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 March 31, 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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(Registrants 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 May 2, 2000, there were 91,439,716 shares of Common Stock, par
value $.01 per share, of the registrant outstanding.
<PAGE>
GALILEO INTERNATIONAL, INC.
QUARTER ENDED MARCH 31, 2000
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Galileo International, Inc.
Condensed Consolidated Balance Sheets as of March 31,
2000 (unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Income for the
quarters ended March 31, 2000 and 1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for
the quarters ended March 31, 2000 and 1999 (unaudited) 5
Condensed Consolidated Statement of Stockholders'
Equity for the quarter ended March 31, 2000 (unaudited) 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 18
PART II - OTHER INFORMATION
Item 2. Changes In Securities and Use of Proceeds 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 22
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
2000 1999
---------- -----------
(Unaudited)
ASSETS
------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 47,885 $ 1,794
Accounts receivable, net 257,942 178,123
Other current assets 42,642 50,533
---------- ----------
Total current assets 348,469 230,450
Property and equipment, at cost:
Land 6,470 6,470
Buildings and improvements 73,024 72,219
Equipment 362,731 354,686
---------- ----------
442,225 433,375
Less accumulated depreciation 260,393 242,498
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Net property and equipment 181,832 190,877
Computer software, net 156,642 160,794
Intangible assets, net 777,064 572,136
Other noncurrent assets 90,910 100,936
---------- ----------
$1,554,917 $1,255,193
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 56,155 $ 48,034
Accrued commissions 52,237 33,722
Income taxes payable 56,512 2,785
Other accrued liabilities 116,297 113,712
Long-term debt, current portion 478 121,000
---------- ----------
Total current liabilities 281,679 319,253
Pension and postretirement benefits 71,947 68,466
Deferred tax liabilities 4,520 14,656
Other noncurrent liabilities 20,773 24,833
Long-term debt, less current portion 691,046 434,392
---------- ----------
Total liabilities 1,069,965 861,600
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; 105,094,286 and 105,038,035 shares issued;
92,776,716 and 89,999,435 shares outstanding 1,051 1,050
Additional paid-in capital 682,514 671,615
Retained earnings 280,235 368,843
Unamortized restricted stock grants (2,562) (2,761)
Accumulated other comprehensive income (3,447) (2,866)
Common stock held in treasury, at cost: 12,317,570
and 15,038,600 shares (472,839) (642,288)
---------- ----------
Total stockholders' equity 484,952 393,593
---------- ----------
$1,554,917 $1,255,193
========== ==========
See accompanying notes to condensed consolidated financial statements.
3
</TABLE>
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except share data)
<TABLE>
Quarter
Ended March 31,
-----------------------
2000 1999
---- ----
Revenues:
<S> <C> <C>
Electronic global distribution services $ 421,306 $ 385,229
Information services 19,432 18,762
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440,738 403,991
Operating expenses:
Cost of operations 134,004 132,130
Commissions, selling and administrative 180,734 151,045
Special charge - services agreement 19,725 -
Special charge - in-process research and development write-off 7,000 -
---------- -----------
341,463 283,175
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Operating income 99,275 120,816
Other income (expense):
Interest expense, net (9,275) (790)
Other, net (2,384) 9,767
---------- -----------
Income before income taxes 87,616 129,793
Income taxes 40,216 51,787
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Net income $ 47,400 $ 78,006
========== ===========
Weighted average shares outstanding 90,678,954 104,683,986
========== ===========
Basic earnings per share $ 0.52 $ 0.75
========== ===========
Diluted weighted average shares outstanding 90,902,545 105,483,986
========== ===========
Diluted earnings per share $ 0.52 $ 0.74
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
Quarter
Ended March 31,
-----------------------
2000 1999
---- ----
Operating activities:
<S> <C> <C>
Net income $ 47,400 $ 78,006
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 42,969 41,429
Write-off of in-process research and development 7,000 -
Gain on sale of assets (169) (9,477)
Deferred income taxes, net (13,978) 978
Changes in operating assets and liabilities,
net of effects from acquisition of businesses:
Accounts receivable, net (76,410) (57,317)
Other current assets 12,089 (198)
Noncurrent assets (418) (4,959)
Accounts payable and accrued commissions 23,845 3,118
Accrued liabilities (226) (15,720)
Income taxes payable 53,780 47,456
Noncurrent liabilities (383) 8,552
Other 1,437 199
-------- --------
Net cash provided by operating activities 96,936 92,067
Investing activities:
Purchase of property and equipment (6,276) (11,174)
Purchase and capitalization of computer software (7,735) (4,523)
Proceeds on sale of assets 169 9,508
Acquisition of businesses, net of $11,613 cash acquired (101,214) -
Other investing activities (5,000) (7,274)
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Net cash used in investing activities (120,056) (13,463)
Financing activities:
Borrowings under credit agreements 135,000 10,000
Repayments under credit agreements - (45,128)
Dividends paid to stockholders (8,091) (7,852)
Repurchase of common stock for treasury (57,393) -
Payments of capital lease obligations (29) (2,139)
Proceeds from exercise of employee stock options, net 21 792
-------- --------
Net cash provided by (used in) financing activities 69,508 (44,327)
Effect of exchange rate changes on cash (297) (395)
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Increase in cash and cash equivalents 46,091 33,882
Cash and cash equivalents at beginning of period 1,794 9,828
-------- --------
Cash and cash equivalents at end of period $ 47,885 $ 43,710
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
GALILEO INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share data)
<TABLE>
Special
Voting Additional
Preferred Common Paid - in Retained
Stock Stock Capital Earnings
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $ - $ 1,050 $ 671,615 $ 368,843
Comprehensive income:
Net income - - - 47,400
Other comprehensive income (loss), net of tax:
Unrealized holding gains on securities - - - -
Foreign currency translation adjustments - - - -
Other comprehensive income (loss)
Comprehensive income
Amortization of restricted stock grants - - - -
Issuance of 56,251 shares of common stock under
employee stock option plans - 1 20 -
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 2,778,600 shares of common stock
for treasury - - - -
Dividends paid ($0.09 per share) - - - (8,091)
----------- ------------- ----------- -----------
Balance at March 31, 2000 $ - $ 1,051 $ 682,514 $ 280,235
============ ============= =========== ===========
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 - - - 47,400
Other comprehensive income (loss), net of tax:
Unrealized holding gains on securities - 297 - 297
Foreign currency translation adjustments - (878) - (878)
-----------
Other comprehensive income (loss) (581)
-----------
Comprehensive income 46,819
Amortization of restricted stock grants 199 - - 199
Issuance of 56,251 shares of common stock under
employee stock option plans - - - 21
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 2,778,600 shares of common stock
for treasury - - (57,393) (57,393)
Dividends paid ($0.09 per share) - - - (8,091)
------------ ------------- ----------- -----------
Balance at March 31, 2000 $ (2,562) $ (3,447) $ (472,839) $ 484,952
============ ============= =========== ===========
See accompanying notes to condensed consolidated financial statements.
6
</TABLE>
<PAGE>
GALILEO INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial
statements of Galileo International, Inc. (the "Company") have been prepared
pursuant to the rules of the Securities and Exchange Commission for quarterly
reports on Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. The
information furnished herein includes all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of results for the interim periods presented.
The results of operations for the quarter ended March 31, 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>
Quarter
Ended March 31,
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2000 1999
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Revenues $ 443.3 $ 406.2
Net income 41.4 60.9
Basic earnings per share 0.44 0.55
Diluted earnings per share 0.43 0.55
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.
In connection with these acquisitions, the Company incurred expenses of
$6.3 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 4 years and the resulting amortization is included
in costs of operations expenses. The results of operations and cash flows of
TRIP.com and Terren have been consolidated with those of the Company from the
date of each acquisition.
NOTE 3 - EARNINGS PER SHARE
Basic earnings per share for the quarters ended March 31, 2000 and 1999 is
calculated based on the weighted average shares outstanding for the period.
Diluted earnings per share is
8
<PAGE>
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
quarters ended March 31, 2000 and 1999 of 223,591 and 800,000, respectively.
NOTE 4 - SPECIAL CHARGES
In connection with the Company's 1997 acquisition of Apollo Travel Services
Partnership ("ATS"), 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 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 increase
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 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 million of other costs, principally related to the closing of the
remaining Swindon, U.K. facilities. As of March 31, 2000, $16.0 million of
severance related costs have been paid and charged against the liability and 366
employees have been terminated. The Company considers the realignment activities
to be substantially complete as of March 31, 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
9
<PAGE>
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 March 31, 2000 and
December 31, 1999, the estimated remaining liabilities for all of the above
mentioned restructuring activities were $7.9 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. The facility was partially utilized on March 10, 2000 to fund
the acquisition of the remaining ownership interest in TRIP.com. Facility fees
range from 10.0 to 22.5 basis points. As of March 31, 2000, the nominal interest
rate for amounts outstanding under this agreement was 6.72%, based on LIBOR
rates.
In April 2000, the Company entered into a new $500.0 million credit
facility that expires in July 2001. Facility fees range from 10.0 to 22.5 basis
points. Interest on the borrowings may be either Base Rate or LIBOR rate based.
This new agreement replaces the $200.0 million 16-month credit facility entered
into in March 2000 and the existing $200.0 million 364-day credit agreement that
was due to expire in July 2000.
NOTE 6 - STOCKHOLDERS' EQUITY
For the quarter ended March 31, 2000, the Company accounted for a $0.5
million unrealized holding gain on available-for-sale marketable equity
securities in accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities". The
after tax effect of $0.3 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 to begin upon completion of the Company's current
$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 March 31, 2000, the Company
repurchased 2,778,600 of its shares in the open market at a total cost of $57.4
million. As of March 31, 2000, the Company held a total of 12,317,570 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,
10
<PAGE>
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 quarter ended March 31, 1999 was $77.6
million, comprised of net income of $78.0 million, unrealized holding losses on
securities of $(0.2) million, and foreign currency translation adjustments of
$(0.2) million.
NOTE 7 - INTEREST IN EQUANT
At March 31, 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 March 31, 2000 would
have been $94.1 million. The Company's carrying value of these depository
certificates was nominal at March 31, 2000 and December 31, 1999. Any future
disposal of such depository certificates may result in significant gains to the
Company. (1)
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 41,500 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 quarter ended March 31, 2000, we
generated 95.6% of our revenue from electronic global distribution services and
4.4% 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
- ----------------
(1) See Statement Regarding Forward-Looking Statements on page 17.
11
<PAGE>
of the periods indicated. The location of the subscriber making the booking
determines the geographic region credited with the related revenues and
bookings:
<TABLE>
Quarter
Ended March 31,
--------------------
2000 1999
---- ----
Percentage of Revenue
- ---------------------
<S> <C> <C>
U.S. Market 39.8 % 42.3 %
All Other Markets 60.2 57.7
--------------------
100.0 % 100.0 %
====================
Worldwide Bookings
- ------------------
(in millions)
U.S. Market:
Air 33.7 36.0
Car/Hotel/Leisure 5.8 5.7
--------------------
Total Bookings 39.5 41.7
All Other Markets:
Air 54.8 53.7
Passive Booking Adjustment - Japan (1) 1.0 -
--------------------
Adjusted Air 55.8 53.7
Car/Hotel/Leisure 1.6 1.5
--------------------
Total Bookings 57.4 55.2
Total Worldwide Bookings 96.9 96.9
====================
(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.
</TABLE>
12
<PAGE>
FIRST QUARTER 2000 COMPARED TO FIRST QUARTER 1999
REVENUES. Revenues increased $36.7 million, or 9.1%, to $440.7 million for
the quarter ended March 31, 2000 from $404.0 million for the quarter ended March
31, 1999. Our electronic global distribution services revenues grew $36.1
million, or 9.4%. Total airline booking revenue increased 10.0% over the quarter
ended March 31, 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 increases in car, hotel, and leisure booking revenues,
increased sales of certain marketing services, and the inclusion of TRIP.com
revenues from March 10, 2000, the date of the acquisition.
Worldwide bookings were flat year over year. International booking volumes
increased 2.2% and U.S. booking volumes decreased 5.3% over the same period last
year. Adjusting for the impact of a July 1999 pricing structure change that
reduced reported passive booking volumes in Japan, total international booking
volumes increased 4.0% for the quarter. The increase in international booking
volumes for the quarter was driven by continued strong growth in many
international markets, including double-digit gains in India, Brazil and
Portugal.
The decline in U.S. booking volumes is primarily due to a decrease in our
U.S. market share, which we believe is principally attributable to the effect of
our field sales force transition in 1999. With a new U.S. sales force in place,
we are aggressively executing growth plans for new and renewal business. We
remain confident in the ability of our new sales force to strengthen our
position in the U.S. market by the middle of this year. (1)
COST OF OPERATIONS. Cost of operations expenses increased $1.9 million, or
1.4%, to $134.0 million for the quarter ended March 31, 2000 from $132.1 million
for the quarter ended March 31, 1999. The increase was primarily attributable to
higher network communication costs related to our ongoing migration to a single
Internet protocol and growth in both new and existing markets, and amortization
of goodwill and other intangibles related to the acquisition of TRIP.com and
Terren. These increases were partially offset by net cost savings from the 1999
Swindon, U.K. realignment and lower maintenance and installation expenses.
COMMISSIONS, SELLING AND ADMINISTRATIVE EXPENSES. Commissions, selling and
administrative expenses increased $29.7 million, or 19.7%, to $180.7 million for
the quarter ended March 31, 2000 from $151.0 million for the quarter ended March
31, 1999. Commissions paid to national distribution companies ("NDCs") and
subscriber incentive payments increased $26.4 million, or 25.1%, to $131.4
million for the quarter ended March 31, 2000 from $105.0 million for the quarter
ended March 31, 1999. The growth in electronic global distribution services
revenues resulted in increased commissions to NDCs, which are generally based on
a percentage of booking revenues, and have therefore grown at a rate consistent
with the growth in
- ---------------
(1) See Statement Regarding Forward-Looking Statements on page 17.
13
<PAGE>
booking fees by country. Incentive payments, which are provided to subscribers
in order to maintain and expand our travel agency customer base, increased in
the quarter principally due to the renegotiation of contracts and the initiation
of new contracts with multinational and key regional accounts. 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 wages, marketing and advertising, and other
expenses since the date of the acquisition.
SPECIAL CHARGES. 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 quarter ended
March 31, 2000 to write off in-process research and development costs related to
our acquisition of TRIP.com.
OTHER INCOME (EXPENSE). Other income (expense) includes interest expense
net of interest income, foreign exchange gains or losses, and other
non-operating items. Other income (expense), net decreased $20.7 million to
$11.7 million in expense for the quarter ended March 31, 2000 from $9.0 million
in income for the quarter ended March 31, 1999. This decrease 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. 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 $11.6 million, or 22.3%, to $40.2
million for the quarter ended March 31, 2000 from $51.8 million for the quarter
ended March 31, 1999. The decrease was a result of lower income before income
taxes for the quarter ended March 31, 2000 compared to the quarter ended March
31, 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 is primarily due to non-deductible amortization of
intangibles arising from the acquisition of TRIP.com.
NET INCOME. Net income decreased $30.6 million, or 39.2%, to $47.4 million
for the quarter ended March 31, 2000 from $78.0 million for the quarter ended
March 31, 1999. Net income as a percentage of revenues decreased to 10.8% for
the quarter ended March 31, 2000 from 19.3% for the quarter ended March 31,
1999. This decrease was principally the result of a one-time special charge
recorded in the quarter ended March 31, 2000, related to the US Airways Services
Agreement, and the write-off of in-process research and development costs and
amortization of intangibles 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.
14
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LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $47.9 million and working capital totaled
$66.8 million at March 31, 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 $46.1 million during the quarter ended March 31, 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.
Cash flow used in investing activities for the quarter ended March 31, 2000
principally relates to $101.2 million in net cash used to acquire TRIP.com and
Terren. The remaining investing activities relate to purchases of mainframe data
processing and network equipment and purchases of computer equipment provided to
our travel agency subscribers. Capital expenditures, excluding the
capitalization of internally developed software, were $11.0 million for the
quarter ended March 31, 2000 compared to $12.9 million for the quarter ended
March 31, 1999. In addition, we used $5.0 million to acquire a minority
ownership equity position in a technology-related company during the quarter
ended March 31, 2000.
Cash flow used in financing activities for the quarter ended March 31, 2000
includes repurchases of Common Stock for treasury totaling $57.4 million and
$8.1 million in dividends paid to our stockholders. We paid a $0.09 per share
cash dividend on February 18, 2000 to stockholders of record as of February 4,
2000. In March 2000, we entered into a new $200.0 million 16-month credit
facility that was partially utilized to fund the TRIP.com acquisition. During
the quarter ended March 31, 2000, net borrowings under our credit agreements
totaled $135.0 million and we had $144.0 million available under our existing
revolving credit facilities at March 31, 2000.
In April 2000, we entered into a new $500.0 million credit facility that
expires in July 2001. This new agreement replaces the $200.0 million 16-month
credit facility entered into in March 2000 and our existing $200.0 million
364-day credit agreement that was due to expire in July 2000.
We expect that future cash requirements will principally be for capital
expenditures, repayments of indebtedness, repurchases of our Common Stock for
treasury, acquisitions of additional NDCs and other 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)
- -------------
(1) See Statement Regarding Forward-Looking Statements on page 17.
