:
Section 3.01. First Borrowing or Issuance. In the case of the first
Borrowing or issuance of a Letter of Credit, receipt by the Agent of (i)
evidence that all amounts payable under the Existing Agreements have been
paid in full by the Borrower (or will be paid concurrently with the
effectiveness hereof) and all commitments under the Existing Agreements have
been terminated (or will be terminated concurrently with the effectiveness
hereof) and (ii) the following documents, each dated the Closing Date unless
otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date complying with the provisions of Section 2.05;
(b) an opinion of Anthony C. Swanagan, Senior Vice President, General
Counsel and Secretary of the Borrower, substantially in the form of Exhibit E
hereto and covering such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request;
(c) all documents the Agent may reasonably request relating to the
existence of the Borrower, the authority for and the validity of this
Agreement and the Notes, and any other matters relevant hereto, all in form
and substance satisfactory to the Agent.
Section 3.02. Each Borrowing and Issuance. In the case of each
Borrowing or issuance of a Letter of Credit (including the first such event):
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02 or 2.03 or a Notice of Issuance as required by Section 2.17, as
the case may be;
(b) the fact that, immediately after such Borrowing or issuance, the
sum of the aggregate principal amount of the outstanding Loans and the
aggregate Letter of Credit Liabilities will not exceed the aggregate amount
of the Commitments;
(c) the fact that, immediately before and after such Borrowing or
issuance, no Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement (except subsection 4.04(b)) shall be true and
correct on and as of the date of such Borrowing or issuance.
Each Borrowing and issuance of a Letter of Credit hereunder shall be deemed
to be a representation and warranty by the Borrower on the date thereof as to
the facts specified in subsections 3.02(b), 3.02(c) and 3.02(d).
Section 3.03. Certain Borrowings and Issuances. In the case of any
Borrowing or any issuance of a Letter of Credit (including the first such
event) that would cause the aggregate principal amount of all Loans and
Letter of Credit Liabilities at any time outstanding to exceed $450,000,000,
the Agent shall have received:
(a) certified copy of resolutions of the Board of Directors of the
Borrower authorizing the aggregate principal amount of all Loans and Letter
of Credit Liabilities to be $500,000,000 or more; and
(b) an opinion of Anthony C. Swanagan, Senior Vice President, General
Counsel and Secretary of the Borrower, confirming that the Board of Directors
of the Borrower has authorized the aggregate principal amount of all Loans
and Letter of Credit Liabilities to be $500,000,000 or more and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request.
ARTICLE 4
Representations and Warranties
The Borrower represents and warrants that:
Section 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
Section 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of
this Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, require no action by
or in respect of, or filing with, any governmental body, agency or official
(except such filings by the Borrower as may be required by the reporting
requirements of the Securities Exchange Act of 1934, as amended) and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower
or of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or any of its Subsidiaries or result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
Section 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower and each Note, when executed and delivered
in accordance with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer or similar laws affecting creditors' rights generally and by general
principles of equity.
Section 4.04. Financial Information. (a) The consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of December 31,
1999 and the related consolidated statements of income and cash flows for the
fiscal year then ended, reported on by KPMG Peat Marwick LLP, copies of which
have been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position
of the Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) Since December 31, 1999 there has been no material adverse change
in the business, financial position or results of operations of the Borrower
and its Consolidated Subsidiaries, considered as a whole.
Section 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could reasonably be
expected to result in a Material Adverse Effect or which in any manner draws
into question the validity or enforceability of this Agreement or the Notes.
Section 4.06. Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and is in compliance
in all material respects with the presently applicable provisions of ERISA
and the Internal Revenue Code with respect to each Plan, except where such
failure to fulfill its obligations or be in compliance could not reasonably
be expected to result in a Material Adverse Effect. No member of the ERISA
Group has (i) sought a waiver of the minimum funding standard under Section
412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make
any contribution or payment to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could reasonably be expected to result in
the imposition of a Lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred any liability under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA, except where such failures to make contributions or
payments, such impositions of Liens, such postings of bonds or such
incurrence of liability, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section 4.07. Compliance with Laws. The Borrower and its Subsidiaries
are in compliance with all applicable statutes, ordinances, rules and
regulations, except where a lack of compliance therewith could not reasonably
be expected to result in a Material Adverse Effect.
Section 4.08. Environmental Matters. On the basis of its knowledge of
the Environmental Laws and the applicability of the Environmental Laws to the
business, operations and properties of the Borrower and its Subsidiaries,
including, without limitation, (i) any requirement under the Environmental
Laws that the Borrower and its Subsidiaries obtain operational permits, (ii)
the possibility of liability in connection with the off-site disposal of
wastes or Hazardous Substances and (iii) any liability to third parties,
including employees, arising from the use, generation, treatment, storage or
disposal of Hazardous Substances by the Borrower or its Subsidiaries, the
Borrower has reasonably concluded that any liabilities and costs that the
Borrower and its Subsidiaries are reasonably likely to incur in connection
with any applicable Environmental Laws are unlikely to result in a Material
Adverse Effect.
Section 4.09. Taxes. The Borrower and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant
to such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of taxes or other governmental charges are,
in the opinion of the Borrower, adequate.
Section 4.10. Subsidiaries. Each of the Borrower's Subsidiaries is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and has all
requisite powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except where
the lack of such requisite powers, licenses, authorizations, consents or
approvals, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect.
Section 4.11. Regulatory Restrictions on Borrowing. The Borrower is
not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or otherwise subject to any
regulatory scheme which restricts its ability to incur debt.
Section 4.12. Full Disclosure. All information (other than any
estimates and projections) heretofore furnished by the Borrower to the Agent
or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information hereafter
furnished by the Borrower to the Agent or any Bank will be, when taken as a
whole, true and accurate in all material respects on the date as of which
such information is stated or certified. All estimates and projections
heretofore furnished by the Borrower to the Agent or any Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby
were, and all such estimates and projections hereafter furnished by the
Borrower to the Agent or any Bank will be, prepared by the Borrower in good
faith utilizing the best information available to the Borrower at the time of
preparation thereof. The Borrower has disclosed to the Banks in writing any
and all facts which materially and adversely affect or may affect (to the
extent the Borrower can now reasonably foresee) the business, operations or
financial condition of the Borrower and its Consolidated Subsidiaries, taken
as a whole, or the ability of the Borrower to perform its obligations under
this Agreement.
ARTICLE 5
Covenants
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note or any Letter of Credit
Liability remains unpaid:
Section 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) within 100 days after the end of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
reported on (without a "going concern"or like qualification or exception and
without any qualification or exception as to the scope of such audit) by KPMG
Peat Marwick LLP or other independent public accountants of nationally
recognized standing;
(b) within 50 days after the end of each of the first three quarters
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such quarter and
the related consolidated statements of income and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end of such
quarter, setting forth in the case of such statements of income and cash
flows, in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation in
all material respects, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting officer of
the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish (x)
whether the Borrower was in compliance with the requirements of Sections 5.10
and 5.14 on the date of such financial statements and (y) for so long as
Pricing Schedule A is the Pricing Schedule, the Applicable Cash Flow Ratio
(as such term is defined in Pricing Schedule A) derived from such financial
statements and (ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements as to
whether anything has come to their attention to cause them to believe that
any Default existed on the date of such statements (which certificate may be
limited to the extent required by accounting rules or guidelines);
(e) within five Domestic Business Days after any officer of the
Borrower obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Borrower shall have filed with the Securities
and Exchange Commission;
(h) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Material Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Material Plan has given or is
required to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC; (ii)
receives notice of complete or partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate,
impose material liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Material Plan under Section 4041(c)
of ERISA, a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which
has resulted or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial officer or the
chief accounting officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of the
ERISA Group is required or proposes to take;
(i) promptly from time to time if Pricing Schedule B is the Pricing
Schedule, notice of any change in the rating of the Borrower's senior,
unsecured long-term debt securities (without credit enhancement) by S&P or
Moody's;
(j) promptly after any officer of the Borrower obtains knowledge
thereof, notice of the commencement of, or any material development in, any
litigation, arbitration or other proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws, which
has had or is reasonably likely to have a Material Adverse Effect; and
(k) from time to time such additional information regarding the
financial position or business of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may reasonably request.
Section 5.02. Payment of Obligations. The Borrower will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity (after giving effect to any applicable grace period), all their
respective material obligations and liabilities (including, without
limitation, tax liabilities and claims of materialmen, warehousemen and the
like which if unpaid might by law give rise to a Lien), except where the same
may be contested in good faith by appropriate proceedings, and will maintain,
and will cause each Subsidiary to maintain, in accordance with generally
accepted accounting principles, appropriate reserves for the accrual of any
of the same.
Section 5.03. Maintenance of Property; Insurance. (a) The Borrower
will keep, and will cause each Subsidiary to keep, all property and equipment
useful and necessary in its business in good working order and condition to
the extent required by sound business practices, ordinary wear and tear
excepted.
(b) The Borrower will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Borrower or in such Subsidiary's own
name) with financially sound and responsible insurance companies, insurance
on all its respective properties and equipment in at least such amounts,
against at least such risks and with such risk retention as are usually
maintained, insured against or retained, as the case may be, in the same
general area by companies of established repute engaged in the same or a
similar business; and will furnish to the Banks, upon request from the Agent,
information presented in reasonable detail as to the insurance so carried.
Section 5.04. Conduct of Business and Maintenance of Existence. The
Borrower will preserve, renew and keep in full force and effect, and will
cause each Subsidiary to preserve, renew and keep in full force and effect
its respective existence and its respective rights, privileges and franchises
material to the normal conduct of business, provided that nothing in this
Section shall prohibit (i) the merger of a Subsidiary into the Borrower or
the merger or consolidation of a Subsidiary with or into another Person if
the entity surviving such consolidation or merger is a Subsidiary and if, in
each case, after giving effect thereto, no Default shall have occurred and be
continuing, (ii) any transaction not prohibited by Section 5.07 or (iii) the
termination of the existence of any Subsidiary if the Borrower in good faith
determines that such termination is not materially disadvantageous to the
Banks.
Section 5.05. Compliance with Laws. The Borrower will comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and
the rules and regulations thereunder) except where either the necessity of
compliance therewith is contested in good faith by appropriate proceedings or
any failure to so comply, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section 5.06. Inspection of Property, Books and Records. The Borrower
will keep, and will cause each Subsidiary to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Subsidiary to permit, representatives of any Bank at such
Bank's expense to visit and inspect any of its respective properties, to
examine and make abstracts from any of its respective books and records and
to discuss its respective affairs, finances and accounts with its respective
officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired.
Section 5.07. Mergers and Sales of Assets. The Borrower will not (i)
consolidate or merge with or into any other Person, (ii) sell, lease or
otherwise transfer, directly or indirectly (including any such transfer by
way of merger or consolidation), all or substantially all the assets of the
Borrower and its Subsidiaries, taken as a whole, to any other Person or
Persons, provided that the Borrower may merge with another Person if (x) the
Borrower is the corporation surviving such merger and (y) after giving effect
to such merger, no Default shall have occurred and be continuing.
Section 5.08. Use of Proceeds. The proceeds of the Loans made under
this Agreement and any Letters of Credit issued under this Agreement will be
used by the Borrower (i) to refinance indebtedness of the Borrower under the
Existing Agreements; (ii) to finance the Borrower's working capital
requirements, (iii) for capital expenditures and (iv) for other general
corporate purposes, including acquisitions and other investments. None of
such proceeds will be used, directly or indirectly, for any purpose, whether
immediate, incidental or ultimate, that entails a violation of the provisions
of Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
Section 5.09. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except:
(a) Liens existing on the Closing Date securing Debt outstanding on
the Closing Date in an aggregate principal or face amount not exceeding
$10,000,000;
(b) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 90
days after the acquisition thereof;
(d) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into the Borrower or a Subsidiary
and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Subsidiary and not created in contemplation of such
acquisition;
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is not
secured by any additional assets;
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt or Derivatives Obligations, (ii) do not secure any obligation
in an amount exceeding $10,000,000 and (iii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(h) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash equivalents
subject to such Liens may at no time exceed $10,000,000; and
(i) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal or face amount not exceeding,
on the date of incurrence of any portion of such Debt, an aggregate of 10% of
Consolidated Tangible Net Worth at such date.
A.
Section 5.10. Interest Coverage Ratio. As of the last day of each
fiscal quarter of the Borrower, the Interest Coverage Ratio at such last day
will not be less than 2.5 to 1.
Section 5.11. Restricted Payments. Neither the Borrower nor any
Subsidiary will make any Restricted Payment, provided that the Borrower may
(a) repurchase shares of its common stock so long as the aggregate amount
expended for all such repurchases subsequent to October 31, 1998 (excluding
repurchases permitted by clause (c) below) does not exceed $750,000,000, (b)
repurchase additional shares of its common stock so long as (i) the aggregate
amount expended for all such purchases (including repurchases permitted by
clause (a) above but excluding repurchases permitted by clause (c) below))
subsequent to October 31, 1998 does not exceed $1,000,000,000, (ii) as of the
date of any such purchase, the ratio of (x) Consolidated Debt (including any
Debt incurred to make such purchase) to (y) Consolidated EBITDA for the most
recent period of four consecutive fiscal quarters of the Borrower and its
Consolidated Subsidiaries for which the Borrower has delivered financial
statements pursuant to Section 5.01 is less than 1.5 to 1.0, and (iii) no
Default or Event of Default exists or will result therefrom and (c) make
Restricted Payments from time to time with respect to any year in an
aggregate amount not to exceed 50% of Consolidated Net Income for such year.
Section 5.12. Transactions with Affiliates. The Borrower will not,
and will not permit any Subsidiary to, directly or indirectly, pay any funds
to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any
Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any
assets, tangible or intangible, to, or participate in, or effect, any
transaction with, any Affiliate except on an arms-length basis on terms at
least as favorable to the Borrower or such Subsidiary than could have been
obtained from a third party who was not an Affiliate, provided that the
foregoing provisions of this Section shall not prohibit any such Person from
declaring or paying any lawful dividend or other payment ratably in respect
of all of its capital stock of the relevant class so long as, after giving
effect thereto, no Default shall have occurred and be continuing.
Section 5.13. Debt of Subsidiaries. Total Debt of all Subsidiaries
(excluding (i) Debt of a Subsidiary to the Borrower or to a wholly owned
Subsidiary and (ii) Debt of Galileo Canada ULC or a Subsidiary thereof in an
aggregate principal amount not to exceed $35,000,000 existing at the time of
or incurred in connection with the acquisition by the Borrower of Galileo
Canada Distribution Systems, Inc.) will not, on the date of incurrence of any
portion of such Debt, exceed the greater of (x) $75,000,000 or (y) 10% of
Consolidated Tangible Net Worth at such date.
Section 5.14. Cash Flow Ratio. As of the last day of each fiscal
quarter of the Borrower, the Cash Flow Ratio at such last day will not be
greater than 2.0 to 1.
ARTICLE 6
Defaults
Section 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall (i) fail to pay when due any principal of any
Loan or to reimburse when due any drawing under any Letter of Credit or (ii)
fail to pay any interest on any Loan or any fees or any other amount payable
hereunder within five Domestic Business Days of the date when due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Article 5, other than those contained in Sections 5.01 through
5.06;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
6.01(a) or 6.01(b) above) for 30 days after notice thereof has been given to
the Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of any Material Financial Obligations when due or within any
applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables the holder of
such Debt or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(g) the Borrower or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any action to authorize any
of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $10,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under Section 4007 of
ERISA) in excess of $10,000,000 in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall exist by
reason of which the PBGC would reasonably be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur
a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $10,000,000;
(j) judgments or orders for the payment of money in excess of
$10,000,000 in the aggregate shall be rendered against the Borrower or any
Subsidiary and such judgments or orders shall continue unsatisfied and
unstayed for a period of 10 days;
(k) the Borrower shall be dissolved or terminated; or
(l) a Change in Ownership or Control shall have occurred;
then, and in every such event, the Agent shall (i) if requested by Banks
having more than 50% in aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding more than 50% of the aggregate principal
amount of the Loans, by notice to the Borrower declare the Loans (together
with accrued interest thereon) to be, and the Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower, provided
that in the case of any of the Events of Default specified in clause 6.01(g)
or 6.01(h) above with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon)
shall become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
Section 6.02. Notice of Default. The Agent shall give notice to the
Borrower under subsection 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
Section 6.03. Cash Cover. The Borrower agrees, in addition to the
provisions of Section 6.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the Agent upon
the instruction of the Banks having more than 50% in aggregate amount of the
Commitments (or, if the Commitments shall have been terminated, holding more
than 50% of the Letter of Credit Liabilities), pay to the Agent an amount in
immediately available funds (which funds shall be held as collateral pursuant
to arrangements satisfactory to the Agent) equal to the aggregate amount
available for drawing under all Letters of Credit then outstanding at such
time, provided that, upon the occurrence of any Event of Default specified in
subsection 6.01(g) or 6.01(h) with respect to the Borrower, the Borrower
shall pay such amount forthwith without any notice or demand or any other act
by the Agent or the Banks.