15
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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, we
declared a cash dividend of $0.09 per share to be paid on May 19, 2000 to
stockholders of record as of May 5, 2000. In addition, on April 21, 2000, the
Board of Directors authorized a new $250.0 million share repurchase program to
begin upon completion of our current $750.0 million program. The declaration and
payment of future dividends, as well as the amount thereof, and the amount of
future repurchases of our Common Stock beyond the authorized stock repurchase
programs 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 17.
16
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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.
17
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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 March 31, 2000, we have entered into foreign
exchange forward contracts that provide for purchases of GBP 7.0 million, CAD
1.0 million, and EUR 3.5 million at various dates throughout 2000. At March 31,
2000 and December 31, 1999, the notional principal amounts of outstanding
forward contracts were $29.7 million and $19.6 million, respectively. The fair
value of outstanding forward contracts at March 31, 2000 and December 31, 1999
was $(1.0) million and $0.03 million, respectively.
As of March 31, 2000, we were party to a $200.0 million 364-day credit
agreement, a $200.0 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 quarter ended March 31, 2000, the effective interest rate
for loans outstanding under the Credit Agreements was 6.42%. If interest rates
had averaged 10% higher in the first quarter of 2000, our interest expense would
have hypothetically increased by $0.9 million. This amount was calculated by
applying the hypothetical increase to the applicable interest rates and
outstanding principal throughout the quarter ended March 31, 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 March 31, 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 March 31, 2000 and December 31,
1999 was $1.2 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
March 31, 2000 equity prices of our marketable securities, our financial
position would not be materially affected. (1)
- ------------
(1) See Statement Regarding Forward-Looking Statements on page 17.
18
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PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 10, 2000, we issued 5,499,630 shares of Common Stock, previously
held in treasury, in connection with the acquisition of Trip.com (See Note 2 -
Business Acquisitions and Investments, on page 7, for further discussion of this
acquisition). The shares, with an estimated fair value of $98.9 million, were
issued, along with cash and other consideration, pursuant to the Merger
Agreement dated as of February 7, 2000, by and among us, TRIP.com, and Galileo
Acquisition Co., to certain shareholders of Trip.com in exchange for all
outstanding shares of Trip.com capital stock not previously owned by us. This
transaction was exempt from the registration requirements of the U.S. Securities
Act of 1933 pursuant to Section 4(2) and Rule 506 of Regulation D thereof. No
underwriters were engaged nor were general solicitations made in connection with
this transaction.
ITEM 5. OTHER INFORMATION
On April 14, 2000, we acquired Travel Automation Services Limited, which
includes Galileo UK, our national distribution company in the United Kingdom,
from British Airways, Plc. Galileo UK distributes our system to travel agents
across the United Kingdom and provides travel technology solutions tailored to
the unique requirements of the United Kingdom market. This transaction will be
accounted for using the purchase method of accounting. Accordingly, a portion of
the purchase price will be allocated to net tangible and intangible assets based
on their estimated fair values.
In March 2000, we announced the launch of Quantitude, Inc. ("Quantitude"),
a new, wholly owned telecommunications subsidiary. Quantitude has recently begun
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 to Quantitude, which will continue to operate our existing
network during the three-year conversion process. (1)
- ------------
(1) See Statement Regarding Forward-Looking Statements on page 17.
19
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit Number Exhibit Description
- -------------- -------------------
3.1 Amendment No. 1 to Restated By-Laws of Galileo
International, Inc.
10.1 Second Amendment to Stockholders' Agreement
among Galileo International,Inc., certain of its
Stockholders and certain related parties of
such Stockholders
10.2 Contribution and Assumption Agreement dated as of
December 30, 1999 between Galileo International, L.L.C.
and GIO Services, L.L.C.
10.3 Pledge and Security Agreement dated as of December 30,
1999 by and among GIO Services, L.L.C., United
Airlines, Inc. and Bank of America, N.A.
10.4 Contribution and Assumption Agreement dated as of March
31, 2000 between Galileo International, L.L.C. and GIO
Services, L.L.C.
10.5 Pledge and Security Agreement dated as of March 31, 2000
by and among GIO Services, L.L.C., US Airways, Inc.
and Bank of America, N.A.
10.6 $200,000,000 16-Month Credit Agreement dated as of
March 8, 2000
10.7 Letter Agreement dated as of May 12, 1995, amending
Rosemont Office Lease dated March 31, 1995
10.8 First Amendment dated as of September 19, 1995 to
Rosemont Office Lease dated March 31, 1995, as amended
10.9 First Amendment dated as of October 30, 1997 to Rosemont
Office Lease dated March 31, 1995, as amended
10.10 Second Amendment dated as of March 3, 1999 to Rosemont
Office Lease dated March 31, 1995, as amended
20
<PAGE>
10.11 Letter dated March 22, 1999 to exercise option to expand
leased property under Rosemont Office Lease dated
March 31, 1995, as amended
10.12 Third Amendment dated as of April 1, 1999 to Rosemont
Office Lease dated March 31, 1995, as amended
*10.13 Employment Agreement of James E. Barlett
*10.14 Galileo International Management Incentive Plan 1999
Plan Summary
27.1 Financial Data Schedule
*Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K - The Company filed two reports on Form 8-K with the
Securities and Exchange Commission, the first on February 15, 2000 with respect
to Item 5 and the second on March 24, 2000 with respect to Item 2.
21
<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: May 11, 2000 By: /s/ Cheryl M. Ballenger
-----------------------
Cheryl M. Ballenger
Senior Vice President, Controller
and acting Chief Financial Officer
(Principal Financial and
Accounting Officer)
22
<PAGE>
GALILEO INTERNATIONAL, INC.
Exhibit Index
Exhibit Number Exhibit Description
- -------------- -------------------
3.1 Amendment No. 1 to Restated By-Laws of Galileo
International, Inc.
10.1 Second Amendment to Stockholders' Agreement
among Galileo International, Inc., certain of its
Stockholders and certain related parties of
such Stockholders
10.2 Contribution and Assumption Agreement dated as of
December 30, 1999 between Galileo International, L.L.C.
and GIO Services, L.L.C.
10.3 Pledge and Security Agreement dated as of December 30,
1999 by and among GIO Services, L.L.C., United
Airlines, Inc. and Bank of America, N.A.
10.4 Contribution and Assumption Agreement dated as of
March 31, 2000 between Galileo International, L.L.C. and
GIO Services, L.L.C.
10.5 Pledge and Security Agreement dated as of March 31, 2000
by and among GIO Services, L.L.C., US Airways, Inc.
and Bank of America, N.A.
10.6 $200,000,000 16-Month Credit Agreement dated as of
March 8, 2000
10.7 Letter Agreement dated as of May 12, 1995, amending
Rosemont Office Lease dated March 31, 1995
10.8 First Amendment dated as of September 19, 1995 to
Rosemont Office Lease dated March 31, 1995, as amended
10.9 First Amendment dated as of October 30, 1997 to Rosemont
Office Lease dated March 31, 1995, as amended
10.10 Second Amendment dated as of March 3, 1999 to Rosemont
Office Lease dated March 31, 1995, as amended
23
<PAGE>
10.11 Letter dated March 22, 1999 to exercise option to expand
leased property under Rosemont Office Lease dated
March 31, 1995, as amended
10.12 Third Amendment dated as of April 1, 1999 to Rosemont
Office Lease dated March 31, 1995, as amended
*10.13 Employment Agreement of James E. Barlett
*10.14 Galileo International Management Incentive Plan 1999
Plan Summary
27.1 Financial Data Schedule
*Management contract or compensatory plan or arrangement.
24
<PAGE>
Exhibit 3.1
AMENDMENT NO. 1 TO RESTATED BY-LAWS OF
GALILEO INTERNATIONAL, INC.
Dated as of July 15, 1999
Article III, Section 2, Number and Term of Directors Holding
Office, of the Restated By-laws of Galileo International, Inc. is
amended to delete the words "thirteen (13) members (including such
directors as shall be elected by any series of special voting
preferred stock of the Corporation) or such other number" in the first
sentence thereof and to replace such words with the words "such number
of members".
Exhibit 10.1
SECOND AMENDMENT TO
STOCKHOLDERS' AGREEMENT
Dated as of July 15, 1999
Section 2.01, Size of the Board, of the Stockholders' Agreement Among
Galileo International, Inc., certain of its Stockholders and certain Related
Parties of such Stockholders, dated as of July 30, 1997, as amended June 30,
1998, is amended to delete the words "13 members" in the first sentence
thereof and to replace such words with the words 'such number of members as
shall be fixed from time to time by the Board".
Exhibit 10.2
CONTRIBUTION AND ASSUMPTION AGREEMENT
THIS CONTRIBUTION AND ASSUMPTION AGREEMENT dated as of
December 30, 1999 (the "Agreement"), is entered into between GALILEO
INTERNATIONAL, L.L.C., a Delaware limited liability company
("Galileo"), having its principal place of business at 9700 West
Higgins Road, Suite 400, Rosemont, Illinois 60018, and GIO Services,
L.L.C., a Delaware limited liability company ("Services"), having its
principal place of business at 9700 West Higgins Road, Suite 400,
Rosemont, Illinois 60018.
PRELIMINARY STATEMENTS
A. Galileo is party to a Services Agreement dated as of
July 30, 1997 (the "Services Agreement"), among Galileo, United Air
Lines, Inc. ("United"), US Airways, Inc. and Air Canada.
B. Services is a wholly-owned subsidiary of Galileo
formed for the purpose of making provision for the payment to United
on July 30, 2002 (the "Payment Date"), for application to that portion
payable to United of the "Price Increase Payment" (as defined in the
Services Agreement) multiplied by the "Cost of Carry Factor" (as
defined in the Services Agreement) up to an aggregate maximum amount
not exceeding $113,138,262.00 (the "Assumed Liability").
C. In furtherance of the foregoing, Galileo wishes to
contribute to the capital of Services certain assets projected to
yield cash proceeds on the Payment Date equal to or exceeding the
Assumed Liability, and Services wishes to assume the Assumed Liability.
NOW, THEREFORE, Galileo and Services agree as follows:
1. Transfer of Contributed Assets; Transfer and Assumption of
Assumed Liability.
(a) Galileo hereby sells, assigns, contributes and
transfers to Services all the right, title and interest of Galileo in
and to (i) $85,944,000.00 in cash (the "Contributed Cash") and (ii)
that certain Certificate of Deposit, dated December 30, 1999, issued
by by Bank of America, National Association, in a face amount of
$11,381,000.00 (subject to adjustment upward as provided therein), and
having maturity date of July 26, 2002 (the "Contributed Instrument";
the Contributed Cash and the Contributed Instrument are referred to
herein collectively, as the "Contributed Assets"), as a contribution
to the capital of Services.
(b) Galileo hereby transfers to Services its obligation
under the Services Agreement to pay the Assumed Liability when due,
and Services hereby assumes from Galileo the obligation to pay the
Assumed Liability when due. Without limiting the scope of the
foregoing transfer and assumption of the Assumed Liability, Services
hereby confirms that it will pay the Assumed Liability to United on
the Payment Date. Galileo hereby confirms that it has retained all
obligations arising under the Services Agreement other than the
Assumed Liability and that Services shall have no obligation to pay or
perform any such retained obligations under the Services Agreement.
2. Delivery of Contributed Assets to Services.
Concurrently with the execution and delivery of this
Agreement, Galileo shall deliver to Services: (a) the Contributed
Cash, in immediately available funds, by wire transfer to Account
Number 8188 311 869, maintained in the name of Services with Bank of
America, National Association; and (b) the Contributed Instrument,
together with a duly executed instrument of transfer, duly
acknowledged by Bank of America, National Association, as payor under
the Contributed Instrument, effecting transfer thereof to Services.
3. Representations and Warranties of Galileo.
(a) Galileo is a limited liability company duly formed,
validly existing and in good standing under the laws of the
jurisdiction named at the beginning hereof and is duly qualified to do
business, and is in good standing, in every jurisdiction in which the
nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by Galileo of
this Agreement and all other instruments and documents to be delivered
hereunder, and the transactions contemplated hereby and thereby, are
within Galileo's limited liability company powers, have been duly
authorized by all necessary limited liability company action, do not
contravene (i) Galileo's certificate of formation or limited liability
company agreement, (ii) any law, rule or regulation applicable to
Galileo, (iii) any contractual restriction contained in any indenture,
loan or credit agreement, lease, mortgage, security agreement, bond,
note, or other agreement or instrument binding on or affecting Galileo
or its property or (iv) any order, writ, judgment, award, injunction
or decree binding on or affecting Galileo or its property, and do not
result in or require the creation of any lien, security interest or
other charge or encumbrance upon or with respect to any of its
properties.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
Galileo of this Agreement or any other document or instrument to be
delivered hereunder.
(d) This Agreement constitutes the legal, valid and
binding obligation of Galileo enforceable against Galileo in
accordance with its terms.
(e) Prior to their transfer hereunder, the Contributed
Assets were owned by Galileo free and clear of any lien, claim or
encumbrance. Pursuant to the transfer of the Contributed Assets
hereunder, Services has acquired full legal title and all beneficial
interest in the Contributed Assets, free and clear of any lien, claim
or encumbrance.
4. Representations and Warranties of Services.
(a) Services is a limited liability company duly formed,
validly existing and in good standing under the laws of the
jurisdiction named at the beginning hereof and is duly qualified to do
business, and is in good standing, in every jurisdiction in which the
nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by Services
of this Agreement and all other instruments and documents to be
delivered hereunder, and the transactions contemplated hereby and
thereby, are within Services' limited liability company powers, have
been duly authorized by all necessary limited liability company
action, do not contravene (i) Services' certificate of formation or
limited liability company agreement, (ii) any law, rule or regulation
applicable to Services, (iii) any contractual restriction contained in
any indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or
affecting Services or its property or (iv) any order, writ, judgment,
award, injunction or decree binding on or affecting Services or its
property, and do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect
to any of its properties.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
Services of this Agreement or any other document or instrument to be
delivered hereunder.
(d) This Agreement constitutes the legal, valid and
binding obligation of Services enforceable against Services in
accordance with its terms.
5. Covenant of Galileo and Services to Maintain the Separate
Existence of Services.
Each of Galileo and Services hereby covenants and agrees
that so long as the Assumed Liability shall remain outstanding, it
shall do all things necessary to maintain the limited liability
company existence of Services separate and apart from Galileo and its
affiliates other than Services (such affiliates being referred to
herein as the "Other Affiliates"). Without limiting the generality of
the foregoing, Galileo and Services shall ensure that Services:
(i) practices and adheres to limited liability company formalities,
such as maintaining appropriate limited liability company books and
records; (ii) maintains at least one member of its limited liability
company board of managers or directors who is not a director of
Galileo or of any Other Affiliate or a person or entity related to
Galileo or any Other Affiliate; (iii) owns or leases all office
furniture and equipment necessary to operate its business;
(iv) refrains from guaranteeing or otherwise becoming liable for any
obligations of Galileo or any Other Affiliate; (v) exerts its best
efforts to maintain all of its deposit and other bank accounts and all
of its assets separate from those of Galileo and each Other Affiliate;
(vi) maintains all of its financial records separate and apart from
those of Galileo and each Other Affiliate; (vii) compensates all its
employees, officers, consultants and agents for, or reimburses Galileo
and each Other Affiliate, as applicable, in respect of services
provided to it by employees, officers, consultants and agents of
Galileo or such Other Affiliate, out of its own funds; (viii) accounts
for and manages all of its liabilities separately from those of
Galileo and each Other Affiliate; (ix) allocates, on an arm's-length
basis, all shared operating services, leases and expenses, including,
without limitation, those associated with the services of shared
consultants and agents and shared computer equipment and software;
(x) refrains from making loans or other advances to Galileo or any
Other Affiliate; and (xi) refrains from paying dividends or making
distributions more frequently than monthly, and, in each case, as duly
authorized by its board of directors and in accordance with applicable
limited liability company law.
6. General Covenants of Galileo and Services.
Each of Galileo and Services hereby agrees that so long as
the Assumed Liability shall remain outstanding, it will:
(i) comply in all material respects with all
applicable laws, rules, regulations and orders with
respect to it, its business and properties;
(ii) preserve and maintain its limited liability
company existence, rights, franchises and privileges in
the jurisdiction of its formation, and qualify and remain
qualified in good standing as a foreign limited liability
company in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises,
privileges and qualification would materially adversely
affect its business or operations;
(iii) at any time and from time to time upon notice
to it from the other party hereto, and during regular
business hours, permit such other party, or its agents or
representatives, to visit its offices and properties for
the purpose of examining records and to discuss matters
relating to this Agreement or performance hereunder with
any of its officers or employees having knowledge of such
matters; and
(iv) make such filings, execute such documents or
take such other action as the other party hereto may
reasonably request to better evidence or effectuate, as
applicable, the transfer of the Contributed Assets and the
Assumed Liability by Galileo to Services hereunder and the
acceptance of the Contributed Asset and the assumption of
the Assumed Liability by Services from Galileo hereunder.
7. Indemnification.
Galileo shall indemnify and hold Services harmless from
any liability, loss, injury or damage, together with all reasonable
out-of-pocket costs and expenses relating thereto, including legal and
accounting fees and expenses, arising out of or resulting directly or
indirectly from (a) any breach of any of the representations,
warranties, covenants, agreements or any other obligations of Galileo
hereunder or (b) any claim by any party to the Services Agreement
(other than Galileo or United) that the transactions evidenced by this
Agreement and the other instruments and agreements related hereto
violate the terms of the Services Agreement.