ARTICLE 7
The Agent
Section 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
Section 7.02. Agent and Affiliates. Bank of America, N.A. shall have
the same rights and powers under this Agreement as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent,
and Bank of America, N.A. and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not the Agent.
Section 7.03. Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in Article 6.
Section 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
Section 7.05. Liability of Agent. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Banks or, when expressly required hereby, all the Banks or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified in Article ,
except receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness of this Agreement, the Notes or any
other instrument or writing furnished in connection herewith. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties. Without limiting the generality of
the foregoing, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is
intended to create or reflect only an administrative relationship between
independent contracting parties.
Section 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by
the Borrower) against any reasonable and customary out-of-pocket costs or
expenses (including counsel fees and disbursements), or any other claim,
demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees
may suffer or incur in connection with this Agreement or any action taken or
omitted by such indemnitees hereunder.
Section 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking any action under this Agreement.
Section 7.08. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
Section 7.09. Agent's Fee; Arranger Fee. The Borrower shall pay to
the Agent for its own account and on behalf of Banc of America Securities LLC
("BAS"), in its capacity as arranger, fees in the amounts and at the times
previously agreed upon between the Borrower and the Agent and BAS,
respectively.
SECTION 7.10. Syndication Agent; Documentation Agent. No Bank
identified herein or in any related document as the "Syndication Agent" or
the "Documentation Agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to
all Banks as such. Without limiting the foregoing, no Bank so identified
shall have or be deemed to have any fiduciary relationship with any other
Bank. Each Bank acknowledges that it has not relied, and will not rely, on
any Bank so identified in deciding to enter into this Agreement or in taking
or not taking action hereunder.
ARTICLE 8
Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent determines that deposits in Dollars (in the applicable
amounts) are not being offered to Bank of America, N.A. in the London
interbank market for such Interest Period, or
(b) in the case of Euro-Dollar Loans, Banks having 50% or more of the
aggregate principal amount of the affected Loans advise the Agent that the
London Interbank Offered Rate, as determined by the Agent, will not
adequately and fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans, for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make Euro-Dollar Loans or to continue or convert outstanding Loans as or into
Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar
Loan shall be converted into a Base Rate Loan on the last day of the
then-current Interest Period applicable thereto. At any time when the
circumstances giving rise to the above-described suspension are in effect,
unless the Borrower notifies the Agent at least two Domestic Business Days
before the date of any Fixed Rate Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such date, (i) if
such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing and (ii) if such Fixed Rate
Borrowing is a Money Market LIBOR Borrowing, then the Money Market LIBOR
Loans comprising such Borrowing shall bear interest for each day from and
including the first day to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
Section 8.02. Illegality. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the
Agent shall forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank notifies the Borrower and the Agent that
the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert outstanding
Loans into Euro-Dollar Loans, shall be suspended. Before giving any notice to
the Agent pursuant to this Section, such Bank shall designate a different
Euro-Dollar Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan
of such Bank then outstanding shall be converted to a Base Rate Loan either
(a) on the last day of the then current Interest Period applicable to such
Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such
Loan to such day or (b) immediately if such Bank shall determine that it may
not lawfully continue to maintain and fund such Loan to such day.
Section 8.03. Increased Cost and Reduced Return. (a) If on or after
(x) the date hereof, in the case of any Committed Loan or Letter of Credit
(or participation therein) or any obligation to make Committed Loans or to
issue or participate in Letters of Credit or (y) the date of the related
Money Market Quote, in the case of any Money Market Loan, the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank (or
its Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall impose, modify or deem applicable any reserve (including,
without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding with respect to any Euro-Dollar
Loan any such requirement with respect to which such Bank is entitled to and
received compensation during the relevant Interest Period under Section
2.16), special deposit, insurance assessment or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its participation in
any Letter of Credit or its obligation to make Fixed Rate Loans or to issue
or participate in Letters of Credit and the result of any of the foregoing is
to increase the cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan or Letter of Credit (or
participation therein), or to reduce the amount of any sum received or
receivable by such Bank (or its Applicable Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the date hereof,
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent) as a consequence
of such Bank's obligations hereunder to a level below that which such Bank
(or its Parent) could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within 15 days after demand by such Bank (with a copy to the Agent),
the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section shall set forth the additional
amount or amounts to be paid to it hereunder, shall set forth the method of
determining such additional amount or amounts in reasonable detail and shall
be conclusive in the absence of manifest error. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
Section 8.04. Taxes. (a) For the purposes of this Section 8.04, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by
the Borrower pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding (i) in the case of each Bank and
the Agent, taxes imposed on its income, and franchise or similar taxes
imposed on it, by a jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or in which its principal executive
office is located or, in the case of each Bank, in which its Applicable
Lending Office is located and (ii) in the case of each Bank, any United
States withholding tax imposed on such payments but only to the extent that
such Bank is subject to United States withholding tax at the time such Bank
first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or
from the execution or delivery of, or otherwise with respect to, this
Agreement or any Note or Letter of Credit.
(b) Any and all payments by the Borrower to or for the account of any
Bank or the Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes, provided that, if the Borrower shall be
required by law to deduct any Taxes or Other Taxes from any such payments,
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent, at its address referred to in Section
9.01, the original or a certified copy of a receipt evidencing payment
thereof.
(c) The Borrower agrees to indemnify each Bank and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section) paid by such Bank or the Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be paid within 15 days
after such Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and
on or prior to the date on which it becomes a Bank in the case of each other
Bank, and from time to time thereafter if requested in writing by the
Borrower (but only so long as such Bank remains lawfully able to do so),
shall provide the Borrower and the Agent with Internal Revenue Service form
W-8 ECI or W-8 BEN, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which
exempts the Bank from United States withholding tax or reduces the rate of
withholding tax on payments of interest for the account of such Bank or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.
(e) For any period with respect to which a Bank has failed to provide
the Borrower or the Agent with the appropriate form pursuant to subsection
8.04(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required
to be provided), such Bank shall not be entitled to indemnification under
subsection 8.04(b) or 8.04(c) with respect to Taxes imposed by the United
States, provided that if a Bank, which is otherwise exempt from or subject to
a reduced rate of withholding tax, becomes subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover
such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section, then such Bank will change
the jurisdiction of its Applicable Lending Office if, in the judgment of such
Bank, such change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise disadvantageous to such
Bank.
Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make, or convert outstanding
Loans to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded compensation under Section 8.03 or 8.04 with
respect to its Euro-Dollar Loans and the Borrower shall, by at least five
Euro-Dollar Business Days' prior notice to such Bank through the Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and until such Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) Euro-Dollar Loans shall instead be Base Rate
Loans (on which interest and principal shall be payable contemporaneously
with the related Fixed Rate Loans of the other Banks); and
(b) after each of its Euro-Dollar Loans has been repaid (or converted
to a Base Rate Loan), all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to repay its Base
Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan
shall be converted into a Euro-Dollar Loan on the first day of the next
succeeding Interest Period applicable to the related Euro-Dollar Loans of the
other Banks.
Section 8.06. Substitution of Bank. If (i) the obligation of any Bank
to make Euro-Dollar Loans or to convert or continue outstanding Loans into
Euro-Dollar Loans shall be suspended pursuant to Section 8.02 or (ii) any
Bank shall demand compensation pursuant to Section 8.03 or 8.04 , the
Borrower shall have the right, with the assistance of the Agent and the
Issuing Banks, to seek a mutually satisfactory bank or banks (which may be
one or more of the Banks) to purchase the outstanding Loans of such Bank and
to assume the Commitment and Letter of Credit Liabilities of such Bank.
ARTICLE 9
Miscellaneous
Section 9.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (a) in the
case of the Borrower or the Agent, at its address or facsimile number set
forth on the signature pages hereof, (b) in the case of any Bank (including
any Issuing Bank), at its address or facsimile number set forth in its
Administrative Questionnaire or (c) in the case of any party, such other
address or facsimile number as such party may hereafter specify for the
purpose by notice to the Agent and the Borrower. Each such notice, request or
other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this
Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section, provided that
notices to the Agent or any Issuing Bank under Article 2 or Article 8 and
notices to the Borrower under subsection 9.06(c) shall not be effective until
received.