8. Term of Agreement.
This Agreement shall continue in effect so long as the Assumed
Liability shall remain outstanding.
9. Modification and Waiver.
No modification or waiver of any provision of this Agreement shall be
effective unless such modification or waiver shall be in writing and
signed by a duly authorized officer of Galileo and Services and the
same shall then be effective only for the period and on the conditions
and for the specific instances and purposes specified in such writing.
10. Notices; Choice of Law; Successors and Assigns; Counterparts.
(a) All communications, demands and notices provided for
hereunder shall be in writing (including telecopy or electronic
facsimile transmission or similar writing) and shall be given to the
other party at its address or telecopy number set forth on the
signature page hereof or at such other address or telecopy number as
such party may hereafter specify for the purposes of notice to such
party. Each such notice or other communication shall be effective
upon receipt thereof at then effective address or telecopy number, as
applicable, for notices.
(b) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
(c) This Agreement shall be binding upon and inure to the
benefit of Galileo and Services and their respective successors and
assigns, but nothing herein shall give Galileo the right to assign
this Agreement or its rights hereunder without the express prior
written consent of Services.
(d) Galileo expressly acknowledges and agrees that
Services is assigning its rights hereunder to United to secure the
obligations of Services to United in respect of the Assumed Liability
and under the Security Agreement, and that pursuant to such
assignment, United may be entitled to directly enforce against Galileo
the rights of Services under this Agreement. Each of Galileo and
Services hereby expressly acknowledges and agrees that United shall be
a third-party beneficiary of this Agreement.
(e) This Agreement may be signed in any number of
counterparts, which, when taken together, shall constitute a single
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Contribution and Assumption Agreement to be signed by their duly
authorized officers on their respective behalves as of the date first
above written.
GALILEO INTERNATIONAL, L.L.C.
By:___________________________
Name: Paul H. Bristow
Title: Executive Vice President
Finance and Chief
Financial Officer
9700 West Higgins Road
Rosemont, Illinois 60018
Telecopy Number: (847) 518-4915
Attention: Paul H. Bristow
GIO SERVICES, L.L.C.
By:___________________________
Name: Paul H. Bristow
Title: Chairman, President and
Chief Executive Officer
9700 West Higgins Road
Rosemont, Illinois 60018
Telecopy Number: (847) 518-4774
Attention: Anna Walsh
[Execution Copy]
CONSENT AND RELEASE
Reference is made to the Contribution and Assumption
Agreement dated as of December 30, 1999 the ("Contribution
Agreement"), between Galileo International, L.L.C. and GIO Services,
L.L.C. Terms defined in the Contribution Agreement and not otherwise
defined in this Consent shall have the meanings herein ascribed to
them in the Contribution Agreement. United Air Lines, Inc. ("United")
hereby consents to the execution, delivery and performance of the
Contribution Agreement by the parties thereto, including, without
limitation, the transfer by Galileo to Services, and the assumption by
Services from Galileo, of the Assumed Liability. United further
agrees that, effective upon satisfaction of the condition precedent
that United shall have received each of the items listed on Schedule A
hereto, in form and substance satisfactory to United, United (i)
releases Galileo from its obligation to pay the Assumed Liability when
due and (ii) agrees to look only to Services for payment thereof.
United further acknowledges that Services has assumed no liability to
pay or otherwise perform any obligations of Galileo under the Services
Agreement other than the Assumed Liability, and Galileo hereby affirms
to United that Galileo shall remain fully liable for the payment and
performance of all its obligations under the Services Agreement other
than the Assumed Liability.
[THIS SPACE INTENTIONALLY LEFT BLANK]
This Consent and Release may be signed in any number of
counterparts, which, when taken together, shall constitute a single
agreement.
UNITED AIR LINES, INC.
By:_______________________
Name:
Title:
GALILEO INTERNATIONAL, L.L.C.
By:_______________________
Name: Paul H. Bristow
Title: Executive Vice
President Finance
and
Chief Financial
Officer
Acknowledged and agreed as of
this ___ day of December, 1999
GIO SERVICES, L.L.C.
By:_______________________
Name: Paul H. Bristow
Title: Chairman, President and
Chief Executive Officer
SCHEDULE A to Consent and Release
CLOSING DOCUMENTATION
1. Contribution and Assumption Agreement dated as of December 30,
1999 (the "Contribution Agreement"), between Galileo
International, L.L.C. ("Galileo") and GIO Services, L.L.C.
("Services").
2. Consent and Release dated as of December 30, 1999 (the
"Consent"), between United Airlines, Inc. ("United") and
Galileo, and acknowledged by Services.
3. Pledge and Security Agreement dated as of December 30, 1999 (the
"Security Agreement"), among Services, United and Bank of
America, National Association.
4. Letter agreement dated as of December 30, 1999, between Galileo
and United, relating to the Services Agreement referred to in
the Contribution Agreement.
5. Certificate of the Secretary of Galileo International, Inc.
("GII"), the sole member of Galileo, certifying (a) the copy of
resolutions of GII attached thereto authorizing, among other
things, the execution, delivery and performance by Galileo of
the Limited Liability Company Agreement of GIO Services, L.L.C.
(the "Services LLC Agreement"), the Contribution Agreement, the
Consent and any related documents and instruments, (b) the copy
of the certificate of incorporation of GII attached thereto and
(c) the copy of the by-laws of GII attached thereto.
6. Certificate of the Assistant Secretary of Galileo, certifying
(a) the copy of the certificate of formation of Galileo attached
thereto, (b) the copy of the limited liability company agreement
of Galileo attached thereto and (c) the names and true
signatures of certain officers of Galileo authorized to execute
and deliver the Services LLC Agreement, the Contribution
Agreement, the Consent and any related documents and instruments.
7. Certificate of the Assistant Secretary of Services certifying
(a) the copy of the certificate of formation of Services
attached thereto, (b) the copy of the Services LLC Agreement
attached thereto and (c) the names and true signatures of
certain officers of Services authorized to execute and deliver
the Contribution Agreement, the Consent, the Security Agreement
and any related documents and instruments.
8. Uniform Commercial Code Financing Statement naming Services as
debtor and United as secured party, to be filed with the
Secretary of State of Illinois.
9. Opinion of Anthony Swanagan, Senior Vice President, General
Counsel and Secretary of Galileo, regarding various corporate
matters with respect to Galileo and Services in connection with
the Contribution Agreement, the Consent and the Security
Agreement, as applicable.
10. Opinion of Sidley & Austin, special counsel to Galileo and
Services, regarding enforceability and perfection.
Exhibit 10.3
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement dated December 30, 1999 (this
"Agreement"), is entered into between GIO Services, L.L.C., a Delaware
limited liability company ("Pledgor"), Bank of America, National Association
("Bank") and United Air Lines, Inc., a Delaware corporation ("United").
PRELIMINARY STATEMENT
A. Pursuant to that certain Contribution and Assumption Agreement
dated as of December 30, 1999 (the "Contribution Agreement") between Galileo
International, L.L.C. and Pledgor, Pledgor has assumed the "Assumed
Liability" (as defined in the Contribution Agreement) to United and United
has agreed to the assumption of the Assumed Liability by Pledgor.
B. Pledgor has established a deposit account with the Bank, Account
No. 8188311869 (the "Deposit Account").
C. Bank has also established a securities account for Pledgor,
Account No. 857101 (the "Securities Account").
D. Galileo International, L.L.C. has transferred to Pledgor a
certificate of deposit from the Bank in the original face amount of
$11,381,000, a copy of which is attached hereto as Exhibit A (the "Stamps
CD").
E. Pledgor has acquired an additional certificate of deposit from
the Bank in the original face amount of $85,844,000, with a maturity date of
July 29, 2002, which is a book entry certificate of deposit held in the
Securities Account (the "Additional CD," and together with the Stamps CD, the
"Pledged CDs").
F. To secure the payment of the Assumed Liability on the date due,
Pledgor has agreed to pledge to United the Pledged CDs and to grant to United
a security interest in the Deposit Account, the Securities Account and
certain related property.
AGREEMENT
ARTICLE 1
SECURITY INTEREST
Section 1.1. Pledge and Grant of Security Interest. Pledgor
hereby pledges to United and grants to United a security interest in all of
Pledgor's right, title and interest in and to the following property, whether
now or hereafter acquired or existing and wheresoever located:
(a) the Deposit Account and the Securities Account (collectively, the
"Accounts" and individually an "Account");
(b) any free credit balance or other money, now or hereafter credited
to, or owing from Bank to Pledgor in respect of, either Account;
(c) any money, securities (certificated or uncertificated),
securities entitlements, commodity contracts, instruments,
documents, general intangibles, financial assets or other
investment property in or credited to, or distributed from,
either Account, now or in the future;
(d) all of Pledgor's books and records relating thereto;
(e) the Pledged CDs;
(f) all the proceeds of the sale, exchange, redemption or exercise of
any of the foregoing thereof, including but not limited to, any
dividend, interest payment or other distribution of cash or
property in respect thereof; and
(g) any rights incidental to the ownership of any of the foregoing,
such as voting, conversion and registration rights and right of
recovery for violations of applicable securities laws
All of the foregoing is referred to herein collectively as the "Collateral."
In addition, Pledgor hereby assigns to United and grants to United a
security interest in, all of Pledgor's rights under the Contribution
Agreement (the "Assigned Agreement"). Notwithstanding the foregoing, United
agrees that unless an Event of Default is outstanding, only Pledgor shall be
entitled to exercise the rights of Pledgor under the Assigned Agreement.
Section 1.2. Secured Obligations. The security interest granted
by Pledgor herein secures payment of the Assumed Liability and all
obligations arising out of this Agreement (the "Secured Obligations").
Section 1.3. Delivery of Pledged CDs. To effectuate the pledge of
the Stamps CD, Pledgor agrees to deliver the Stamps CD to United promptly
after receipt by Pledgor of the Stamps CD, together with an assignment in
blank or to United, in the form attached to the Stamps CD. To effectuate the
pledge of the Additional CD, Pledgor will cause the Bank to note the security
interest of United in the Additional CD on its records concerning the
Securities Account. The Bank waives any right of set-off it may have with
respect to either Pledged CD.
Section 1.4. Voting Rights. Except as provided in the following
sentence, Pledgor may exercise any voting rights that it may have as to any
of the Collateral and any consent or voting rights of Pledgor under the
Assigned Agreement for any purpose which is not inconsistent with this
Agreement. Upon the occurrence and continuance of an "Event of Default" (as
defined in Section 4.1 below) and upon notice to the Pledgor, United may
exercise all voting rights as to any of the Collateral and any consent or
voting rights of Pledgor under the Assigned Agreement and Pledgor shall
deliver to United all notices, proxy statements, proxies and other
information and instruments relating to the exercise of such rights received
by Pledgor from the issuers of any of the Collateral promptly upon receipt
thereof, and shall at the request of United execute and deliver to United any
proxies or other instruments which are, in the judgment of United, necessary
for United to validly exercise such voting and consensual rights.
Section 1.5. The Accounts and Investments. (a) The Bank agrees to
transfer all collected funds from time to time in the Deposit Account to the
Securities Account. Funds in the Securities Account will be invested by
Bank, at the direction of Pledgor, only in "Permitted Investments" (as
hereinafter defined); provided, however, that at all times not less than
$85,844,000 shall be invested in the Additional CD. It is understood and
agreed that neither Bank nor Pledgor shall be liable for any loss arising
from such investment in Permitted Investments. Any investment income from
investment of funds in the Securities Account shall be retained in the
Securities Account or transferred to the Deposit Account.
(b) For purposes of this Agreement, "Permitted Investments" means any
one or more of the following instruments, obligations or securities, in each
case with a maturity of not later than July 29, 2002 (or without a scheduled
maturity in the case of money market funds referred to in clause (7) below):
(1) direct obligations of, and obligations guaranteed as to
payment of principal and interest by, the United States or any agency
or instrumentality of the United States;
(2) certificates of deposit, demand or time deposits of,
bankers' acceptances issued by, or federal funds sold by any depository
institution (including the Bank) or trust company incorporated under
the laws of the United States or any state and subject to supervision
and examination by federal and/or state banking authorities and the
deposits of which are insured by the Federal Deposit Insurance
Corporation, so long as at the time of such investment or contractual
commitment providing for such investment the long-term unsecured debt
obligations of such depository institution or trust company have a
credit rating of Aa2 by Moody's Investors Service, Inc. ("Moody's").
(3) repurchase obligations with respect to (i) any security
described in clause (1) above or (7) below, or (ii) any other security
issued or guaranteed by any agency or instrumentality of the United
States, in either case entered into with a federal agency or depository
institution (including the Bank) or trust company acting as principal,
whose obligations having the same maturity as that of the repurchase
agreement would be Permitted Investments under clause (2) above;
(4) commercial paper having, at the time of such investment or
contractual commitment providing for such investment, a rating of P-1
by Moody's;
(5) investments in Permitted Investments maintained in "sweep
accounts," short-term asset management accounts and the like utilized
for the investment, on an overnight basis, of residual balances in
investment accounts maintained at the Bank or any other depository
institution or trust company organized under the laws of the United
States or any state that is a member of the Federal Deposit Insurance
Corporation, the short-term debt of which is rated P-1 by Moody's;
(6) guaranteed investment contracts entered into with any
financial institution having a final maturity of not more than one
month from the date of acquisition, the short-term debt securities of
which institution is rated P-1 by Moody's; and
(7) funds classified as money market funds or invested in money
market instruments consisting of: United States Treasury bills, other
obligations issued or guaranteed by the United States government, its
agencies or instrumentalities; certificates of deposit; banker's
acceptances; and commercial paper (including variable master demand
notes); provided, however, that redemptions shall be permitted on a
daily or next business day basis.
(c) The Bank, acting as securities intermediary (as defined in the
Uniform Commercial Code as in effect in the State of Illinois (the "Illinois
UCC"), hereby expressly agrees that: (i) all matters relating to the
Securities Account will be governed by the law of the State of Illinois; (ii)
all assets held by it as the securities intermediary in the Securities
Account will be treated as "financial assets" under Article 8 of the Illinois
UCC; and (iii) the securities intermediary will not agree to comply with
entitlement orders originated by any Person with respect to the investments
or financial assets held in the Securities Account other than Pledgor, or,
after receipt of written notice from United that an Event of Default has
occurred and is outstanding, United.
The Bank acknowledges that United has a security interest in the
Collateral, including, but not limited to, the Deposit Account, the
Securities Account, and the Pledged CDs. Any claim to, security interest in
or lien upon the Securities Account or any financial assets held therein
which Bank now has or at any time hereafter may acquire shall be junior and
subordinate to the security interests of United in such Collateral, except
for Bank's liens securing: (i) regular fees and charges owed with respect to
the operation of the Securities Account and (ii) payment owed to Bank for
open trade commitments for purchases in and for the Securities Account.
Section 1.6. Pledgor to Remain Liable. Pledgor hereby expressly
agrees that, anything herein to the contrary notwithstanding, it shall remain
liable under the Assigned Agreement to observe and perform all of the
conditions and obligations to be observed and performed by the Pledgor
thereunder, all in accordance with and pursuant to the terms and provisions
thereof. United shall not have any duty, responsibility, obligation or
liability under the Assigned Agreement by reason of or arising out of the
assignment thereof to United or the granting to United of a security interest
therein or the receipt by United of any payment relating thereto, nor shall
United be required or obligated in any manner to perform or fulfill any of
Pledgor's obligations thereunder or pursuant thereto, or to make any payment,
or to make any inquiry as to the nature or sufficiency of any payment
received by it or the sufficiency of any performance of any party under the
Assigned Agreement, or to present or file any claim, or to take any action to
collect or enforce any performance or the payment of any amounts which may
have been assigned to it, in which it may have been granted a security
interest or to which it may be entitled at any time or times.
Section 1.7. Duration of Security Interest. The security interest
granted to United hereunder shall not terminate unless and until the Secured
Obligations have been fully paid or performed, at which time such security
interest will terminate. When the security interest is terminated, United
will deliver to, or deliver at the direction of Pledgor, the Pledged CDs and
any of the other Collateral in United's possession.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Pledgor hereby represents and warrants to United as follows:
Section 2.1. Enforceability. This Agreement has been duly
executed and delivered by the Pledgor, constitutes its valid and legally
binding obligation and is enforceable in accordance with its terms against
the Pledgor.
Section 2.2. No Conflict. The execution, delivery and performance
of this Agreement, the pledge of the Pledged CDs, the grant of the security
interest in the Collateral hereunder and the consummation of the transactions
contemplated hereby and thereby will not, with or without the giving of
notice of the lapse of time, (a) violate any material law applicable to the
Pledgor; (b) violate any judgment, writ, injunction or order of any court or
governmental body or officer applicable to the Pledgor; (c) violate or result
in the breach of any material agreement to which the Pledgor is a party or by
which any of its properties, including the Collateral, is bound; or (d)
violate any restriction on the transfer of any of the Collateral.
Section 2.3. No Consents. No consent, approval, license, permit
or other authorization of any third party (other than the Bank) or any
governmental body or officer is required for the valid and lawful execution
and delivery of this Agreement, the pledge of the Pledged CDs, the creation
and perfection of United's security interest in the Collateral, the
assignment by Pledgor of its rights under the Assigned Agreement or the valid
and lawful exercise by United of remedies available to it under this
Agreement or applicable law or of the voting and other rights granted to it
in this Agreement except as may be required for the offer or sale of those
items of Collateral which are securities under applicable securities laws.