Section 9.02. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
Section 9.03. Expenses; Indemnification. (a) The Borrower shall pay
(i) all reasonable and customary out-of-pocket expenses of the Agent,
including fees and disbursements of special counsel for the Agent, in
connection with the preparation and administration of this Agreement, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs, all reasonable and
customary out-of-pocket expenses incurred by the Agent and each Bank,
including (without duplication) the fees and disbursements of outside counsel
and the allocated cost of inside counsel, in connection with any collection,
bankruptcy, insolvency and other enforcement proceedings resulting from such
Event of Default.
(b) The Borrower agrees to indemnify the Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought
or threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder, provided that no Indemnitee
shall have the right to be indemnified hereunder for such Indemnitee's own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
Section 9.04. Sharing of Set-offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount then due and payable with
respect to the Loans and Letter of Credit Liabilities held by it which is
greater than the proportion received by any other Bank in respect of the
aggregate amount then due and payable with respect to the Loans and Letter of
Credit Liabilities held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Loans and Letter of Credit Liabilities held by the other Banks, and such
other adjustments shall be made, as may be required so that all such payments
with respect to the Loans and Letter of Credit Liabilities held by the Banks
shall be shared by the Banks pro rata, provided that nothing in this Section
shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Borrower other than its indebtedness
hereunder. The Borrower agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in a Loan or
Letter of Credit Liability, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
Section 9.05. Amendments and Waivers . Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Agent or an Issuing Bank
are affected thereby, by it), provided that no such amendment or waiver shall
(i) increase the Commitment of any Bank or subject any Bank to any additional
obligation without the written consent of each Bank, (ii) reduce the
principal of or rate of interest on any Loan or the amount to be reimbursed
in respect of any Letter of Credit or any interest thereon or any fees
hereunder without the written consent of each Bank affected thereby, (iii)
postpone the date fixed for any payment of principal of or interest on any
Loan or the amount to be reimbursed in respect of any Letter of Credit or
interest thereon or any fees hereunder or for any scheduled reduction or
termination of any Commitment without the written consent of each Bank or
(iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section
or any other provision of this Agreement without the written consent of each
Bank.
Section 9.06. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans and Letter of Credit participations. In the event
of any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to the Borrower and the Agent, such Bank shall
remain responsible for the performance of its obligations hereunder, and the
Borrower, the Issuing Banks and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement. Any agreement pursuant to which any Bank may grant such
a participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement, provided that (i)
such participation agreement may provide that such Bank will not (without the
consent of the Participant) agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), or (iii) of Section 9.05 that
affects the Participant and (ii) if the Participant is an Affiliate of such
Bank, such participation agreement may provide that such Bank will not
(without the consent of the Participant) agree to any modification, amendment
or waiver of this Agreement that affects the Participant. The Borrower agrees
that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Section 2.16 and Article 8 with
respect to its participating interest. An assignment or other transfer which
is not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to
an initial Commitment of not less than $10,000,000) of all, of its rights and
obligations under this Agreement, the Notes and Letters of Credit, and such
Assignee shall assume such rights and obligations, pursuant to an Assignment
and Assumption Agreement in substantially the form of Exhibit F hereto
executed by such Assignee and such transferor Bank, with (and subject to) the
subscribed consent of the Agent and the Issuing Banks and, so long as no
Default has occurred and is continuing, the Borrower (which consents shall
not be unreasonably withheld so long as (i) the Assignee is a commercial bank
and (ii) the transferor Bank has given the Agent and the Borrower not less
than three Domestic Business Days' prior written notice of such proposed
assignment and the identity of the proposed Assignee), provided that if an
Assignee is an affiliate of such transferor Bank or was a Bank immediately
prior to such assignment, no such consent of the Borrower, the Agent or any
Issuing Bank shall be required, provided further that in the event of an
assignment by a Bank of a proportionate part of its rights and obligations
under this Agreement, the Notes and the Letters of Credit, the part retained
by such transferor Bank shall be equivalent to an initial Commitment of not
less than $10,000,000, and provided further that such assignment may, but
need not, include rights of the transferor Bank in respect of outstanding
Money Market Loans. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank, the Agent
and the Borrower shall make appropriate arrangements so that, if required, a
new Note is issued to the Assignee. In connection with any such assignment,
the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,500. If the Assignee is not
incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
Section 9.07. Collateral. Each of the Banks represents to the Agent
and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
Section 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of Illinois. The Borrower, the Agent and each of the
Banks hereby submit to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois
State court sitting in Chicago for purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated hereby.
The Borrower, the Agent and each of the Banks irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
Section 9.09. Counterparts; Integration; Effectiveness. This
Agreement 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 Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and
all prior agreements and understandings, oral or written, relating to the
subject matter hereof. This Agreement shall become effective upon receipt by
the Agent of 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, receipt by the Agent in form satisfactory to it of telegraphic,
facsimile or other written confirmation from such party of execution of a
counterpart hereof by such party).
Section 9.10 . WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.11. Confidentiality. The Agent and each Bank agree to keep
any information delivered or made available by the Borrower pursuant to this
Agreement confidential from anyone other than persons employed or retained by
such Bank and its affiliates, provided that nothing herein shall prevent the
Agent or any Bank from disclosing such information (i) to any other Bank or
to the Agent, (ii) to such Bank's or Agent's legal counsel and independent
auditors, (iii) upon the order of any court or administrative agency, (iv)
upon the request or demand of any regulatory agency or authority, (v) which
had been publicly disclosed other than as a result of a disclosure by the
Agent or any Bank prohibited by this Agreement, (vi) in connection with any
litigation to which the Agent, any Bank or its subsidiaries or Parent may be
a party, (vii) to the extent necessary in connection with the exercise of any
remedy hereunder, (viii) subject to provisions substantially similar to those
contained in this Section, to any other Person if reasonably incidental to
the administration of the credit facility contemplated hereby and (ix)
subject to provisions substantially similar to those contained in this
Section, to any actual or proposed Participant or Assignee.
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/Cheryl M. Ballenger
Name: Cheryl M. Ballenger
Title: Sr. V.P., Controller
Address: 9700 West Higgins Road, Suit 400
Rosemont, IL 60018
Attn: Chief Financial Officer
Facsimile: (847) 518-4599
BANK OF AMERICA, N.A.,
as Administrative Agent and as a Bank
By:/s/Laurie G Haugh
Name: Laurie G. Haugh
Title: Vice President
Address: 231 S. LaSalle Street
Chicago, IL 60697
Attn: Laurie G. Haugh
Facsimile: (312) 974-8811
ABN AMRO BANK N.V.,
as Documentation Agent and as a Bank
By:/s/ John L. Church
Name: John L. Church
Title: Group Vice President
By:/s/ Laurie D. Flom
Name: Laurie D. Flom
Title: Group Vice President
Address: 135 South LaSalle
Chicago, IL 60603
Attn: Credit Administration
Facsimile: (312) 606-8425
CREDIT LYONNAIS NEW YORK BRANCH
as Syndication Agent and as a Bank
By:/s/ Philippe Soustra
Name: Philippe Soustra
Title: Senior Vice President
Address: 1301 Avenue of the Americas
New York, NY 10019
Attn: Brian Bolotin
Facsimile: (212) 261-7368
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, as Co-Agent and as a Bank
By:/s/ Walter R. Wolff
Name: Walter R. Wolff
Title: Joint General Manager
Address: 227 W. Monroe, Ste. 2600
New York, NY 10020
Attn: Steve Ryan
Facsimile: (312) 855-8200
THE BANK OF TOKYO-MITSUBISHI,
LTD, CHICAGO BRANCH, as Co-Agent and as
a Bank
By:/s/ Hisashi Miyashiro
Name: Hisashi Miyashiro
Title: Deputy General Manager
Address: 227 W. Monroe Street
Suite 2300
Chicago, IL 60606
Attn: Diane Tkach
Facsimile: (312) 696-4535
THE SUMITOMO BANK, LIMITED,
as Co-Agent and as a Bank
By:/s/John H. Kemper
Name: John H. Kemper
Title: Senior Vice President
Address: 233 S. Wacker Dr., Ste. 4010
Chicago, IL 60606
Attn: Brady Sadek
Facsimile: (312) 876-6436
THE NORINCHUKIN BANK,
NEW YORK BRANCH,
as Co-Agent and as a Bank
By:/s/Yoshiro Niiro
Name: Yoshiro Niiro
Title: General Manager
Address: 245 Park Avenue
29th Floor
New York, NY 10167
Attn: Keisuke Ishii
Facsimile: (212) 697-5754
THE FUJI BANK, LIMITED,
as Co-Agent and as a Bank
By:/s/ Peter L. Chinnici
Name: Peter L. Chinnici
Title: Senior Vice President &
Group Head
Address: Suite 2000
225 W. Wacker Dr.
Chicago, IL 60606
Attn: Richard Dunning
Facsimile: (312) 621-3386
HARRIS TRUST AND SAVINGS BANK
By:/s/ M. James Barry, III
Name: M. James Barry III
Title: Vice President
Address: 111 West Monroe St.