Section 2.4. Collateral and Security Interest. The Pledgor is the
sole owner of the Collateral free and clear of all liens, encumbrances and
adverse claims (other than those created by this Agreement), has the
unrestricted right to pledge and to grant the security interest provided for
herein to United. Upon the filing of the Uniform Commercial Code financing
statements in the office identified on Schedule 1, United will have a valid
and perfected first priority security interest in the Collateral free of all
liens, encumbrances, transfer restrictions and adverse claims.
ARTICLE 3
COVENANTS
The Pledgor hereby covenants and agrees with United that the Pledgor
shall:
Section 3.1. Defend Title. Defend its title to the Collateral and
the security interest of United therein against the claims of any person
claiming rights in the Collateral against or through the Pledgor and maintain
and preserve such security interest so long as this Agreement shall remain in
effect.
Section 3.2. No Transfer. Not (a) withdraw any money or property
from either Account, except for transfer from the Deposit Account to the
Securities Account or transfer from the Securities Account to the Deposit
Account, in each case, as provided in Section 1.5, or (b) sell or offer to
sell or otherwise transfer or encumber any portion of the Collateral, other
than in connection with using funds in the Securities Account to make
Permitted Investments.
Section 3.3. Further Assurances.
(a) Pledgor shall, at the Pledgor's expense, do such further acts
and execute and deliver such additional conveyances, certificates,
instruments, legal opinions and other assurances as United may at any time
reasonably request to protect, assure or enforce its interests, rights and
remedies under this Agreement. The Pledgor shall execute and deliver to
United and file with the appropriate governmental offices one or more Uniform
Commercial Code financing statements describing the Collateral, or amendments
or continuations thereof whenever necessary to continue the perfection of
United's security interest hereunder and whenever requested by United.
(b) Pledgor shall promptly deliver any certificate or instrument
constituting or representing any of the Collateral that Pledgor may obtain
possession of from time to time, to the Bank for credit to the Securities
Account, forthwith duly endorsed in blank without restriction.
(c) Pledgor shall promptly deliver to the Bank any endorsements
or instruments which may be necessary or convenient to transfer any financial
assets held by the Bank in the Securities Account, which are registered in
the name of, payable to the order of, or specially endorsed to the Pledgor,
to the Bank or its securities intermediary or to one of their respective
nominees.
Section 3.4. Statements. Cause the Bank to send (and the Bank
hereby agrees to send) to United a complete and accurate copy of every
statement, confirmation, notice or other communication concerning each
Account that the Bank sends to the Pledgor. All information furnished by the
Pledgor concerning the Collateral or otherwise in connection with this
Agreement, is or shall be at the time the same is furnished, accurate,
correct and complete in all material respects.
ARTICLE 4
EVENTS OF DEFAULT; REMEDIES
Section 4.1. Events of Default; Remedies. (a) If any of the
following events (an "Event of Default") has occurred and is continuing:
(i) the Pledgor shall fail to pay the Assumed Liability when the
same becomes due and payable; or
(ii) the Pledgor shall fail to perform any covenant or agreement
contained herein, and such failure shall continue for thirty (30) days
after Pledgor has received notice of such failure from United; or
(iii) the Pledgor shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Pledgor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of
sixty (60) days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial portion of its property)
shall occur; or the Pledgor shall take any corporate action to
authorize any of the actions set forth above in this subsection (iii);
United may, in its discretion: (A) cause each Account to be reregistered in
its sole name or transfer the Securities Account to another broker/dealer in
its sole name; (B) remove any Collateral which is in physical form from
either Account and register such Collateral in its name or in the name of its
broker/dealer, agent or nominee or any of their nominees; (C) exercise any
voting, conversion, registration, purchase or other rights of a holder of any
of the Collateral; (D) collect any notes, checks or other instruments for the
payment of money included in the Collateral and compromise or settle with any
obligor of such instruments; (E) enforce the rights of Pledgor under the
Assigned Agreement; and (F) exercise any other rights with respect to the
Collateral or the Assigned Agreement which a secured party is entitled to
exercise under Article 9 of the Illinois UCC.
(b) If notice of the time and place of any public sale of the
Collateral or the time after which any private sale or other intended
disposition is required by the UCC, the Pledgor acknowledges that ten (10)
days advance notice thereof will be a reasonable notice. United shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. United may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice be made at the time and place to which it was so
adjourned.
(c) The Pledgor shall execute and deliver to the purchasers of the
Collateral all instruments and other documents necessary or proper to sell,
convey, and transfer title to such Collateral.
(d) Any cash held by United as Collateral and all cash proceeds of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of United, be held by United as collateral
for, or then or at any time thereafter be applied (after payment of any
amounts payable to United pursuant to Article 5 below) in whole or in part
against, all or any part of the Secured Obligations in such order as United
may elect. Any surplus of such cash or cash proceeds held by United and
remaining after payment in full of all of United's expenses hereunder and the
Secured Obligations shall be promptly paid over to the Pledgor or to whomever
may be lawfully entitled to receive such surplus.
Section 4.2. The Appointment of United as Agent. The Pledgor
hereby appoints and constitutes United, its successors and assigns, as its
agent and attorney-in-fact for the purpose of carrying out the provisions of
this Agreement following the occurrence and during the continuance of an
Event of Default and taking any action or executing any instrument following
the occurrence and during the continuance of an Event of Default that United
considers necessary or convenient for such purpose, including the power to
endorse and deliver checks, notes and other instruments for the payment of
money in the name of and on behalf of the Pledgor, to endorse and deliver in
the name of and on behalf of the Pledgor securities certificates and execute
and deliver in the name of and on behalf of the Pledgor instructions to the
issuers of uncertificated securities, and to execute and file in the name of
and on behalf of the Pledgor financing statements (which may be photocopies
of this Agreement) and continuations and amendments to financing statements.
This appointment is coupled with an interest and is irrevocable and will not
be affected by the bankruptcy of the Pledgor nor by the lapse of time. The
Pledgor hereby consents and agrees that the issuers of or obligors of the
Collateral or any registrar or transfer agent or trustee for any of the
Collateral shall be entitled to accept the provisions hereof as conclusive
evidence of the rights of United to effect any transfer pursuant to this
Agreement and the authority granted to United herein, notwithstanding any
other notice or direction to the contrary heretofore or hereafter given by
Pledgor, or any other person, to any of such issuers, obligors, registrars,
transfer agents, or trustees.
ARTICLE 5
EXPENSES
Section 5.1 Payment. The Pledgor agrees that it will forthwith upon
demand pay or reimburse to United any and all reasonably incurred
out-of-pocket expenses, including the fees and disbursements of counsel and
of any brokers, investment brokers, appraisers or other experts, that United
may incur in connection with (i) the exercise by United of any of the rights
conferred upon it under Article 4, or (ii) any action or proceeding to
enforce its rights under this Agreement or in pursuit of any non-judicial
remedy hereunder including the sale of the Collateral; provided, however,
that notwithstanding the provisions of this Section 5.1 or Section 5.2, each
party hereto shall be responsible for its own fees and expenses, including
legal fees and expenses, incurred in connection with the preparation,
negotiation and execution of this Agreement and the Contribution Agreement.
Section 5.2 Indemnity. (a) The Pledgor shall indemnify each of United
and the Bank and their respective directors, officers, employees, agents and
attorneys against, and hold them harmless from, any liability, claim, cost,
damage or expense, including the fees and disbursements of their legal
counsel, incurred by any of them under the corporate or securities laws
applicable to holding or selling any of the Collateral, except, with respect
to any indemnified party, for liability, claim, cost, damage or expense
arising out of the gross negligence or willful misconduct of such indemnified
party.
(b) The Pledgor further agrees to indemnify Bank and its
officers, directors, employees, agents and attorneys against and hold them
harmless from, any liability, claim, cost, damage, or expense, including the
fees and disbursements of their counsel, in any way related to or arising out
of or in connection with this Agreement or any action taken or not taken
pursuant hereto, except, with respect to any indemnified party, for
liability, claim, cost, damage or expense arising out of the gross negligence
or willful misconduct of such indemnified party.
ARTICLE 6
MISCELLANEOUS
Section 6.1. Non-Waiver. Neither the failure of nor any delay by any
party to this Agreement to enforce any right hereunder or to demand
compliance with its terms is a waiver of any right hereunder. No action
taken pursuant to this Agreement on one or more occasions is a waiver of any
right hereunder or constitutes a course of dealing that modifies this
Agreement.
Section 6.2. Amendments and Waivers. No amendment, modification or
termination of this Agreement, and no waiver of any right or remedy under
this Agreement, shall be binding on any party unless it is in writing and is
signed by the party to be charged. No such waiver of any right or remedy
under any term of this Agreement shall in any event be deemed to apply to any
subsequent default under the same or any other term contained herein.
Section 6.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not create
or render unenforceable such provision in any other jurisdiction.
Section 6.4. Successors. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns, and shall inure
to the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns.
Section 6.5. Rules of Construction. In this Agreement, words in the
singular number include the plural, and in the plural include the singular;
words of the masculine gender include the feminine and the neuter, and when
the sense so indicates words of the neuter gender may refer to any gender and
the word "or" is disjunctive but not exclusive. Any references to Sections,
Articles, Schedules or Exhibits contained herein shall be references to
Sections, Articles, Schedules or Exhibits of or to this Agreement unless
otherwise specified. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
Section 6.6. Notices. Unless otherwise expressly specified or
permitted hereby, all communications and notices provided for herein shall be
in writing, and any such notice shall become effective when received. Any
written notice shall be by (a) personal delivery thereof, including, without
limitation, by overnight mail and courier service, or (b) facsimile
transmission (receipt being deemed to occur when the facsimile transmission
itself is received), in each case addressed to the parties hereto at their
respective addresses as set forth below or at such other addresses as either
party may from time to time designate by written notice to the other party
listed below:
If to Pledgor:
GIO Services, L.L.C.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
Attention: Anna Walsh
Telephone: (847) 518-4005
Facsimile: (847) 518-4774
If to United:
United Airlines, Inc.
1200 E. Algonquin Road
Elk Grove Township, Illinois 60007
Attention: Lynn Hughitt, Vice President and Controller
Telephone: (847) 700-4482
Facsimile: (847) 700-6340
If to the Bank:
Bank of America, National Association
233 South Wacker Drive, Suite 2800
Mail Code IL1-003-27-36
Chicago, Illinois 60606-6301
Attention: Christopher Schuer
Telephone: (312) 234-3436
Facsimile: (312) 234-3430
with a copy to:
Bank of America, National Association
200 North College Street
Mail Code NC1-004-03-06
Charlotte, NC 28255
Attention: Michele Bifone
Telephone: (704) 388-6421
Facsimile: (704) 386-8755
Section 6.7. Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.
Section 6.8. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
Section 6.9. Responsibilities of Bank. This Agreement shall not
create any obligation or duty of Bank except for those expressly set forth
herein. The Bank shall have no responsibility or liability to Pledgor for
complying with the terms of this Agreement and shall have no responsibility
to investigate the appropriateness of any entitlement order or other request,
instruction, notice or direction received from United, the validity of
United's security interest, or any other matter or issue relating to the
relationship between United and Pledgor, including but not limited to the
Contribution Agreement and the Assumed Liability.
IN WITNESS WHEREOF, the parties hereto have signed and delivered
this Pledge and Security Agreement as of December 30, 1999.
GIO Services, L.L.C.
By:_________________________
Name:
Title:
United Air Lines, Inc.
By:_________________________
Name:
Title:
Bank of America, National
Association
By:_________________________
Name:
Title:
SCHEDULE 1
Offices for Filing of UCC Financing Statements
1) Illinois Secretary of State
January 15, 2000 (7:16AM)
Exhibit 10.4
CONTRIBUTION AND ASSUMPTION AGREEMENT
THIS CONTRIBUTION AND ASSUMPTION AGREEMENT dated as of March 31,
2000 (the "Agreement"), is entered into between GALILEO INTERNATIONAL,
L.L.C., a Delaware limited liability company ("Galileo"), having its
principal place of business at 9700 West Higgins Road, Suite 400, Rosemont,
Illinois 60018, and GIO Services, L.L.C., a Delaware limited liability
company ("Services"), having its principal place of business at 9700 West
Higgins Road, Suite 400, Rosemont, Illinois 60018.
PRELIMINARY STATEMENTS
A. Galileo is party to a Services Agreement dated as of July 30,
1997 (the "Services Agreement"), among Galileo, United Air Lines, Inc.
("United"), US Airways, Inc. ("US Airways") and Air Canada.
B. Services is a wholly-owned subsidiary of Galileo formed for
the purpose of, among other things, making provision for the payment to US
Airways on July 30, 2002 (the "Payment Date"), for application to the portion
payable to US Airways of the "Price Increase Payment" (as defined in the
Services Agreement), giving effect to the "Cost of Carry Factor" (as defined
in the Services Agreement), up to an aggregate maximum amount not exceeding
$30,973,436.00 (the "US Airways Liability). In addition to the US Airways
Liability, Services has assumed, pursuant to a Contribution and Assumption
Agreement dated as of December 30, 1999, the portion payable to United of the
Price Increase Payment, giving effect to the Cost of Carry Factor (the
"United Liability").
C. In furtherance of the foregoing, Galileo wishes to contribute
to the capital of Services, for the benefit of US Airways, certain assets
projected to yield cash proceeds on the Payment Date equal to or exceeding
the US Airways Liability, and Services wishes to assume the US Airways
Liability.
NOW, THEREFORE, Galileo and Services agree as follows:
1. Transfer of US Airways Contributed Assets; Transfer and Assumption of
US Airways Liability.
(a) Galileo hereby sells, assigns, contributes and transfers to
Services all the right, title and interest of Galileo in and to
$27,156,945.58 in cash (the "US Airways Contributed Assets"), as a
contribution to the capital of Services.
(b) Galileo hereby transfers to Services its obligation under
the Services Agreement to pay the US Airways Liability when due, and Services
hereby assumes from Galileo the obligation to pay the US Airways Liability
when due. Without limiting the scope of the foregoing transfer and
assumption of the US Airways Liability, Services hereby confirms that it will
pay the US Airways Liability to US Airways on the Payment Date. Galileo
hereby confirms that it has retained all obligations other than the US
Airways Liability and the United Liability and that Services shall have no
obligation to pay or perform any such retained obligations under the Services
Agreement.
2. Delivery of US Airways Contributed Assets to Services.
Concurrently with the execution and delivery of this Agreement,
Galileo shall deliver the US Airways Contributed Assets to Services, in
immediately available funds, by wire transfer to Account Number 8188311869,
maintained in the name of Services with Bank of America, National Association.
3. Representations and Warranties of Galileo.
(a) Galileo is a limited liability company duly formed, validly
existing and in good standing under the laws of the jurisdiction named at the
beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business requires
it to be so qualified.
(b) The execution, delivery and performance by Galileo of this
Agreement and all other instruments and documents to be delivered hereunder,
and the transactions contemplated hereby and thereby, are within Galileo's
limited liability company powers, have been duly authorized by all necessary
limited liability company action, do not contravene (i) Galileo's certificate
of formation or limited liability company agreement, (ii) any law, rule or
regulation applicable to Galileo, (iii) any contractual restriction contained
in any indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or
affecting Galileo or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting Galileo or its property, and do
not result in or require the creation of any lien, security interest or other
charge or encumbrance upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by Galileo of this
Agreement or any other document or instrument to be delivered hereunder.
(d) This Agreement constitutes the legal, valid and binding
obligation of Galileo enforceable against Galileo in accordance with its
terms.
(e) Prior to their transfer hereunder, the US Airways
Contributed Assets were owned by Galileo free and clear of any lien, claim or
encumbrance. Pursuant to the transfer of the US Airways Contributed Assets
hereunder, Services has acquired full legal title and all beneficial interest
in the US Airways Contributed Assets, free and clear of any lien, claim or
encumbrance.
(f) Services has no material liabilities (contingent or
otherwise) other than the United Liability and the US Airways Liability and
no material assets other than the US Airways Contributed Assets and the
assets contributed to Services in connection with its assumption of the
United Liability. Assuming investment of Services' assets in assets
permitted to be held under Services' contractual obligations and giving
effect to projected costs of operating Services (net of any offsets or
reimbursements), Services will have sufficient assets to pay all of its
liabilities as they become due.
4. Representations and Warranties of Services.
(a) Services is a limited liability company duly formed, validly
existing and in good standing under the laws of the jurisdiction named at the
beginning hereof and is duly qualified to do business, and is in good
standing, in every jurisdiction in which the nature of its business requires
it to be so qualified.
(b) The execution, delivery and performance by Services of this
Agreement and all other instruments and documents to be delivered hereunder,
and the transactions contemplated hereby and thereby, are within Services'
limited liability company powers, have been duly authorized by all necessary
limited liability company action, do not contravene (i) Services' certificate
of formation or limited liability company agreement, (ii) any law, rule or
regulation applicable to Services, (iii) any contractual restriction
contained in any indenture, loan or credit agreement, lease, mortgage,
security agreement, bond, note, or other agreement or instrument binding on
or affecting Services or its property or (iv) any order, writ, judgment,
award, injunction or decree binding on or affecting Services or its property,
and do not result in or require the creation of any lien, security interest
or other charge or encumbrance upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by Services of this
Agreement or any other document or instrument to be delivered hereunder,
other than the filing of a financing statement under the Uniform Commercial
Code as in effect in the State of Illinois, as contemplated by the Pledge and
Security Agreement referenced in Section 10(d) of this Agreement.
(d) This Agreement constitutes the legal, valid and binding
obligation of Services enforceable against Services in accordance with its
terms.
5. Covenant of Galileo and Services to Maintain the Separate Existence of
Services.
Each of Galileo and Services hereby covenants and agrees that so
long as the US Airways Liability shall remain outstanding, it shall do all
things necessary to maintain the limited liability company existence of
Services separate and apart from Galileo and its affiliates other than
Services (such affiliates being referred to herein as the "Other
Affiliates"). Without limiting the generality of the foregoing, Galileo and
Services shall ensure that Services: (i) practices and adheres to limited
liability company formalities, such as maintaining appropriate limited
liability company books and records; (ii) maintains at least one member of
its limited liability company board of managers or directors who is not a
director of Galileo or of any Other Affiliate or a person or entity related
to Galileo or any Other Affiliate; (iii) owns or leases all office furniture
and equipment necessary to operate its business; (iv) refrains from
guaranteeing or otherwise becoming liable for any obligations of Galileo or
any Other Affiliate; (v) exerts its best efforts to maintain all of its
deposit and other bank accounts and all of its assets separate from those of
Galileo and each Other Affiliate; (vi) maintains all of its financial records
separate and apart from those of Galileo and each Other Affiliate;
(vii) compensates all its employees, officers, consultants and agents for, or
reimburses Galileo and each Other Affiliate, as applicable, in respect of,
services provided to it by employees, officers, consultants and agents of
Galileo or such Other Affiliate, out of its own funds; (viii) accounts for
and manages all of its liabilities separately from those of Galileo and each
Other Affiliate; (ix) allocates, on an arm's-length basis, all shared
operating services, leases and expenses, including, without limitation, those
associated with the services of shared consultants and agents and shared
computer equipment and software; (x) refrains from making loans or other
advances to Galileo or any Other Affiliate; (xi) refrains from making
distributions more frequently than monthly, and, in each case, as duly
authorized by its board of directors and in accordance with applicable
limited liability company law; and (xii) unless a representative of US
Airways shall be an "Independent Director" under and as defined in the
Limited Liability Company Agreement of GIO Services, L.L.C., dated as of
December 30, 1999, refrain from taking any action requiring the vote of the
Independent Directors under such Limited Liability Company Agreement or any
of the other constitutive documents of Services, without the prior written
consent of US Airways.
6. General Covenants of Galileo and Services.
Each of Galileo and Services hereby agrees that so long as the US
Airways Liability shall remain outstanding, it will:
(i) comply in all material respects with all applicable
laws, rules, regulations and orders with respect to it, its
business and properties;
(ii) preserve and maintain its limited liability company
existence, rights, franchises and privileges in the jurisdiction
of its formation, and qualify and remain qualified in good
standing as a foreign limited liability company in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would
materially adversely affect its business or operations;
(iii) at any time and from time to time upon notice to it
from the other party hereto, and during regular business hours,
permit such other party, or its agents or representatives, to
visit its offices and properties for the purpose of examining
records and to discuss matters relating to this Agreement or
performance hereunder with any of its officers or employees
having knowledge of such matters; and
(iv) make such filings, execute such documents or take
such other action as the other party hereto may reasonably
request to better evidence or effectuate, as applicable, the
transfer of the US Airways Contributed Assets and the US Airways
Liability by Galileo to Services hereunder and the acceptance of
the US Airways Contributed Assets and the assumption of the US
Airways Liability by Services from Galileo hereunder.
7. Indemnification.
Galileo shall indemnify and hold Services harmless from any
liability, loss, injury or damage, together with all reasonable
out-of-pocket costs and expenses relating thereto, including legal and
accounting fees and expenses, arising out of or resulting directly or
indirectly from any breach of any of the representations, warranties,
covenants, agreements or any other obligations of Galileo hereunder.
8. Term of Agreement.
This Agreement shall continue in effect so long as the US Airways
Liability shall remain outstanding.
9. Modification and Waiver.
No modification or waiver of any provision of this Agreement
shall be effective unless such modification or waiver shall be in writing and
signed by a duly authorized officer of Galileo and Services and the same
shall then be effective only for the period and on the conditions and for the
specific instances and purposes specified in such writing.
10. Notices; Choice of Law; Successors and Assigns; Counterparts.
(a) All communications, demands and notices provided for
hereunder shall be in writing (including telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other party at its
address or telecopy number set forth on the signature page hereof or at such
other address or telecopy number as such party may hereafter specify for the
purposes of notice to such party. Each such notice or other communication
shall be effective upon receipt thereof at the then effective address or
telecopy number, as applicable, for notices.
(b) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS THEREOF.
(c) This Agreement shall be binding upon and inure to the
benefit of Galileo and Services and their respective successors and assigns,
but nothing herein shall give Galileo the right to assign this Agreement or
its rights hereunder without the express prior written consent of Services.
(d) Galileo expressly acknowledges and agrees that Services is
assigning its rights hereunder to US Airways to secure the obligations of
Services to US Airways in respect of the US Airways Liability and under a
Pledge and Security Agreement of even date herewith among Services, USAirways
and Bank of America, National Association, and that pursuant to such
assignment, US Airways may be entitled to directly enforce against Galileo
the rights of Services under this Agreement. Each of Galileo and Services
hereby expressly acknowledges and agrees that US Airways shall be a
third-party beneficiary of this Agreement.
(e) This Agreement may be signed in any number of counterparts,
which, when taken together, shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Contribution and Assumption Agreement to be signed by their duly authorized
officers on their respective behalves as of the date first above written.
GALILEO INTERNATIONAL, L.L.C.
By:
Name:
Title:
9700 West Higgins Road
Rosemont, Illinois 60018
Telecopy Number: (847) 518-4915
Attention: Cheryl Ballenger
GIO SERVICES, L.L.C.
By:
Name:
Title:
9700 West Higgins Road
Rosemont, Illinois 60018
Telecopy Number: (847) 518-4774
Attention: Anna Walsh
3
[Execution Copy]
CONSENT AND RELEASE
Reference is made to the Contribution and Assumption Agreement
dated as of March 31, 2000 the ("Contribution Agreement"), between Galileo
International, L.L.C. and GIO Services, L.L.C. Terms defined in the
Contribution Agreement and not otherwise defined in this Consent shall have
the meanings herein ascribed to them in the Contribution Agreement. US
Airways, Inc. ("US Airways") hereby consents to the execution, delivery and
performance of the Contribution Agreement by the parties thereto, including,
without limitation, the transfer by Galileo to Services, and the assumption
by Services from Galileo, of the US Airways Liability. US Airways further
agrees that, effective upon satisfaction of the condition precedent that
US Airways shall have received each of the items listed on Schedule A hereto,
in form and substance satisfactory to US Airways, US Airways (i) releases
Galileo from its obligation to pay the US Airways Liability when due and (ii)
agrees to look only to Services for payment thereof. US Airways further
acknowledges that Services has assumed no liability to pay or otherwise
perform any obligations of Galileo under the Services Agreement other than
the US Airways Liability and the United Liability, and Galileo hereby affirms
to US Airways that Galileo shall remain fully liable for the payment and
performance of all its obligations under the Services Agreement other than
the US Airways Liability and the United Liability.
[THIS SPACE INTENTIONALLY LEFT BLANK]
This Consent and Release may be signed in any number of
counterparts, which, when taken together, shall constitute a single agreement.
US AIRWAYS, INC.
By:
Name:
Title:
GALILEO INTERNATIONAL, L.L.C.
By:
Name:
Title:
Acknowledged and agreed as of
this 31st day of March, 2000
GIO SERVICES, L.L.C.
By:
Name:
Title:
SCHEDULE A to Consent and Release
CLOSING DOCUMENTATION
1. Contribution and Assumption Agreement dated as of March 31, 2000 (the
"Contribution Agreement"), between Galileo International, L.L.C.
("Galileo") and GIO Services, L.L.C. ("Services").
2. Consent and Release dated as of March 31, 2000 (the "Consent"), between
US Airways, Inc. ("US Airways") and Galileo, and acknowledged by
Services.
3. Pledge and Security Agreement dated as of March 31, 2000 (the "Security
Agreement"), among Services, US Airways and Bank of America, National
Association.
4. Letter agreement dated as of March 31, 2000, between Galileo and
US Airways, relating to the Services Agreement referred to in the
Contribution Agreement.
5. Certificate of the Secretary of Galileo International, Inc. ("GII"),
the sole member of Galileo, certifying (a) the copy of resolutions of
GII attached thereto authorizing, among other things, the execution,
delivery and performance by Galileo of the Limited Liability Company
Agreement of GIO Services, L.L.C. (the "Services LLC Agreement"), the
Contribution Agreement, the Consent and any related documents and
instruments, (b) the copy of the certificate of incorporation of GII
attached thereto and (c) the copy of the by-laws of GII attached
thereto.
6. Certificate of the Assistant Secretary of Galileo, certifying (a) the
copy of the certificate of formation of Galileo attached thereto,
(b) the copy of the limited liability company agreement of Galileo
attached thereto and (c) the names and true signatures of certain
officers of Galileo authorized to execute and deliver the Services LLC
Agreement, the Contribution Agreement, the Consent and any related
documents and instruments.
7. Certificate of the Assistant Secretary of Services certifying (a) the
copy of the certificate of formation of Services attached thereto,
(b) the copy of the Services LLC Agreement attached thereto and (c) the
names and true signatures of certain officers of Services authorized to
execute and deliver the Contribution Agreement, the Consent, the
Security Agreement and any related documents and instruments.
8. Uniform Commercial Code Financing Statement naming Services as debtor
and US Airways as secured party, to be filed with the Secretary of
State of Illinois.
9. Opinion of Anthony Swanagan, Senior Vice President, General Counsel and
Secretary of Galileo, regarding various corporate matters with respect
to Galileo and Services in connection with the Contribution Agreement,
the Consent and the Security Agreement, as applicable.
10. Opinion of Sidley & Austin, special counsel to Galileo and Services,
regarding enforceability and perfection.
Exhibit 10.5
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement dated March 31, 2000 (this "Agreement"),
is entered into between GIO Services, L.L.C., a Delaware limited liability
company ("Pledgor"), Bank of America, National Association ("Bank") and US
Airways, Inc., a Delaware corporation ("US Airways").
PRELIMINARY STATEMENT
A. Pursuant to that certain Contribution and Assumption Agreement
dated as of March 31, 2000 (the "Contribution Agreement") between Galileo
International, L.L.C. and the Pledgor, the Pledgor has assumed the "US
Airways Liability" (as defined in the Contribution Agreement) to US Airways
and US Airways has agreed to the assumption of the US Airways Liability by
the Pledgor.
B. The Pledgor has established a deposit account with the Bank,
Account No. 8188112614 (the "Deposit Account").
C. Bank has also established a securities account for the Pledgor,
Account No. 859152 (the "Securities Account").
D. The Pledgor has acquired a certificate of deposit from the Bank
in the original face amount of $27,156,945.58, with a maturity date of July
29, 2002, which is a book entry certificate of deposit held in the Securities
Account (the "Pledged CD").
E. To secure the payment of the US Airways Liability on the date
due, the Pledgor has agreed to pledge to US Airways the Pledged CD and to
grant to US Airways a security interest in the Deposit Account, the
Securities Account and certain related property.
AGREEMENT
ARTICLE 1
SECURITY INTEREST
Section 1.1. Pledge and Grant of Security Interest. The Pledgor
hereby pledges to US Airways and grants to US Airways a security interest in
all of the Pledgor's right, title and interest in and to the following
property, whether now or hereafter acquired or existing and wheresoever
located:
(a) the Deposit Account and the Securities Account (collectively, the
"Accounts" and individually an "Account");
(b) any free credit balance or other money, now or hereafter credited
to, or owing from Bank to the Pledgor in respect of, either
Account;
(c) any money, securities (certificated or uncertificated),
securities entitlements, commodity contracts, instruments,
documents, general intangibles, financial assets or other
investment property in or credited to, or distributed from,
either Account, now or in the future;
(d) the Pledged CD;
(e) all the proceeds of the sale, exchange, redemption or exercise of
any of the foregoing, including but not limited to, any dividend,
interest payment or other distribution of cash or property in
respect thereof; and
(f) any rights incidental to the ownership of any of the foregoing,
such as voting, conversion and registration rights and right of
recovery for violations of applicable securities laws
All of the foregoing is referred to herein collectively as the "Collateral."
In addition, the Pledgor hereby assigns to US Airways and grants to US
Airways a security interest in, all of the Pledgor's rights under the
Contribution Agreement (the "Assigned Agreement"). Notwithstanding the
foregoing, US Airways agrees that unless an Event of Default is outstanding,
only the Pledgor shall be entitled to exercise the rights of the Pledgor
under the Assigned Agreement.
Section 1.2. Secured Obligations. The security interest granted
by the Pledgor herein secures payment of the US Airways Liability and all
obligations arising out of this Agreement (the "Secured Obligations").
Section 1.3. Delivery of Pledged CD. To effectuate the pledge of
the Pledged CD, the Pledgor will cause the Bank to note the security interest
of US Airways in the Pledged CD on its records concerning the Securities
Account. The Bank waives any right of set-off it may have with respect to
the Pledged CD.
Section 1.4. Voting Rights. Except as provided in the following
sentence, the Pledgor may exercise any voting rights that it may have as to
any of the Collateral and any consent or voting rights of the Pledgor under
the Assigned Agreement for any purpose which is not inconsistent with this
Agreement. Upon the occurrence and continuance of an "Event of Default" (as
defined in Section 4.1 below) and upon notice to the Pledgor, US Airways may
exercise all voting rights as to any of the Collateral and any consent or
voting rights of the Pledgor under the Assigned Agreement and the Pledgor
shall deliver to US Airways all notices and other information and instruments
relating to the exercise of such rights received by the Pledgor from the
issuers of any of the Collateral promptly upon receipt thereof, and shall at
the request of US Airways execute and deliver to US Airways any instruments
which are, in the judgment of US Airways, necessary for US Airways to validly
exercise such voting and consent rights.
Section 1.5. The Accounts and Investments. (a) The Bank agrees to
transfer all collected funds from time to time in the Deposit Account to the
Securities Account. Funds in the Securities Account will be invested by
Bank, at the direction of the Pledgor, only in "Permitted Investments" (as
hereinafter defined); provided, however, that at all times not less than
$27,156,945.58 shall be invested in the Pledged CD. It is understood and
agreed that neither Bank nor the Pledgor shall be liable for any loss arising
from such investment in Permitted Investments. Any investment income from
investment of funds in the Securities Account shall be retained in the
Securities Account or transferred to the Deposit Account.
(b) For purposes of this Agreement, "Permitted Investments" means any
one or more of the following instruments, obligations or securities, in each
case with a maturity of not later than July 29, 2002 (or without a scheduled
maturity in the case of money market funds referred to in clause (7) below):
(1) direct obligations of, and obligations guaranteed as to
payment of principal and interest by, the United States or any agency
or instrumentality of the United States;
(2) certificates of deposit, demand or time deposits of,
bankers' acceptances issued by, or federal funds sold by any depository
institution (including the Bank) or trust company incorporated under
the laws of the United States or any state and subject to supervision
and examination by federal and/or state banking authorities and the
deposits of which are insured by the Federal Deposit Insurance
Corporation, so long as at the time of such investment or contractual
commitment providing for such investment the long-term unsecured debt
obligations of such depository institution or trust company have a
credit rating of Aa2 by Moody's Investors Service, Inc. ("Moody's").
(3) repurchase obligations with respect to (i) any security
described in clause (1) above or (7) below, or (ii) any other security
issued or guaranteed by any agency or instrumentality of the United
States, in either case entered into with a federal agency or depository
institution (including the Bank) or trust company acting as principal,
whose obligations having the same maturity as that of the repurchase
agreement would be Permitted Investments under clause (2) above;
(4) commercial paper having, at the time of such investment or
contractual commitment providing for such investment, a rating of P-1
by Moody's;
(5) investments in Permitted Investments maintained in "sweep
accounts," short-term asset management accounts and the like utilized
for the investment, on an overnight basis, of residual balances in
investment accounts maintained at the Bank or any other depository
institution or trust company organized under the laws of the United
States or any state that is a member of the Federal Deposit Insurance
Corporation, the short-term debt of which is rated P-1 by Moody's;
(6) guaranteed investment contracts entered into with any
financial institution having a final maturity of not more than one
month from the date of acquisition, the short-term debt securities of
which institution is rated P-1 by Moody's; and
(7) funds classified as money market funds or invested in money
market instruments consisting of: United States Treasury bills, other
obligations issued or guaranteed by the United States government, its
agencies or instrumentalities; certificates of deposit; banker's
acceptances; and commercial paper (including variable master demand
notes); provided, however, that redemptions shall be permitted on a
daily or next business day basis.
(c) The Bank, acting as securities intermediary (as defined in the
Uniform Commercial Code as in effect in the State of Illinois (the "Illinois
UCC"), hereby expressly agrees that: (i) all matters relating to the
Securities Account will be governed by the law of the State of Illinois; (ii)
all assets held by it as the securities intermediary in the Securities
Account will be treated as "financial assets" under Article 8 of the Illinois
UCC; and (iii) the securities intermediary will not agree to comply with
entitlement orders originated by any Person with respect to the investments
or financial assets held in the Securities Account other than the Pledgor,
or, after receipt of written notice from US Airways that an Event of Default
has occurred and is outstanding, US Airways.