Chicago, IL 60603
Attn: M. James Barry
Facsimile: (312) 293-4856
MICHIGAN NATIONAL BANK
By:/s/ Annette Gordon
Name: Annette Gordon
Title: Vice President
Address: 27777 Inkster Rd.
Farmington Hills, MI 48333
Attn: Annette Gordon
Facsimile: (248) 473-4345
THE SANWA BANK, LIMITED
By:/s/ Lee E. Prewitt
Name: Lee E. Prewitt
Title: Vice President
Address: 10 S. Wacker Dr.
Chicago, IL 60606
Attn: Lee Prewitt
Facsimile: (312) 346-6677
BANK OF CHINA, LOS ANGELES
BRANCH
By:/s/ Luo, XiaoMing
Name: Luo, XiaoMing
Title: Branch Manager
Address: 444 S. Flower St., #3900
Los Angeles, CA 90071
Attn: Eric A. Moore
Facsimile: (213) 688-1015
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By:/s/ Scott J. Paige
Name: Scott J. Paige
Title: Senior Vice President
Address: 520 Madison Avenue
New York, NY 10022
Attn: Susan Lau
Facsimile: (212) 644-6825
COMERICA BANK
By:/s/ Greg Block
Name: Greg Block
Title: Vice President
Address: Comerica Tower
500 Woodward Avenue
Detroit, MI 48226
Attn: Greg Block
Facsimile: (313) 222-9516
SUNTRUST BANK
By:/s/ Margaret A. Jaketic
Name: Margaret A. Jaketic
Title: Vice President
Address: 303 Peachtree St., N.E.
3rd Floor, MC 1928
Atlanta, GA 30308
Attn: Margaret A. Jaketic
Facsimile: (404) 588-8505
THE DAI-ICHI KANGYO BANK, LTD.
By:/s/ Nobuyasu Fukatsu
Name: Nobuyasu Fukatsu
Title: General Manager
Address: 10 S. Wacker Dr.
Chicago, IL 60606
Attn: Richard Cummings
Facsimile: (312) 876-2011
THE NORTHERN TRUST COMPANY
By:/s/ Craig L. Smith
Name: Craig L. Smith
Title: Vice President
Address: 50 South LaSalle St.
Chicago, IL 60675
Attn: Craig Smith
Facsimile: (312) 444-5055
SOCIETE GENERALE S.A.
By:/s/ Steven R. Fercho
Name: Steven R. Fercho
Title: Director
Address: 181 W. Madison St.
Chicago, IL 60602
Attn: John Root
Facsimile: (312) 578-5099
BANK HAPOALIM
By:/s/ Laura Anne Raffa
Name: Laura Anne Raffa
Title: First Vice President &
Corporate Manager
By:/s/ Shaun Breidbart
Name: Shaun Breidbart
Title: Vice President
Address: 1177 Avenue of the Americas
New York, New York 10036
Attn: Shawn Breidbart
Facsimile: (212) 782-2187
COMMITMENT SCHEDULE
Amount of
Bank Commitment
Bank of America, N.A., $45,000,000
as Administrative Agent and as a Bank
Credit Lyonnais New York Branch, 45,000,000
as Syndication Agent and as a Bank
ABN AMRO Bank N.V., 45,000,000
as Documentation Agent and as a Bank
The Industrial Bank of Japan, Limited, 31,000,000
as Co-Agent and as a Bank
The Bank of Tokyo-Mitsubishi, 31,000,000
Ltd., Chicago Branch,
as Co-Agent and as a Bank
The Sumitomo Bank, Limited, 31,000,000
as Co-Agent and as a Bank
The Fuji Bank, Limited, 31,000,000
as Co-Agent and as a Bank
The Norinchukin Bank, New York Branch, 31,000,000
as Co-Agent and as a Bank
Bank of China, Los Angeles Branch 20,000,000
Comerica Bank 20,000,000
The Dai-ichi Kangyo Bank, Ltd. 20,000,000
Harris Trust & Savings Bank 20,000,000
Michigan National Bank 20,000,000
The Mitsubishi Trust and 20,000,000
Banking Corporation, New York Branch
The Northern Trust Company 20,000,000
The Sanwa Bank, Limited 20,000,000
Societe Generale S.A. 20,000,000
SunTrust Bank 20,000,000
Bank Hapoalim 10,000,000
TOTAL $500,000,000
PRICING SCHEDULE A
Each of the terms "Euro-Dollar Margin", "Facility Fee Rate" and "Letter
of Credit Fee Rate" means, for any date, (a) prior to the Borrower's delivery
of financial statements for the fiscal quarter ended March 31, 2000, 0.725%,
0.150% and 0.725%, respectively, and (b) thereafter, 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
--------------------------------------------------------------------
Euro-Dollar 0.525% 0.625% 0.725%
Margin
--------------------------------------------------------------------
Facility Fee 0.100% 0.125% 0.150%
Rate
--------------------------------------------------------------------
Letter of Credit Fee 0.525% 0.625% 0.725%
Rate
--------------------------------------------------------------------
For purposes of this Schedule, the following terms have the following
meanings:
"applicable 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 subsection
5.01(a) or 5.01(b), as the case may be, provided that at any time a Default
exists under subsection 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 1.0 to 1.
"Level I Pricing" applies at any date if, at such date, the Applicable
Cash Flow Ratio is less than .5 to 1.
"Level II Pricing" applies at any date if, at such date, the Applicable
Cash Flow Ratio is greater than or equal to .5 to 1 but less than 1.0 to 1.
"Level III Pricing" applies at any date if, at such date, the
Applicable Cash Flow Ratio is greater than or equal to 1.0 to 1.
"Pricing Level" refers to the determination of which of Level I
Pricing, Level II Pricing or Level III Pricing applies at any date.
PRICING SCHEDULE B
Each of the terms "Euro-Dollar Margin", "Facility Fee Rate"
"Utilization Fee Rate" and "Letter 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 "Pricing Level" that applies at such date:
-------------------------------------------------------------------
Level I Level II Level III Level IV Level V
-------------------------------------------------------------------
Euro-Dollar 0.400% 0.500% 0.600% 0.700% 1.025%
Margin
-------------------------------------------------------------------
Facility 0.100% 0.125% 0.150% 0.175% 0.225%
Fee Rate
-------------------------------------------------------------------
Utilization 0.100% 0.125% 0.125% 0.125% 0.125%
Fee Rate
-------------------------------------------------------------------
Letter of 0.400% 0.500% 0.600% 0.700% 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:
"Level 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.
"Level 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.
"Level 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 or Baa2 or higher by
Moody's and (ii) neither Level I Pricing nor Level II Pricing applies.
"Level 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 or Baa3 or higher by
Moody['s and (ii) none of Level I Pricing, Level II Pricing and Level III
Pricing applies.
"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.
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, if the ratings
differential is more than one level, then the midpoint between the two rating
(or, if there is no midpoint, the higher of the two midpoint ratings) will be
used to determine the applicable Pricing Level (e.g., BBB+/A3 results in
Level I Pricing; BBB/A3 and BBB-/A3 each result in Level II Pricing; BB+/A3
and BB/A3 each result in Level III pricing; BB-/A3 results in Level IV
Pricing).
5
EXHIBIT A - Note
NOTE
Chicago, Illinois
___________ __, 200_
For value received, Galileo International, Inc., a Delaware corporation
(the "Borrower"), promises to pay to the order of ______________________ (the
"Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to
the Credit Agreement referred to below on the maturity date provided for in
the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in the manner and at the place provided for in the
Credit Agreement.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof, provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of April 13, 2000 among Galileo International, Inc., the Banks parties
thereto, the Letter of Credit Issuing Banks parties thereto, Credit Lyonnais
New York Branch, as syndication agent, ABN AMRO Bank N.V., as documentation
agent, and Bank of America, N.A., as administrative agent (as the same may be
amended from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
GALILEO INTERNATIONAL, INC.