The Bank acknowledges that US Airways has a security interest in
the Collateral, including, but not limited to, the Deposit Account, the
Securities Account, and the Pledged CD. Any claim to, security interest in
or lien upon the Securities Account or any financial assets held therein
which Bank now has or at any time hereafter may acquire shall be junior and
subordinate to the security interest of US Airways in such Collateral, except
for Bank's liens securing: (i) scheduled fees and charges arising in the
ordinary course of business with respect to the operation of the Securities
Account and (ii) payment owed to Bank for open trade commitments for
purchases in and for the Securities Account.
Section 1.6. The Pledgor to Remain Liable. The Pledgor hereby
expressly agrees that, anything herein to the contrary notwithstanding, it
shall remain liable under the Assigned Agreement to observe and perform all
of the conditions and obligations to be observed and performed by the
Pledgor thereunder, all in accordance with and pursuant to the terms and
provisions thereof. US Airways shall not have any duty, responsibility,
obligation or liability under the Assigned Agreement by reason of or arising
out of the assignment thereof to US Airways or the granting to US Airways of
a security interest therein or the receipt by US Airways of any payment
relating thereto, nor shall US Airways be required or obligated in any manner
to perform or fulfill any of the Pledgor's obligations thereunder or pursuant
thereto, or to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it or the sufficiency of any
performance of any party under the Assigned Agreement, or to present or file
any claim, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it, in which it may
have been granted a security interest or to which it may be entitled at any
time or times.
Section 1.7. Duration of Security Interest. The security interest
granted to US Airways hereunder shall not terminate unless and until the
Secured Obligations have been fully paid or performed, at which time such
security interest will terminate. When the security interest is terminated,
US Airways will deliver to, or deliver at the direction of the Pledgor, the
Pledged CD and any of the other Collateral in US Airways' possession.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Pledgor hereby represents and warrants to US Airways as follows:
Section 2.1. Enforceability. This Agreement has been duly
executed and delivered by the Pledgor, constitutes its valid and legally
binding obligation and is enforceable in accordance with its terms against
the Pledgor.
Section 2.2. No Conflict. The execution, delivery and performance
of this Agreement, the pledge of the Pledged CD, the grant of the security
interest in the Collateral and the Assigned Agreement hereunder and the
consummation of the transactions contemplated hereby and thereby will not,
with or without the giving of notice of the lapse of time, (a) violate any
material law applicable to the Pledgor; (b) violate any judgment, writ,
injunction or order of any court or governmental body or officer applicable
to the Pledgor; (c) violate or result in the breach of any material agreement
to which the Pledgor is a party or by which any of its properties, including
the Collateral and the Assigned Agreement, is bound; or (d) violate any
restriction on the transfer of any of the Collateral or the Assigned
Agreement.
Section 2.3. No Consents. No consent, approval, license, permit
or other authorization of any third party (other than the Bank) or any
governmental body or officer is required for (a) the valid and lawful
execution and delivery of this Agreement, (b) the pledge of the Pledged CD,
(c) the creation and perfection of US Airways' security interest in the
Collateral, (d) the assignment by the Pledgor of its rights under and the
creation and perfection of US Airways' security interest in the Assigned
Agreement or (e) the valid and lawful exercise by US Airways of remedies
available to it under this Agreement or applicable law or of the voting and
other rights granted to it in this Agreement except as may be required for
the offer or sale of those items of Collateral which are securities under
applicable securities laws.
Section 2.4. Collateral and Security Interest. The Pledgor is the
sole owner of the Collateral free and clear of all liens, encumbrances and
adverse claims (other than those created by this Agreement), has the
unrestricted right to pledge and to grant the security interest provided for
herein to US Airways. Upon the filing of the Uniform Commercial Code
financing statements in the office identified on Schedule 1, US Airways will
have a valid and perfected first priority security interest in the Collateral
free of all liens, encumbrances, transfer restrictions and adverse claims.
ARTICLE 3
COVENANTS
The Pledgor hereby covenants and agrees with US Airways that the
Pledgor shall:
Section 3.1. Defend Title. Defend its title to the Collateral and
the Assigned Agreement and the security interest of US Airways therein
against the claims of any person claiming rights in the Collateral or the
Assigned Agreement against or through the Pledgor and maintain and preserve
such security interest so long as this Agreement shall remain in effect.
Section 3.2. No Transfer. Not (a) withdraw any money or property
from either Account, except for transfer from the Deposit Account to the
Securities Account or transfer from the Securities Account to the Deposit
Account, in each case, as provided in Section 1.5, or (b) sell or offer to
sell or otherwise transfer or encumber any portion of the Collateral, other
than in connection with using funds in the Securities Account to make
Permitted Investments.
Section 3.3. Further Assurances.
(a) At the Pledgor's expense, (i) execute and deliver to US
Airways and file with the appropriate governmental offices one or more
Uniform Commercial Code financing statements describing the Collateral and
the Assigned Agreement, or amendments or continuations thereof whenever
necessary to continue the perfection of US Airways' security interest
hereunder and whenever requested by US Airways and (ii) do such further acts
and execute and deliver such additional conveyances, certificates,
instruments, legal opinions and other assurances as US Airways may at any
time reasonably request to protect, assure or enforce its interests, rights
and remedies under this Agreement.
(b) Promptly deliver any certificate or instrument constituting
or representing any of the Collateral of which the Pledgor may obtain
possession from time to time, to the Bank for credit to the Securities
Account forthwith duly endorsed in blank without restriction.
(c) Promptly deliver to the Bank any endorsements or instruments
which may be necessary or convenient to transfer any financial assets held by
the Bank in the Securities Account, which are registered in the name of,
payable to the order of, or specially endorsed to the Pledgor, to the Bank
or its securities intermediary or to one of their respective nominees.
Section 3.4. Statements. Cause the Bank to send (and the Bank
hereby agrees to send) to US Airways a complete and accurate copy of every
statement, confirmation, notice or other communication concerning each
Account that the Bank sends to the Pledgor. All information furnished by
the Pledgor concerning the Collateral or otherwise in connection with this
Agreement, is or shall be at the time the same is furnished, accurate,
correct and complete in all material respects.
ARTICLE 4
EVENTS OF DEFAULT; REMEDIES
Section 4.1. Events of Default; Remedies. (a) If any of the
following events (an "Event of Default") has occurred and is continuing:
(i) the Pledgor shall fail to pay the US Airways Liability when
the same becomes due and payable; or
(ii) the Pledgor shall fail to perform any covenant or agreement
contained herein, and such failure shall continue for thirty (30) days
after the Pledgor has received notice of such failure from US Airways;
or
(iii) the Pledgor shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Pledgor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of
sixty (60) days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial portion of its property)
shall occur; or the Pledgor shall take any corporate action to
authorize any of the actions set forth above in this subsection (iii);
US Airways may, in its discretion: (A) cause each Account to be reregistered
in its sole name or transfer the Securities Account to another broker/dealer
in its sole name; (B) remove any Collateral which is in physical form from
either Account and register such Collateral in its name or in the name of its
broker/dealer, agent or nominee or any of their nominees; (C) exercise any
voting, conversion, registration, purchase or other rights of a holder of any
of the Collateral; (D) collect any notes, checks or other instruments for the
payment of money included in the Collateral and compromise or settle with any
obligor of such instruments; (E) enforce the rights of the Pledgor under the
Assigned Agreement; and (F) exercise any other rights with respect to the
Collateral or the Assigned Agreement which a secured party is entitled to
exercise under Article 9 of the Illinois UCC.
(b) If notice of the time and place of any public sale of the
Collateral or the time after which any private sale or other intended
disposition is required by the UCC, the Pledgor acknowledges that ten (10)
days advance notice thereof will be a reasonable notice. US Airways shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. US Airways may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice be made at the time and place to which it
was so adjourned.
(c) The Pledgor shall execute and deliver to the purchasers of the
Collateral all instruments and other documents necessary or proper to sell,
convey, and transfer title to such Collateral.
(d) Any cash held by US Airways as Collateral and all cash proceeds of
any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of US Airways, be held by US Airways as
collateral for, or then or at any time thereafter be applied (after payment
of any amounts payable to US Airways pursuant to Article 5 below) in whole or
in part against, all or any part of the Secured Obligations in such order as
US Airways may elect. Any surplus of such cash or cash proceeds held by US
Airways and remaining after payment in full of all of US Airways' expenses
hereunder and the Secured Obligations shall be promptly paid over to the
Pledgor or to whomever may be lawfully entitled to receive such surplus.
Section 4.2. The Appointment of US Airways as Agent. The Pledgor
hereby appoints and constitutes US Airways, its successors and assigns, as
its agent and attorney-in-fact for the purpose of carrying out the provisions
of this Agreement following the occurrence and during the continuance of an
Event of Default and taking any action or executing any instrument following
the occurrence and during the continuance of an Event of Default that US
Airways considers necessary or convenient for such purpose, including the
power to endorse and deliver checks, notes and other instruments for the
payment of money in the name of and on behalf of the Pledgor, to endorse and
deliver in the name of and on behalf of the Pledgor securities certificates
and execute and deliver in the name of and on behalf of the Pledgor
instructions to the issuers of uncertificated securities, and to execute and
file in the name of and on behalf of the Pledgor financing statements (which
may be photocopies of this Agreement) and continuations and amendments to
financing statements. This appointment is coupled with an interest and is
irrevocable and will not be affected by the bankruptcy of the Pledgor nor by
the lapse of time. The Pledgor hereby consents and agrees that the issuers
of or obligors of the Collateral or any registrar or transfer agent or
trustee for any of the Collateral shall be entitled to accept the provisions
hereof as conclusive evidence of the rights of US Airways to effect any
transfer pursuant to this Agreement and the authority granted to US Airways
herein, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Pledgor, or any other person, to any of
such issuers, obligors, registrars, transfer agents, or trustees.
ARTICLE 5
EXPENSES
Section 5.1 Payment. The Pledgor agrees that it will forthwith upon
demand pay or reimburse to US Airways any and all reasonably incurred
out-of-pocket expenses, including the fees and disbursements of counsel and
of any brokers, investment brokers, appraisers or other experts, that US
Airways may incur in connection with (i) the exercise by US Airways of any of
the rights conferred upon it under Article 4, or (ii) any action or
proceeding to enforce its rights under this Agreement or in pursuit of any
non-judicial remedy hereunder including the sale of the Collateral; provided,
however, that notwithstanding the provisions of this Section 5.1 or Section
5.2, each party hereto shall be responsible for its own fees and expenses,
including legal fees and expenses, incurred in connection with the
preparation, negotiation and execution of this Agreement and the Contribution
Agreement.
Section 5.2 Indemnity. (a) The Pledgor shall indemnify each of US
Airways and the Bank and their respective directors, officers, employees,
agents and attorneys against, and hold them harmless from, any liability,
claim, cost, damage or expense, including the fees and disbursements of their
legal counsel, incurred by any of them under the corporate or securities laws
applicable to holding or selling any of the Collateral, except, with respect
to any indemnified party, for liability, claim, cost, damage or expense
arising out of the gross negligence or willful misconduct of such indemnified
party.
(b) The Pledgor further agrees to indemnify Bank and its
officers, directors, employees, agents and attorneys against and hold them
harmless from, any liability, claim, cost, damage, or expense, including the
fees and disbursements of their counsel, in any way related to or arising out
of or in connection with this Agreement or any action taken or not taken
pursuant hereto, except, with respect to any indemnified party, for
liability, claim, cost, damage or expense arising out of the gross negligence
or willful misconduct of such indemnified party.
ARTICLE 6
MISCELLANEOUS
Section 6.1. Non-Waiver. Neither the failure of nor any delay by any
party to this Agreement to enforce any right hereunder or to demand
compliance with its terms is a waiver of any right hereunder. No action
taken pursuant to this Agreement on one or more occasions is a waiver of any
right hereunder or constitutes a course of dealing that modifies this
Agreement.
Section 6.2. Amendments and Waivers. No amendment, modification or
termination of this Agreement, and no waiver of any right or remedy under
this Agreement, shall be binding on any party unless it is in writing and is
signed by the party to be charged. No such waiver of any right or remedy
under any term of this Agreement shall in any event be deemed to apply to any
subsequent default under the same or any other term contained herein.
Section 6.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not create
or render unenforceable such provision in any other jurisdiction.
Section 6.4. Successors. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns, and shall inure
to the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns.
Section 6.5. Rules of Construction. In this Agreement, words in the
singular number include the plural, and in the plural include the singular;
words of the masculine gender include the feminine and the neuter, and when
the sense so indicates words of the neuter gender may refer to any gender and
the word "or" is disjunctive but not exclusive. Any references to Sections,
Articles, Schedules or Exhibits contained herein shall be references to
Sections, Articles, Schedules or Exhibits of or to this Agreement unless
otherwise specified. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
Section 6.6. Notices. Unless otherwise expressly specified or
permitted hereby, all communications and notices provided for herein shall be
in writing, and any such notice shall become effective when received. Any
written notice shall be by (a) personal delivery thereof, including, without
limitation, by overnight mail and courier service, or (b) facsimile
transmission (receipt being deemed to occur when the facsimile transmission
itself is received), in each case addressed to the parties hereto at their
respective addresses as set forth below or at such other addresses as either
party may from time to time designate by written notice to the other party
listed below:
If to the Pledgor:
GIO Services, L.L.C.
9700 West Higgins Road, Suite 400
Rosemont, Illinois 60018
Attention: Anna Walsh
Telephone: (847) 518-4005
Facsimile: (847) 518-4774
If to US Airways:
US Airways, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
Attention: Thomas A. Mutryn
Telephone: (703) 872-5700
Facsimile: (703) 872-5960
With a copy to:
Thomas Kennedy, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Telephone: (212) 735-2526
Facsimile: (917) 777-2526
If to the Bank:
Bank of America, National Association
233 South Wacker Drive, Suite 2800
Mail Code IL1-003-27-36
Chicago, Illinois 60606-6301
Attention: Christopher Schuer
Telephone: (312) 234-3436
Facsimile: (312) 234-3430
with a copy to:
Bank of America, National Association
200 North College Street
Mail Code NC1-004-03-06
Charlotte, NC 28255
Attention: Michele Bifone
Telephone: (704) 388-6421
Facsimile: (704) 386-8755
Section 6.7. Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.
Section 6.8. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
Section 6.9. Responsibilities of Bank. This Agreement shall not
create any obligation or duty of Bank except for those expressly set forth
herein. The Bank shall have no responsibility or liability to the Pledgor
for complying with the terms of this Agreement and shall have no
responsibility to investigate the appropriateness of any entitlement order or
other request, instruction, notice or direction received from US Airways, the
validity of US Airways' security interest, or any other matter or issue
relating to the relationship between US Airways and the Pledgor, including
but not limited to the Contribution Agreement and the US Airways Liability.
IN WITNESS WHEREOF, the parties hereto have signed and delivered
this Pledge and Security Agreement as of March 31, 2000.
GIO Services, L.L.C.
By:_________________________
Name:
Title:
US Airways, Inc.
By:_________________________
Name:
Title:
Bank of America, National
Association
By:_________________________
Name:
Title:
SCHEDULE 1
Offices for Filing of UCC Financing Statements
1) Illinois Secretary of State
Exhibit 10.6
CONFORMED COPY
CREDIT AGREEMENT
dated as of
March 8, 2000
among
Galileo International, Inc.,
The Banks Parties Hereto,
The Letter of Credit Issuing Banks Named Herein
and
Bank of America, N.A.,
as 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 22
Section 2.09. Optional Termination or Reduction of Commitments 23
Section 2.10. Method of Electing Interest Rates 23
Section 2.11. Mandatory Termination of Commitments 25
Section 2.12. Optional Prepayments 25
Section 2.13. General Provisions as to Payments 25
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 30
Section 3.02. Each Borrowing and Issuance 31
ARTICLE 4Representations 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 32
Section 4.04. Financial Information 32
Section 4.05. Litigation 33
Section 4.06. Compliance with ERISA 33
Section 4.07. Compliance with Laws 33
Section 4.08. Environmental Matters 34
Section 4.09. Taxes 34
Section 4.10. Subsidiaries 34
Section 4.11. Regulatory Restrictions on Borrowing 34
Section 4.12. Full Disclosure 34
ARTICLE 5 Covenants
Section 5.01. Information 35
Section 5.02. Payment of Obligations 37
Section 5.03. Maintenance of Property; Insurance 37
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 38
Section 5.07. Mergers and Sales of Assets 38
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 40
Section 5.13. Debt of Subsidiaries 41
Section 5.14. Cash Flow Ratio 41
ARTICLE 6 Defaults
Section 6.01. Events of Default 41
Section 6.02. Notice of Default 43
Section 6.03. Cash Cover 43
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 44
Section 7.05. Liability of Agent 44
Section 7.06. Indemnification 45
Section 7.07. Credit Decision 45
Section 7.08. Successor Agent 45
Section 7.09. Agent's Fee; Arranger Fee 45
ARTICLE 8 Change in Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or
Unfair 46
Section 8.02. Illegality 46
Section 8.03. Increased Cost and Reduced Return 47
Section 8.04. Taxes 48
Section 8.05. Base Rate Loans Substituted for Affected Fixed
Rate Loans 50
Section 8.06. Substitution of Bank 51
ARTICLE 9 Miscellaneous
Section 9.01. Notices 51
Section 9.02. No Waivers 51
Section 9.03. Expenses; Indemnification 52
Section 9.04. Sharing of Set-offs 52
Section 9.05. Amendments and Waivers 53
Section 9.06. Successors and Assigns 53
Section 9.07. Collateral 55
Section 9.08. Governing Law; Submission to Jurisdiction 55
Section 9.09. Counterparts; Integration; Effectiveness 55
Section 9.10. WAIVER OF JURY TRIAL 55
Section 9.11. Confidentiality 56
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 March 8, 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 and
BANK OF AMERICA, N.A., as Agent.
The parties hereto agree as follows:
I. ARTICLE
Definitions
A. Section . 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 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 .
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to subsection , 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 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 .
"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 , 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 or subsection or
increased from time to time pursuant to subsection .
"Committed Loan" means a loan made by a Bank pursuant to Section
, 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 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 .
"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 remediation 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 .
"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 ) 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 , 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 .
"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) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date;
(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) any Interest Period which would otherwise end after
the Termination Date shall end on 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 otherwise 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) any Interest Period which would otherwise end after
the Termination Date shall end on 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 ).
"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 .
"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 .
"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,
unless and until the Borrower shall have elected that Pricing Schedule
B attached hereto be the Pricing Schedule, such election to be
effected by the giving by the Borrower of not less than five Domestic
Business Days' notice to the Agent of the effective date of such
election, and (ii) on and after the effective date of such election,
Pricing Schedule B attached hereto. Such election, if made, shall be
irrevocable.
"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.
"Trip.com Acquisition" means the acquisition of Trip.com, Inc.
by the Borrower pursuant to the Merger Agreement dated as of February
7, 2000 among the Borrower, Galileo Acquisition Co. and Trip.com, Inc.
"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.
A. Section . 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 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 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.
B. Section . 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 on the same date, all of which Loans are
of the same type (subject to Article ) 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 ), and a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans)
or by reference to the provisions of Article under which
participation therein is determined (i.e., a "Committed Borrowing" is
a Borrowing under Section 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).
I. ARTICLE
The Credits
A. Section . 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 ) 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.
B. Section . 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:
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;
the aggregate amount of such Borrowing;
whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate or a Euro-Dollar Rate; and
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.
1. Section . Money Market Borrowings. The
Money Market Option. In addition to Committed Borrowings pursuant to
Section , 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.
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:
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,
the aggregate amount of such Borrowing, which shall
be $5,000,000 or a larger multiple of $1,000,000,
the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of the term
"Interest Period", and
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.
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.
Submission and Contents of Money Market Quotes.
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 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 and , any Money
Market Quote so made shall be irrevocable except with the written
consent of the Agent given on the instructions of the Borrower.
Each Money Market Quote shall be in substantially
the form of Exhibit D hereto and shall in any case specify:
the proposed date of Borrowing;
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;
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;
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
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.
Any Money Market Quote shall be disregarded if it:
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;
contains qualifying, conditional or similar language;
proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market Quotes; or
arrives after the time set forth in subsection
2.03(d)(i).
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.
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:
the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request;
the principal amount of each Money Market Borrowing
must be $5,000,000 or a larger multiple of $1,000,000;
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
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.
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.
1. Section . Notice to Banks; Funding of Loans.
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.
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 has not
been satisfied, the Agent will make the funds so received from the
Banks available to the Borrower at the Payment Office.
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.
1. Section . Notes. 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.
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.
Upon receipt of each Bank's Note pursuant to
subsection , 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.
1. Section . Maturity of Loans. Each Committed
Loan shall mature, and the principal amount thereof shall be due and
payable, together with accrued interest thereon, on the Termination
Date.
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.
1. Section . Interest Rates. 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. Any overdue
principal of or interest on any Base Rate 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 rate otherwise applicable to Base Rate Loans
for such day.
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 Lender 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.
Any overdue principal of or, to the extent permitted
by applicable law, interest on any Euro-Dollar Loan shall bear
interest, payable on demand, for each day until paid at a rate per
annum equal to the higher of 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 or 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 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.
Subject to Section , 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.
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.
1. Section . Fees. 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 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 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.
The Borrower shall pay to the Agent 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 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.
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.
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).
A. Section . 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.
1. Section . Method of Electing Interest Rates. 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 and the last sentence of this subsection (a)),
as follows:
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;
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.
Each Notice of Interest Rate Election shall specify:
the Group of Loans (or portion thereof) to which
such notice applies;
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;
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
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".
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.
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 .
A. Section . 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.
1. Section . Optional Prepayments. 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 ) 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).
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.
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.
1. Section . General Provisions as to Payments. 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.
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.
A. Section . 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 , or or 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.
B. Section . 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).
C. Section . 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.
1. Section . Letters of Credit. 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, the aggregate amount of the Letter of Credit
Liabilities shall not exceed $20,000,000 and 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.
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.
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 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 Ban'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, but only to the extent such Bank has made
payment to the Issuing Bank in respect of such Letter of Credit
pursuant hereto.
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:
any lack of validity or enforceability of this
Agreement or any Letter of Credit or any document related hereto or
thereto;
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;
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);
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;
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;
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
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.
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 any error,
omission, interruption or delay in transmission or delivery of any
messages, by mail, cable, telegraph or otherwise, any error in
interpretation of technical terms, any loss or delay in the
transmission of any document required in order to make a drawing under
a Letter of Credit, 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.
I. ARTICLE
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:
A. Section . 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, satisfactory to the Agent, that the Trip.com
Acquisition has been (or within one business day will be) completed in
accordance with all applicable legal and regulatory requirements; and
(ii) the following documents, each dated the Closing Date unless
otherwise indicated:
a duly executed Note for the account of each Bank
dated on or before the Closing Date complying with the provisions of
Section ;
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;
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.
A. Section . Each Borrowing and Issuance. In the case of each
Borrowing or issuance of a Letter of Credit (including the first such
event):
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;
the fact that, immediately after such Borrowing, 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;
the fact that, immediately before and after such
Borrowing or issuance, no Default shall have occurred and be
continuing; and
the fact that the representations and warranties of
the Borrower contained in this Agreement (except subsection ) 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(c) and 3.02(d).
I. ARTICLE
Representations and Warranties
The Borrower represents and warrants that:
A. Section . 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.
B. Section . 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.
C. Section . 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.
1. Section . Financial Information. The
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of December 31, 1998 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.
The unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of September 30, 1999
and the related unaudited consolidated statements of income and cash
flows for the nine months then ended, copies of which have been
delivered to each of the Banks, fairly present in all material
respects, in conformity with generally accepted accounting principles
applied on a basis consistent with the financial statements referred
to in subsection 4.04(a), 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 nine month
period (subject to normal year-end adjustments).
Except as disclosed in the Borrower's quarterly
reports on Form 10-Q for the periods ending March 31, 1999, June 30,
1999 and September 30, 1999, since December 31, 1998 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.
A. Section . 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.
B. Section . 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.
C. Section . 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.
D. Section . 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.
E. Section . 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.
F. Section . 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.
G. Section . 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.
H. Section . 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.
I. ARTICLE
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:
A. Section . Information. The Borrower will deliver to each of
the Banks:
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;
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;
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 setting forth in reasonable detail the
calculations required to establish (x) whether the Borrower was in
compliance with the requirements of Sections and 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 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;
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);
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;
promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
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;
if and when any member of the ERISA Group 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; 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; 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; applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy of such
application; 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; gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
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;
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; and
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.
A. Section . 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.
1. Section . Maintenance of Property; Insurance.
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.
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.
a) Section . 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
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, any transaction not prohibited by
Section or 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.
B. Section . 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.
C. Section . 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.
a) Section . Mergers and Sales of Assets. The Borrower will not
consolidate or merge with or into any other Person, 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.
b) Section . 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 to pay
the purchase price for, and fees and expenses relating to, the
Trip.com Acquisition; to refinance certain existing indebtedness of
the Borrower; to finance the Borrower's working capital requirements,
(iv) for capital expenditures and (v) 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.
D. Section . 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:
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;
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;
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;
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;
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;
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;
Liens arising in the ordinary course of its business
which do not secure Debt or Derivatives Obligations, do not secure
any obligation in an amount exceeding $10,000,000 and 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;
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
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 . 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.
B. Section . 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.
C. Section . 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.
D. Section . 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.
E. Section . 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.
I. ARTICLE
Defaults
A. Section . Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
the Borrower shall fail to pay when due any
principal of any Loan or to reimburse when due any drawing under any
Letter of Credit or 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;
the Borrower shall fail to observe or perform any
covenant contained in Article , other than those contained in
Sections through ;
the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clause or above) for 30 days after notice thereof has
been given to the Borrower by the Agent at the request of any Bank;
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);
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;
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;
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;
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;
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;
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;
the Borrower shall be dissolved or terminated; or
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 or 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.
A. Section . Notice of Default. The Agent shall give notice to
the Borrower under subsection promptly upon being requested to do so
by any Bank and shall thereupon notify all the Banks thereof.
B. Section . Cash Cover. The Borrower agrees, in addition to the
provisions of Section 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 or 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.
I. ARTICLE
The Agent
A. Section . 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.
B. Section . 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.
C. Section . 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 .
D. Section . 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.
E. Section . 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.
F. Section . 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.
G. Section . 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.
H. Section . 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.
I. Section . 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.
I. ARTICLE
Change in Circumstances
A. Section . 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:
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
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.
A. Section . 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.
1. Section . Increased Cost and Reduced Return. 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
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.
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.
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.
1. Section . Taxes. For the purposes of this
Section , 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.
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, 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,
the Borrower shall make such deductions, the Borrower shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law and the Borrower shall
furnish to the Agent, at its address referred to in Section , the
original or a certified copy of a receipt evidencing payment thereof.
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.
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 1001 or
4224, 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.
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 (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 or 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.
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 will eliminate
or reduce any such additional payment which may thereafter accrue and
is not otherwise disadvantageous to such Bank.
A. Section . 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 or (ii) any Bank has demanded compensation under Section or
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:
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
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.
A. Section . 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
or (ii) any Bank shall demand compensation pursuant to Section or ,
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.
I. ARTICLE
Miscellaneous
1. Section . 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: in the case of the Borrower or
the Agent, at its address or facsimile number set forth on the
signature pages hereof, in the case of any Bank (including any
Issuing Bank), at its address or facsimile number set forth in its
Administrative Questionnaire or 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 if given by
facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received, 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 or Article 8 and notices to the Borrower
under subsection 9.06(c) shall not be effective until received.
B. Section . 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.
1. Section . Expenses; Indemnification. The
Borrower shall pay 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
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.
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.
A. Section . 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.
B. Section . 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.
1. Section . Successors and Assigns. 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.
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 such participation agreement may provide that
such Bank will not agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), or (iii) of Section
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
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).
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 Borrower (which 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), the
Agent and the Issuing Banks, 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 .
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.
No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment under
Section or 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 , or 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.
A. Section . 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.
B. Section . 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 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 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.
C. Section . 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).
D. Section . 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.
E. Section . 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: Acting Chief Financial Officer
Address: 9700 West Higgins Road, Suite 400
Rosemont, IL 60018
Attn: Chief Financial Officer
Facsimile: (847) 518-4201
BANK OF AMERICA, N.A.,
individually and as Agent
By:/s/ Laura G. Haugh
Name: Laura G. Haugh
Title: Vice President
Address: 231 S. LaSalle Street
Chicago, Illinois 60697
Attn: Laurie G. Haugh
Facsimile: (312) 974-8811
COMMITMENT SCHEDULE
Bank Amount ofCommitment
Bank of America, N.A. $200,000,000
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 or , as the case may be, provided that at any
time a Default exists under subsection , or , the Applicable Cash
Flow Ratio shall be deemed to be greater than or equal to 2.0 to 1.
"Level I Pricing" applies at any date if, at such date, the
Applicable Cash Flow Ratio is less than .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).
EXHIBIT A - Note
NOTE
Chicago, Illinois
___________ __, 2000
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 March 8, 2000 among Galileo International, Inc.,
the Banks parties thereto, the Letter of Credit Issuing Banks parties
thereto and Bank of America, N.A., as 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 March 8,
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 Period2
$
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
March 8, 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 March 8, 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]
Dated: By:
Authorized Officer:
EXHIBIT E - Opinion of Counsel for the Borrower
OPINION OF
COUNSEL FOR THE BORROWER
July , 1997
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 March 8, 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
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 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 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 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 NAME OF ASSIGNOR (the
"Assignor"), NAME OF ASSIGNEE (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 March 8, 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.3 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 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 , 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.
NAME OF ASSIGNOR
By:
Name:
Title:
NAME OF ASSIGNEE
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:
NAME OF ISSUING BANK,
as Issuing Bank
By:
Name:
Title: ]
- --------
1 Amount must be $5,000,000 or a larger multiple of $1,000,000.
2 Not less than 14 days, subject to the provisions of the definition
of Interest Period.
3 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 10.7
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
not personally, but as Trustee under Trust No. 107101-01
c/o Heitman Properties Ltd.
9700 Higgins Road
Rosemont, Illinois 60018
May 12, 1995
Galileo International Partnership
5350 South Valentia Way
Englewood, Colorado 80111
Re: Office Lease dated March 31, 1995 by and between American
National
Bank and Trust Company of Chicago, not personally, but as
Trustee
Under Trust No. 107101-01, and Galileo International
Partnership
(the "Lease")
This letter is to confirm our agreement that Section 30.05(C)(1)
of the Lease shall be amended by substituting the date "April 1, 1997"
for the date "April 1, 1995" in the 20th line thereof. Except as
modified herein, the Lease shall remain in full force and effect in
accordance with its terms.
AMERICAN NATINAL BANK AND TRUST
COMPANY OF CHICAGO, not personally, but
solely
As Trustee under Trust No. 107101-01
By: _________________________________
Its: __________________________________
Acknowledged and agreed:
GALILEO INTERNATIONAL PARTNERSHIP
By: _______________________________
Its: _______________________________
Exhibit 10.8
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the "First Amendment"), is made
as of the September, 1995 by and between AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO, not personally, but solely as Trustee under
Trust Agreement known as Trust No. 107101-01 ("Landlord"), and GALILEO
INTERNATIONAL PAARTNERSHIP, A Delaware general partnership ("Tenant").
WITNESSETH:
A. Landlord and Tenant entered into a certain Office Lease (the
"Original Lease") dated March 31, 1995, whereby Landlord lease to
Tenant certain premises consisting of approximately 85,521 square feet
of retable area contained on the concourse level and 3rd, 4th and 10th
floors of that certain office building known as Orchard Point office
Center and located at 9700 Higgins Road, Rosemont, Illinois, for a
lease Term expiring on March 31, 2000;
B. Whereas Landlord and Tenant amended the Original lease
pursuant to a letter agreement dated May 12, 1995;
C. Landlord and Tenant desire to extend the term of the Second
Floor Temporary Space for a period of five 95) months and to adjust
the rental rate with respect to such extension term.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein and in the Lease contained, it is hereby agreed as
follows:
1. DEFINED TERMS. Each capitalized term used in this First
Amendment shall have the same meaning ascribed to such term in the
Lease.
2. RENEWAL OF TERM. The expiration date of the Lease Term for
the Second Floor Temporary Space, Suite 200, is extended from
September 30, 1995 to February 29, 1996. All of the terms and
provisions of the Lease shall apply with respect to that part of the
Lease Term occurring after September 30, 1995, except as is otherwise
provided in this First Amendment. To the extent of any conflict
between the terms of the Lease and the terms of this First Amendment,
the terms of the First Amendment shall be controlling.
a) In addition to Rent for the Premises and any other Temporary
space in the Building, effective as of October 1, 1995, the Base Rent
payable under the Lease for the renewal term of the Second Floor
Temporary Space shall be one hundred sixty two thousand ten
9$162,010.00) [an annual rate of $17.00 per square foot], payable in
equal monthly installments of thirteen thousand five hundred and
83/100 ($13,500.83); and
b) Tenant shall not be entitled to any abatement of Base Rent
or Rent Adjustment under or by reason of this First Amendment; and
c) Base Rent for the renewal term of the Second Floor Temporary
Space shall not be adjusted pursuant to Section 4 of the Original
Lease; and
d) Tenant represents that Landlord is not in default of the
Lease and that Landlord shall have no obligation to improve, or
perform any work in the Second Floor Temporary Space, make any
contribution toward such work or make any other financial concession
to or for Tenant.
3. BROKER. Tenant represents that except for Heitman
Properties Ltd. ("Heitman") Tenant has not retained, contracted or
dealt with any real estate broker, salesperson or finder in connection
with this First Amendment, and not such person initiated or
participated in the negotiation of this First Amendment. Tenant shall
agree to indemnify and hold Landlord and Heitman harmless from and
against any and all liabilities and claims for commissions and fees
arising out of a breach of the foregoing representation. Landlord
shall be responsible for the payment of any commissions or fees due to
Heitman upon separate agreements with Heitman.
4. SUBMISSION. Submission of this First Amendment by Landlord
or Landlord's agent, or their respective agents or representative, to
Tenant for examination and/or execution shall not in any manner bind
Landlord and no obligations on Landlord shall arise under this First
Amendment unless and until this First Amendment is fully signed and
delivered by Landlord and Tenant; provided, however, the execution and
delivery by Tenant of this First Amendment to Landlord or Landlord's
agent or their respective agents or representatives shall constitute
an irrevocable offer by such party to enter into the transactions
contemplated by this First Amendment on the terms and conditions
herein contained, which offer may not be revoked for thirty (30) days
after such delivery.
5. BINDING EFFECT. This First Amendment shall be binding upon
and inure to the benefit of Landlord, Tenant and their respective
successors and permitted assigns.