By:
Name:
Title:
LOANS AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------
Date Amount Type Amount of Notation
of of Principal Made By
Loan Loan Repaid
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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EXHIBIT B - Money Market Quote Request
Form of Money Market Quote Request
[Date]
To: Bank of America, N.A.(the "Agent")
From: Galileo International, Inc.
Re: Credit Agreement (as the same may be amended from time to time,
the "Credit Agreement") dated as of April 13, 2000 among Galileo
International, Inc., the Banks parties thereto, the Letter of
Credit Issuing Banks parties thereto and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount1 Interest Period* *
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Galileo International, Inc.
By:
Name:
Title:
EXHIBIT C - Invitation for Money Market Quotes
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Galileo International, Inc.
(the 'Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of April 13,
2000 among Galileo International, Inc., the Banks parties thereto, the Letter
of Credit Issuing Banks parties thereto and the undersigned, as Agent, we are
pleased on behalf of the Borrower to invite you to submit Money Market Quotes
to the Borrower for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30
A.M.] (New York City time) on [date].
BANK OF AMERICA, N.A., as
Agent
By:
Authorized Officer
EXHIBIT D - Money Market Quote
Form of Money Market Quote
To: Bank of America, N.A., as Agent
Re: Money Market Quote to Galileo International, Inc. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, ____, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market [Absolute
Amount** Period*** [Margin****] Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market
Loans for which the above offers may be accepted shall not exceed
$____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids
must be made for $5,000,000 or a larger multiple of $1,000,000.
*** Not less than 14 days, as specified in the related Invitation. No more
than five bids are permitted for each Interest Period.
**** Margin over or under the London Interbank Offered Rate determined for
the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit
Agreement dated as of April 13, 2000 among Galileo International, Inc., the
Banks parties thereto, the Letter of Credit Issuing Banks parties thereto and
yourselves, as Agent, irrevocably obligates us to make the Money Market
Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
EXHIBIT E - Opinion of Counsel for the Borrower
OPINION OF
COUNSEL FOR THE BORROWER
April __, 2000
To the Banks, the Issuing Banks and the Agent
Referred to Below
c/o Bank of America, N.A., as Agent
231 South LaSalle Street
Chicago, Illinois 60697
Ladies and Gentlemen:
I am the Senior Vice President, General Counsel and Secretary of
Galileo International, Inc. (the "Borrower") and have acted as counsel for
the Borrower in connection with the Credit Agreement (the "Credit Agreement")
dated as of April 13, 2000 among the Borrower, the Banks parties thereto, the
Letter of Credit Issuing Banks parties thereto and Bank of America, N.A., as
Agent. Terms defined in the Credit Agreement are used herein as therein
defined. This opinion is being rendered to you at the request of the Borrower
pursuant to subsection 3.01(b) of the Credit Agreement.
In connection with this opinion, I have investigated such questions of
law, received such information from officers and representatives of the
Borrower and its Subsidiaries and examined such certificates of public
officials, and corporate documents and records of the Borrower and its
Subsidiaries and other documents as I have deemed necessary or appropriate
for purposes of this opinion.
In rendering my opinion I have assumed (a) the due authorization,
execution and delivery of the Credit Agreement by each of the parties thereto
(other than the Borrower), (b) the authenticity of all documents submitted to
me as originals and (c) the conformity to original documents of all documents
submitted to me as copies.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly organized and validly
existing under the laws of the State of Delaware and has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes are (a) within the corporate powers of the
Borrower, (b) have been duly authorized by all necessary corporate action,
(c) require no action by or in respect of, or filing with, any governmental
body, agency or official (except such filings as may be required by the
reporting requirements of the Securities Exchange Act of 1934, as amended)
and (d) do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or
by-laws of the Borrower or of any indenture or other agreement or instrument
evidencing Debt of the Borrower or of any other material agreement, judgment,
injunction, order, decree or other instrument known to me and binding upon
the Borrower or any of its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
3. The Credit Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms except, (i) as the same may be limited by bankruptcy, insolvency,
fraudulent transfer or similar laws affecting creditors' rights generally and
by general principles of equity, (ii) insofar as provisions contained in the
Credit Agreement provide for indemnification, the enforcement thereof may be
limited by public policy considerations, (iii) I express no opinion as to
Section 9.04 of the Credit Agreement insofar as it provides that any Bank
purchasing a participation from another Bank pursuant thereto may exercise
set-off or similar rights with respect to such participation and (iv) I
express no opinion as to the effect of the law of any jurisdiction (other
than the State of Illinois) wherein any Bank may be located or wherein
enforcement of the Credit Agreement or the Notes issued thereunder may be
sought which limits the rates of interest legally chargeable or collectible.
4. There is no action, suit or proceeding pending against, or to the
best of my knowledge threatened against or affecting, the Borrower or any of
its Subsidiaries before any court or arbitrator or any governmental body,
agency or official, in which there is a reasonable possibility of an adverse
decision which could reasonably be expected to materially adversely affect
the business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity or
enforceability of the Credit Agreement or the Notes.
I am admitted to practice in the State of Illinois and express no
opinion as to matters governed by the laws of any jurisdiction other than the
laws of the State of Illinois, the General Corporation Law of the State of
Delaware, and the Federal laws of the United States of America.
This opinion may be relied upon by each of you and any permitted
successor or assignee of each of you and any representative of each of you
and may not be relied upon by or disclosed to any other person (except to the
extent information is permitted to be disclosed pursuant to Section 9.11 of
the Credit Agreement) without my prior written consent.
Very truly yours,
Anthony C. Swanagan
EXHIBIT F - Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, ____ among(the "Assignor"), (the "Assignee"),
GALILEO INTERNATIONAL, INC. (the "Borrower") and BANK OF AMERICA, N.A., as Agent
(the "Agent").
WHEREAS, this Assignment and Assumption Agreement (the "agreement")
relates to the Credit Agreement dated as of April 13, 2000 among the
Borrower, the Assignor and the other Banks parties thereto, as Banks, the
Letter of Credit Issuing Banks parties thereto and the Agent (as amended from
time to time, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower and participate in Letters of Credit
in an aggregate principal amount at any time outstanding not to exceed
$__________;
[WHEREAS, Committed Loans made to the Borrower by the Assignor under
the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof;]
[WHEREAS, Letters of Credit with a total amount available for drawing
thereunder of $__________ are outstanding at the date hereof;] and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Committed
Loans and Letter of Credit Liabilities, and the Assignee proposes to accept
assignment of such rights and assume the corresponding obligations from the
Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee
all of the rights of the Assignor under the Credit Agreement to the extent of
the Assigned Amount, and the Assignee hereby accepts such assignment from the
Assignor and assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the purchase from
the Assignor of the corresponding portion of the principal amount of the
Committed Loans and Letter of Credit Liabilities made by the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, [the Borrower, the Agent] and the Issuing Banks and
the payment of the amounts specified in Section 3 required to be paid on the
date hereof (i) the Assignee shall, as of the date hereof, succeed to the
rights and be obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount, and
(ii) the Commitment of the Assignor shall, as of the date hereof, be reduced
by a like amount and the Assignor released from its obligations under the
Credit Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between
them.*** It is understood that facility fees and/or letter of credit fees
accrued to the date hereof are for the account of the Assignor and such fees
accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of
the other party hereto, it shall receive the same for the account of such
other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
SECTION 4. Consent of the Borrower, the Agent and the Issuing Banks. This
Agreement is conditioned upon the consent of the Borrower, the Agent and the
Issuing Banks pursuant to subsection 9.06(c) of the Credit Agreement. The
execution of this Agreement by the Borrower, the Agent and the Issuing Banks
is evidence of this consent. Pursuant to subsection 9.06(c), the Borrower
agrees to execute and deliver a Note payable to the order of the Assignee to
evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation or
warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of the Borrower, or the
validity and enforceability of the obligations of the Borrower in respect of
the Credit Agreement or any Note or Letter of Credit. The Assignee
acknowledges that it has, independently and without reliance on the Assignor,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement and
will continue to be responsible for making its own independent appraisal of
the business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
SECTION 7. Counterparts. This Agreement 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their duly authorized officers as of the date first above
written.
By:
Name:
Title:
By:
Name:
Title:
[CONSENTED TO:
GALILEO INTERNATIONAL, INC.
By:
Name:
Title:
CONSENTED TO:
BANK OF AMERICA, N.A.,
as Agent
By:
Name:
Title:
CONSENTED TO:
as Issuing Bank
By:
Name:
Title:
--------
1 Amount must be $5,000,000 or a larger multiple of $1,000,000.
** Not less than 14 days, subject to the provisions of the definition of
Interest Period.
***Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
Exhibit 10.3
AMENDMENT NO. 6 TO FIVE-YEAR CREDIT AGREEMENT
AMENDMENT dated as of May 19, 2000 to the Five-Year Credit
Agreement dated as of July 23, 1997 (as heretofore amended, the "Credit
Agreement") among GALILEO INTERNATIONAL, INC. (the "Borrower"), the
BANKS party thereto (the "Banks") and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent (the "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 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
"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. Amendments to the Definitions.
(a) The definition of "Change in Ownership or Control" in Section 1.01 is
amended as follows:
(1) Clause (i) of the definition is deleted, and clauses (ii) and (iii)
are renumbered (i) and (ii), respectively.
(2) The words "one or more members of the Existing
Ownership Group" are replaced with the words "UAL Corporation and its
affiliates".
(b) The definition of "Continuing Director" in Section 1.01 is amended by
the deletion of clause (ii) and the redesignation of clause (iii) as clause
(ii).
(c) The definition of "Existing Ownership Group" in Section 1.01 is
hereby deleted.
(d) The definition of "Restricted Payment" in Section 1.01 is amended by
the deletion of the following proviso:
; provided that repurchases by the Borrower of shares of its common
stock
subsequent to October 31, 1998 shall not constitute Restricted Payments
to
the extent that the aggregate amount expended for such repurchases
subsequent to October 31, 1998 does not exceed $750,000,000.
(e) The phrase "Schedule III" in the definition of "Transaction
Documents" is changed to "Schedule II".
SECTION 3. Amendments to The Credits.
(a) The figure "$10,000,000" in Section 2.04(b)(ii) is changed to
"$5,000,000".
(b) The figure "$10,000,000" in Section 2.04(f)(ii) is changed to
"$5,000,000".
SECTION 4. Amendments to Covenants.
(a) Section 5.01 is amended as follows:
(1) Subsection (i) is redesignated Subsection (k).
(2) The following subsections are hereby added immediately prior
to redesignated subsection (k):
(i) promptly from time to time if Pricing Schedule B is the
Pricing Schedule, notice of any change in the rating of the
Borrower's senior, unsecured long-term debt securities (without
Credit enhancement) by S&P or Moody's;
(j) promptly after any officer of the Borrower obtains
knowledge thereof, notice of the commencement of, or any
material development in, any litigation, arbitration or other
proceeding affecting the Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws, which has had or
is reasonably likely to have a Material Adverse Effect; and
(b) Section 5.11 is amended to read in its entirety as follows:
SECTION 5.11. Restricted Payments. Neither the Borrower nor any
Subsidiary will make any Restricted Payment, provided that the Borrower
may (a) repurchase shares of its common stock so long as the aggregate
amount expended for all such repurchases subsequent to October 31, 1998
(excluding repurchases permitted by clause (c) below) does not exceed
$750,000,000, (b) repurchase additional shares of its common stock so
long as (i) the aggregate amount expended for all such purchases
(including repurchases permitted by clause (a) above but excluding
repurchases permitted by clause (c) below) subsequent to October 31,
1998 does not exceed $1,000,000,000, (ii) as of the date of any such
purchase, the ratio of (x) Consolidated Debt (including any Debt incurred
to make such purchase) to (y) Consolidated EBITDA for the most recent
period of four consecutive fiscal quarters of the Borrower and its
Consolidated Subsidiaries for which the Borrower has delivered financial
statements pursuant to Section 5.01 is less than 1.5 to 1.0, and (iii) no
Default exists or will result therefrom and (c) make Restricted Payments
from time to time with respect to any year in an aggregate amount not to
exceed 50% of Consolidated Net Income for such year.
(c) The figure "$50,000,000" in Section 5.13 is changed to "$75,000,000".
SECTION 5. Amendment Section 9.06. Section 9.06(c) is amended to read
in its entirety as follows:
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part
(equivalent to an initial Commitment of not less than $10,000,000) of all,
of its rights and obligations under this Agreement, the Notes and Letters of
Credit, and such Assignee shall assume such rights and obligations,
pursuant to an Assignment and Assumption Agreement in substantially the
form of Exhibit G hereto executed by such Assignee and such transferor
Bank, with (and subject to) the subscribed consent of the Agent and the
Issuing Banks and, so long as no Default has occurred and is continuing,
the Borrower (which consents shall not be unreasonably withheld so long
as (i) the Assignee is a commercial bank and (ii) the transferor Bank has
given the Agent and the Borrower not less than three Domestic Business
Days' prior written notice of such proposed assignment and the identity of
the proposed Assignee), provided that if an Assignee is an affiliate of such
transferor Bank or was a Bank immediately prior to such assignment, no
such consent of the Borrower, the Agent or any Issuing Bank shall be
required, provided further that in the event of an assignment by a Bank of
a proportionate part of its rights and obligations under this Agreement, the
Notes and the Letters of Credit, the part retained by such transferor Bank
shall be equivalent to an initial Commitment of not less than $10,000,000,
and provided further that such assignment may, but need not, include
rights of the transferor Bank in respect of outstanding Money Market
Loans. Upon execution and delivery of such instrument and payment by
such Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank, the Agent
and the Borrower shall make appropriate arrangements so that, if required,
a new Note is issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an administrative
fee for processing such assignment in the amount of $3,500. If the
Assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.
SECTION 6. Amendments to Schedules. Schedule II is hereby deleted and
Schedule III is renumbered Schedule II.
SECTION 7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. 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 9. 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.
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/ Cheryl M. Ballenger
Title: Senior Vice President, Controller
and Acting Chief Financial Officer
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Robert Bottamedi
Title: Vice President
BANK OF AMERICA, N. A.
By: /s/ Laura G. Haugh
Title: Vice President
BANK OF MONTREAL
By: /s/ Bruce A. Pietka
Title: Vice President
HSBC BANK PLC
By:
Title:
THE BANK OF TOKYO-MITSUBISHI,
LTD., CHICAGO BRANCH
By: /s/ Hisashi Miyashiro
Title: Deputy General Manager
THE SUMITOMO BANK, LIMITED
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
BANK AUSTRIA
By:
Title:
By:
Title:
CREDIT LYONNAIS
NEW YORK BRANCH
By: /s/ Pascal Poupelle
Title: President and Chief Operating
Officer
ROYAL BANK OF CANADA
By:
Title:
SOCIETE GENERALE
CHICAGO BRANCH
By: /s/ Jose A. Moreno
Title: Director
UBS AG,
STAMFORD BRANCH
By:
Title:
By:
Title:
THE NORTHERN TRUST COMPANY
By: /s/ Craig Smith
Title: Vice President
THE SANWA BANK, LIMITED,
CHICAGO BRANCH
By:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By:
Title:
By:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
Title:
Exhibit 10.4
MANAGEMENT INCENTIVE PLAN
2000 PLAN SUMMARY
The Plan's Objectives
- To attract, retain, and motivate a top quality management team.
- Focus managements attention and energy on the financial goals of Galileo
International, Inc.
- Create a strong and direct link between cash compensation and both
individual and corporate annual performance.
Plan Overview
Plan Period
The plan period is 1 January, 2000 through 31 December, 2000.
Eligibility
Employees of participating Galileo companies are eligible to participate in
the Management Incentive Plan ("Plan") based upon duties and responsibilities of
their positions and ability to impact the overall results of Galileo
International, Inc. Individuals with a grade of M3 and above or T9 are eligible.
See the Company Eligibility Table (see Addendum A on page 8) for a list of
participating Galileo companies in the Plan.
Employees may not participate in more than one Company sponsored incentive
plan concurrently. Company-sponsored incentive plans are plans such as this
Management Incentive Plan, Global Profit Sharing and U.S. Sales Compensation -
Subscriber Sales & Support.
|X| The payment terms for each plan will apply respective to the period of
time the employee was a participant of that plan.
Any individual who commences participation after January 1 of the year is
eligible to receive a prorated award, provided all other requirements are
satisfied. Individuals must be participants in the Management Incentive Plan
prior to September 1st to be eligible for any award for the year.
The Company and/or Compensation Committee of the Board of the Company
reserves the right to remove individual participants from the Plan indefinitely
or during any given year for a reason such as absence from active employment,
individual performance issues or other reasons affecting their ability to
contribute to corporate results.
|X| In particular, participants on a leave of absence for 8 consecutive months
or more during a plan period will not be eligible for an award for that
year.
|X| For leaves of a shorter duration, see the section on "Calculating
Individual Awards".
|X| Notwithstanding the foregoing, employees must be employed by a
participating company on the date an award is paid for a plan period to be
eligible to receive an award under the Plan for such period.
Incentive Opportunities
Corporate Target and Award Levels
The Chief Executive Officer and the Compensation Committee of the Board of
the Company determine the corporate performance measure and targets under the
Plan.
Bonus payments are based on achievement of individual and corporate
objectives for the plan period as shown in Table 1. Corporate results determine
the percentage of target award potentially payable to each participant as
illustrated in Table 2.
The maximum payout for both the corporate and individual ratings is 150% of
the target incentive potential.
Individual Target and Award Potential
The target incentive potential is based on eligible salary grades. The
salary grade together with local competitive and Company practice determine the
targets.
Awards are calculated using the rate of monthly base pay on December 31st
of the year for which the award is made. If prorated, the base pay on the last
day of work in the previous position is used.
|X| Base pay for the year is the employee's monthly base salary multiplied by
the number of pay months in the year and fractions of a month the employee
is eligible for participation in the plan.
The Chief Executive Officer, through his senior executives, is responsible
for developing appropriate individual goals for participants.
|X| These goals should be established early in the first quarter of the year
and documented. Each objective, typically five or six, should be weighted
to represent its relative importance to the other objectives. The total
of assigned weights must equal 100.
|X| During the year, and as needed, these goals may be reviewed and modified
to continue to support business needs
|X| Significant changes in the goals initially established should be
discussed. To ensure thorough and accurate communication, these changes
should be documented.
Table 1 is used to determine the award payable to each participant in the
year.
|X| A portion of this award is based on corporate results and the remainder is
based on the achievement of individual performance goals.
|X| The portion of the award attributable to either corporate or individual
results is intended to reflect the relative ability of individuals at each
level to directly affect each set of results.
Table 1
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Salary Portion of Award Attributable to
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Title Level Grade Corporate Results Individual Results
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Chief Executive Officer M9 100% 0%
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Executive Vice President M7 100% 0%
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Senior Vice President M6 100% 0%
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Vice President M5 75% 25%
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Senior Director M5 50% 50%
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Director M4 50% 50%
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Senior Manager M3 25% 75%
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Principal Engineer T9 25% 75%
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Performance Measures and Standards
Corporate financial performance measures apply in the same way for all
participants. Individual performance measures will vary by individual.
2000 corporate financial performance for the 2000 Management Incentive Plan
is measured on Earnings Per Share (EPS). Threshold, target and maximum award
levels are shown in Table 2.
Table 2
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Performance vs 2000 MIP Target Potential Target Award
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94% 50%
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100% 100%
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106% 150%
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Performance between levels can be interpolated or estimated as appropriate.
The Company reserves the right to exclude unusual profit or expense events
from the calculation of EPS for this Plan. These events are unusual items not
related to operating performance.
Award Determination
Incentive awards are determined as soon as practicable after the close of
the fiscal year and paid as soon as possible following Compensation Committee
and/or Board approval, as described below.
Approval Process
Bonuses, based on either corporate or individual results, are not paid if
the Company does not meet the threshold level of corporate financial
performance.
Individuals, whose overall personal performance is assessed at 50% of
target or less, will not be eligible for any payment, including the portion
attributable to corporate results.
Company Performance
The Board has the authority to approve the Company's financial performance
based on the audited results determined by the Company's auditor.
Individual Performance
The Board has the authority to approve the total award payout amount for
individual performance.
The Board requires detailed review and approval of award payments for the
Corporate Officers and others with base pay of US$150,000 or its local
equivalent, or more.
Calculating Individual Awards
As soon as practicable after the Plan period, the manager and participant
review the level of achievement of each of the objectives. The manager assigns a
rating to each objective. Based on the weighting and rating, an overall rating
is assigned.
The results are summarized and approved by the Executive or Senior Vice
President, who is responsible for producing and signing a finalized version
documenting the individual and overall results and sending it to Human
Resources.
Human Resources calculates the award amounts and implements payment.
The following example illustrates the calculation of an award paid to a
participant with a prior year's December 31st base pay of $100,000 and a target
bonus of 35%. Additional assumptions are: that the individual was in the Plan
for the entire calendar year for which the award is made and was employed at the
time of payment; that the Company's performance is slightly above target and is
paid out at 103.85 and that the individual received a rating of 90% against
individual objectives.
Table 3
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Portion of Award
Attributable to
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Bonus Payment Calculation Corporate Individual Award
Results Results Payment
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Actuals 50% 50%
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Prior Year's Base 12/31 - $100,000 50,000 50,000
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Target Level - 35% 35% 35%
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Target Performance Level - 100% for both $17,500 $17,500 $35,000.00
Corporate and Individual Results
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Performance Levels - Award Payment at 103.85 103.85% 90%
Company and 90% of Individual Results
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$18,173.75 $15,750.00 $33,923.75
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Participants included for part of the year receive prorated payments, as
explained in the Plan.
Participants promoted during the year receive prorated payments based on
the time spent at each of the one or more target levels for which they were
eligible. The individual's base pay for each bonus target is used to calculate
the award potential.
Participants on leave who are absent from active employment for less than 8
consecutive months during the plan period remain eligible for a payment for the
period. The eligible base pay for the period may be prorated based on the amount
of time absent from active employment.
|X| Employees on a leave of less than 3 consecutive months are eligible for an
award payment based on full year participation, and no proration of base
pay will be made.
|X| Employees on a leave of 3 consecutive months but less than 8 consecutive
months will be eligible for an award based on their eligible pay as
prorated to reflect that absence. However, the manager has some
discretion to amend the individual's performance rating in appropriate
circumstances as outlined below.
-- If a leave is taken after objectives are set:
If the participant's objectives were adjusted to reflect the
contribution that s/he was expected to make during the remaining number
months of the Plan year, the manager should rate him/her against these
objectives.
If the participant's objectives were not adjusted as a result of the
leave, leading to the participant receiving a significantly lower
rating than would otherwise be expected, the manager may recommend an
adjustment to the individual rating to ensure an equitable result is
given reflective of the participant's performance and contribution.
-- If the participant's objectives are established after the employee
returned from leave:
The objectives should reflect what is expected to be achieved in the
remaining Plan period.
|X| In all cases, of absence exceeding 3 consecutive months, the individual
and corporate awards will be determined using the participant's prorated
base pay.
Award Payment
Participants who leave direct employment with a participating company for
any reason at any time prior to payment being made for a plan period will
forfeit any award that may have been available for such period under this Plan.
Plan Provisions
The Company reserves the right to amend or terminate the Management
Incentive Plan at any time. In addition, at the sole discretion of the Company,
the Company may amend or adjust the incentive award amounts under this Plan in
recognition of unusual or nonrecurring events affecting the Company, changes in
law or accounting principles or for any other reason. The decisions of the
Company with respect to the award amounts under this Plan are final and binding
on all parties.
Neither participation in the Plan nor the level of participation are
guaranteed from year to year under the Plan or any similar Plan.
Award payments are subject to statutory deductions including taxes.
Addendum A
Company Eligibility Table
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Company Business Name Eligibility Date
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Apollo Galileo USA Partnership 1 January, 2000
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Apollo Travel Services Mexico S.A. de C.V. 1 January, 2000
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Galileo Asia Limited 1 January, 2000
(Hong Kong, Philippines and Singapore employees)
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Galileo Belgium S.A. 1 January, 2000
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Galileo Canada ULC 1 January, 2000
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Galileo Deutschland GmbH 1 January, 2000
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Galileo do Brasil & Cia 1 January, 2000
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Galileo Espana, S.A. 1 January, 2000
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Galileo France SARL 1 January, 2000
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Galileo International, Inc. 1 January, 2000
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Galileo International, L.L.C. 1 January, 2000
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Galileo Latin America, L.L.C. (Venezuela) 1 January, 2000
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Galileo Netherland B.V. 1 January, 2000
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Galileo Nordiska AB 1 January, 2000
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Galileo Portugal Limited 1 January, 2000
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Galileo Switzerland AG 1 January, 2000
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The Galileo Company 1 January, 2000
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Galileo United Kingdom (Travel Automation Services) To Be Determined
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Quantitude, Inc. To Be Determined
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S.D. Shepherd Systems, Inc. Ineligible
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Terren Corporation Ineligible
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THOR, Inc. Ineligible
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TRIP.com, Inc Ineligible
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