6. LANDLORD'S LEASE UNDERTAKINGS-EXCULPATION FROM
PERSONAL LIABILITY; TRANSFER OF LANDLORD'S INTEREST
6.01 Landlord's Lease Undertakings. Notwithstanding anything
to the contrary contained in this Lease or in any exhibits, Riders or
addenda hereto attached (collectively the "lease Documents"), it is
expressly understood and agreed by and between the parties hereto
that: (a) the recourse of Tenant or its successors or assigns against
landlord with respect to the alleged breach by or on the part of
Landlord of any representation, warranty, covenant, undertaking or
agreement contained in any of the Lease Documents (collectively,
"Landlord's Lease Undertakings") shall extend only to Landlord's
interest in the real estate of which the Premises demised under the
lease documents are a part ("Landlord's Real Estate") and not to any
other assets of Landlord or its beneficiaries; and (b) except to the
extent of Landlord's interest in Landlord's Real Estate, no personal
liability or personal responsibility of any sort with respect to any
of Landlord's Lease Undertakings or any alleged breach thereof is
assumed by, or shall at any time be asserted or enforceable against,
Landlord, Heitman/JMB Advisory Corporation or Heitman Properties Ltd.,
or against any of their respective directors, officers, employees,
agents, constituent partners, beneficiaries, trustees or
representatives.
It is expressly understood and agreed by and between the parties
hereto, anything herein to the contrary notwithstanding, that each and
all of the representations, warranties, covenants, undertakings and
agreements herein made on the part of landlord while in form
purporting to be the representations, warranties, covenants,
undertakings and agreements of Landlord are nevertheless each and
every one of them made and intended, not as personal representations,
warranties, covenants, undertakings and agreements by Landlord or for
the purpose or with the intention of binding Landlord personally, but
are made and intended for the purpose only of subjecting Landlord
interest in the Building, the Land and the Premises to the terms of
this lease and for no other purpose whatsoever, and in case of default
hereunder by Landlord (or default through, under or by any of its
beneficiaries, or agents or representatives of said beneficiaries),
the Tenant shall look solely to the interests of Landlord in the
Building and Land; that this lease is executed and delivered by
Landlord not in its own right, but solely in the exercise of the
powers conferred upon it as such Trustee: that neither the Landlord
nor any of Landlord's beneficiaries shall have any personal liability
to pay any indebtedness accruing hereunder or to perform any covenant,
either express or implied, herein contained, and no liability or duty
shall rest upon Landlord to sequester the trust estate or the rents,
issues and profits arising therefrom, or the proceeds arising from any
sale or other disposition thereof; and that no personal liability or
personal responsibility of any sort is assumed by, nor shall at any
time be asserted or enforceable against, said Landlord, American
National Bank and Trust Company of Chicago, a national baking
association, individually or personally, but only as Trustee under the
provision of a Trust Agreement dated December 6, 1988 and known as its
Trust No. 107101-01, or against any of the beneficiaries under said
Trust Agreement, or their respective agents, on account of this lease
or on account of this lease or on account of any representation,
warranty, covenant, undertaking or agreement of Landlord in this lease
contained, either express or implied, all such personal liability, if
any, being expressly waived and released by Tenant and by all persons
claiming by, through or under Tenant.
IN WITHNESS WHEREOF, this First Amendment is executed as of the
day and year aforesaid.
LANDLORD:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, not personally, but solely as Trustee aforesaid
By: ______________________
Its:______________________
TENANT:
GALILEO INTERNATIONAL PARTNERSHIP,
A Delaware general partnership
By:____________________________
Its:____________________________
Exhibit 10.9
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE is made his 30th day of October, 1997, by and
between AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, not personally but
solely as Trustee under Trust No. 107101-01 ("Landlord"), and GALILEO
INTERNATIONAL, L.L.C., a Delaware limited liability company (as
successor-by-merger to Galileo International Partnership) ("Tenant").
WITNESSETH:
A. Landlord an Tenant's predecessor-in-interest Galileo International
Partnership, a Delaware general partnership ("GIP"), entered into a certain
OfficeLease (file "Lease") dated March 31, 1995, whereby Landlord leased to GIP
certain premises (the "Original Premises") consisting of approximately 85,521
rentable square feet located on the concourse level and 3rd, 4th and 10th floors
of that certain building (the "Building") known as Orchard Point Office Center,
located at 9700 Higgins Road, Rosemont, Illinois.
B. GIP merged into Tenant and succeeded to the interest of the "Tenant"
under the Lease.
C. Landlord and Tenant desire to amend the Lease to reflect the lease by
Landlord to Tenant of certain additional space, all as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, it is hereby agreed as follows:
1. Defined Terms. Each capitalized term used as a defined term in this
Amendment but not otherwise defined herein shall have the same meaning ascribed
to such term in the Lease.
2. Additional Space. Landlord leases to Tenant and Tenant leases from
Landlord certain premises in the Building, consisting of approximately 32,801
rentable square feet (consisting of (i) approximately 23,7a.6 rentable square
feet on the second floor of the Building [which is the balance of the rentable
area on such floor that is not now leased by Tenant, as shown on the plan
attached hereto as Exhibit "A"], (ii) approximately 8310 rentable square feet on
the first floor of the building [as shown on the plan attached hereto as Exhibit
"B"] and (iii) approximately 755 rentable square feet on the concourse level of
the Building known as Suite 45 [as shown on the plan attached heteto as Exhibit
"C"]) (collectively, the "Additional Space"). The Additional Space is leased to
Tenant subject to all of the same terms and provisions as are contained in the
Lease, except as otherwise set forth herein. The Additional Space is leased for
a lease term commencing on the date (the "Additional Space Commencement Date")
which is the first to occur of (a) November 1, 1997 or (b) the date Tenant first
occupies any portion of the Additional Space, and expiring on the Expiration
Date. The date set forth in clause (a) of the immediately preceding sentence of
this Paragraph 3 may be extended as provided in Paragraph 5D below From and
after the Additional Space Commencement Date, the term Premises" as used and
defined in the Lease, as amended hereby, shall be deemed to mean and refer to
the Original Premises plus the Additional Space.
3. Expansion of Space.
A. By written notice to Landlord given not later than October 31, 1997 (the
"Expansion Space Notice Date"), Tenant shall have the option (the "Additional
Space Expansion Option") to expand the Additional Space to also consist of
approximately 5,774 rentable square feet on the eighth floor of the Building
(the "Expansion Space"), as shown on the plan attached hereto as Exhibit "D." If
Tenant exercises the Additional Space Expansion Option, Landlord reserves the
right to substitute any of the space in the Building selected by Landlord for
the Expansion Space described herein, provided such substituted space shall have
a reasonably comparable rentable area as the Expansion Space described herein.
B. Notwithstanding anything in subparagraph A above to the contrary, if
Landlord receives a bona fide offer to lease the Expansion Space prior to the
Expansion Space Notice Date, then Landlord shall notify Tenant of such offer and
the Expansion Space Notice Date shall instead be the date that is five days
after Landlord's notice notifying Tenant of such bona fide offer.
C. If Tenant exercises the Additional Space Expansion Option, the Expansion
Space shall be deemed to be part of the Additional Space and the provisions of
this Amendment shall also apply to the Expansion Space. Landlord and Tenant
shall promptly execute an instrument confirming Tenant's exercise of the
Additional Space Expansion Option and the lease of the Expansion Space by
Landlord to Tenant.
4. Rent
A. Commencing on the Additional Space Commencement Date, Base Rent for the
Additional Space (not including the Expansion Space, if applicable) shall be as
follows:
Year of Lease Term
(commencing on the
Additional Space
Commencement Date Annual(ized) Base Rent Monthly Base Rent
1 $360,810.96 $30,067.58
2 393,612.00 32,801.00
3* 426,413.04 35,534.42
* The Lease Term expires March 31, 2000
If Tenant exercises the Additional Space Expansion Option, commencing
on the Additional Space
Commencement Date, Base Rent for Expansion Space shall be as follows:
Year of Lease Term
(commencing on the
Additional Space
Commencement Date) Annual(ized) Base Rent Monthly Base Rent
1 $63,513,96 $5,292.83
2 69,288.00 5,774.00
3* 75,062.04 6,255.17
* The Lease Term expires March 31, 2000.
Provided that if Landlord exercises its right set forth in paragraph
3A above to substitute other space in the Building for the Expansion
Space described herein, the rate of annual Base Rent for such
substituted Expansion Space shall be as follows:
Year of Lease Term
Annual Rate of
(commencing on the Base
Rent per rentable
Additional Space
square foot of
Commencement Date) the
substituted
Expansion Space
1
$11.00
2
12.00
3*
13.00
* The Lease Term expires March 31, 2000.
(Such annual Base Rent shall be payable in equal monthly installments
of Monthly Base Rent).
Base Rent for the Original Premises shall not be affected by this
Amendment.
B. Tenant shall remain obligated to pay tax and Operating Expense
Adjustment, as provided in the Lease, provided that effective as of the
Additional Space Commencement Date, the percentage set forth in Section 1.08 of
the Lease with respect to Tenant's percentage Share shall be changed to 43.04%
(or 45.15% if Tenant bas exercised the Additional Space Expansion Option).
5. Condition of Premises; Delivery
A. No agreement of Landlord to alter, remodel, decorate, clean or improve
the additional Space, the Original Premises or the Building (or to provide
Tenant with any credit or allowance for the same), and no representation
regarding the condition of the Additional Space, the Original Premises or the
Building, have been made by or on behalf of Landlord or relied upon by Tenant
except as provided in this Paragraph 5. Tenant shall accept the Additional Space
in its "as is" condition as of the Additional Space Commencement Date.
B. Provided Tenant is not in Default under the Lease, as amended hereby,
and further provided that the Lease, as amended hereby, remains in full force
and effect, upon Tenant's request at any time from and after the Additional
Space Commencement Date. Landlord shall provide Tenant with a decorating
allowance (the "Allowance") in the amount of $160,23 0 (plus, if Tenant has
exercised the Additional Space Expansion Option, an amount equal to $5.00 per
rentable square foot of the Expansion Space) to pay for tenant improvement work
(the "Work") performed by Tenant in the Additional Space to prepare such
Additional Space for Tenant's initial occupancy or in the Original Premises for
refurbishment thereof. If Tenant fails to request the Allowance, or any part
thereof, prior to the expiration or termination of the Lease Term, the
Allowance, or such part thereof, shall revert to Landlord and Tenant shall have
no further interest in such amount. Tenant shall be entitled to perform the Work
in accordance with thee provisions of Article IX of the Lease. The Allowance
shall be disbursed to Tenant on a progress basis, based upon draw requests
submitted by Tenant to Landlord for work performed, together with sworn
contractor's statements, Tenant Affidavits and lien waivers applicable to such
Work and which substantiate the amount to which Tenant seeks reimbursement from
thee Allowance. Such draw requests shall not be submitted more frequently than
monthly.
C. In no event shall Landlord be liable to Tenant if Landlord is unable to
deliver possession of the Additional Space on the date stated in clause (a) of
the third sentence of Paragraph 2 for any reason (including, without Limitation,
the failure of any existing tenant in Additional Space to timely vacate its
premises). If Landlord is unable to deliver possession of any portion of file
Additional Space (i.e., the original Additional Space or the Expansion Space) to
Tenant by the date stated in clause (a) of the third sentence of Paragraph 2,
then (i) such date stated in clause (a) of the third sentence of Paragraph 2
shall be deferred with respect to such portion of the Additional Space until
Landlord can deliver possession of such portion of the Additional Space to
Tenant, (ii) the Lease, as amended hereby, shall remain in full force and effect
and (iii) Monthly Base Rent for such portion of file Additional Space shall be
abated for the 14 day period commencing on file date Landlord delivers
possession of such portion of the Additional Space to Tenant. Notwithstanding
the foregoing, if Landlord is unable to deliver possession of the Additional
Space to Tenant by the date stated in clause (a) of the third sentence of
Paragraph 2 due to a delay attributable to Tenant, then the date stated in
clause (a) of the third sentence of Paragraph 2 shall not be deferred and
Landlord shall have no liability on account of such delay (and rent due for the
Additional Space shall not abate).
6. Modifications. Article XXX of the Lease is hereby deleted and of no
further force or effect. Article XXXI of the Lease is hereby amended so that the
"Expansion Space" described therein shall not include any portion of the second
floor of the Building.
7. Communications and Computer Lines. Tenant may, in a manner consistent
with the provisions and requirements of the Lease, as amended, install,
maintain, replace, remove or use any communications or computer wires, cables
and related devices (collectively, the "Lines") at the Building in or serving
the Premises, provided: (a) Tenant shall obtain Landlord's prior written consent
which consent may be conditioned as reasonably required by Landlord, (b) if
Tenant at any time uses any equipment that may create an electromagnetic field
exceeding the normal insulation ratings of ordinary twisted pair rise cable or
cause radiation higher than normal background radiation, the Lines therefor
(including riser cables) shall be appropriately insulated to prevent such
excessive electromagnetic fields or radiation, and (c) Tenant shall pay all
costs in connection therewith. Landlord reserves the right to require that
Tenant remove any Lines which are installed in violation of these provisions.
Landlord may (but shall not have the obligation to): (i) install new Lines
at the Building and (ii) create additional space for Lines at the Building; and
adopt reasonable and uniform rules and regulations with respect to the Lines.
Notwithstanding anything to the contrary contained in the Lease, Landlord
reserves the right to require that Tenant remove any or all Lines installed by
or for Tenant within or sending the Additional Space upon termination of the
Lease, as amended hereby (the provisions of this sentence shall not apply to the
Lines in the Original Premises and the provisions of the last parenthetical
clause of insert 9.04 of the Lease regarding Lines shall not apply to the Lines
in the Additional Space). Tenant shall not without the prior written consent of
Landlord in each instance (which consent shall not be unreasonably withheld),
grant to any third party a security interest or lien in or on the lines, and any
such security interest or lien granted without Landlord's written consent shall
be null and void, Except to the extent arising from the intentional or negligent
acts of Landlord or Landlord's agents or employees, Landlord shall have no
liability for damages arising from and, Landlord does not warrant that Tenant's
use of any Lines will be free from the following (collectively, called "Line
Problems"): (x) any eavesdropping or wire-tapping by unauthorized parties, (y)
any failure of any Lines to satisfy Tenant's requirements, or (z) any shortages,
failures, variations, interruptions, disconnections, loss or damage caused by
the installation, maintenance, replacement, use or removal of Lines by or for
other tenants or occupants at the Building. Under no circumstances shall any
Line Problems be deemed an actual or constructive eviction of Tenant, render
Landlord liable to Tenant for abatement of Rent, or relieve Tenant from
performance of Tenant's obligations under the Lease, as amended hereby. Landlord
in no event shall be liable for damages by reason of loss of profits, business
interruption or other consequential damage arising from any Line problems.
8. Broker. Tenant represents and warrants to Landlord that except for
Heitman Properties Ltd, ("Heitman") and Tanguay-Burke-Stratton (collectively,
the "Brokers"), Tenant has not dealt with any real estate broker, salesperson or
finder in connection witl1 this Amendment, and no such person initiated or
participated in the negotiation of this Amendment. Tenant hereby agrees to
indemnify and hold harmless Landlord and Heitman from and against any and all
liabilities and claims for commissions and fees arising out of a breach of the
foregoing representation. Landlord shall be responsible for the payment of any
commissions or fees due to the Brokers based upon a separate agreement with the
Brokers.
9. Conflict. In the event of any conflict between the terms or provisions
of the Lease and the terms or provisions of this Amendment, the terms and
provisions of this Amendment shall govern and Control.
10. Effect of Amendment. As amended by this Amendment, the Lease shall
remain in full force and effect. Tenant ratifies and confirms all of the terms
and conditions of the Lease, as amended hereby, and acknowledges hat it is bound
by all of file liabilities and obligations of the "Tenant" under the Lease, as
amended hereby. Landlord ratifies and confirms all of the terms and conditions
of the Lease, as amendment hereby, and acknowledges that it is bound by all of
the liabilities and obligations of the "Landlord" under the Lease, as amended
hereby.
11. Submission. Submission of this Amendment by Landlord or
Landlord's beneficiary or agent to Tenant or its agent or
representative, for examination and/or execution shall not constitute
a reservation of or option for the Premises or in any manner bind
Landlord and no obligation on Landlord shall arise under the Amendment
unless and until this Amendment is fully signed and delivered by
Landlord and Tenant; provided, however, the execution and delivery by
Tenant of this Amendment to Landlord or Landlord's beneficiary, or its
agent or representative, shall constitute an irrevocable offer by
Tenant to enter into the transactions described herein, which offer
may not be revoked by Tenant for fifteen (15) business days after such
delivery.
12. Landlord's Lease Undertakings. Notwithstanding anything to the contrary
contained in the Lease, as amended hereby, or in any exhibits, Riders or addenda
hereto attached (collectively, file "Lease Documents"), it is expressly
understood and agreed by and between the parties hereto that: (a) the recourse
of Tenant or its successors or assigns against Landlord with respect to the
alleged breach by or on the part of Landlord of any representation, warranty,
covenant, undertaking or agreement contained in any of the Lease Documents or
otherwise arising out of Tenant's use of the Premises or the Building
(collectively, "Landlord's Lease Undertakings") shall extend only to Landlord's
interest in the real estate of which the Premises demised under the Lease
Documents are a part ("Landlord's Real Estate") and not to any other assets of
Landlord or its beneficiaries; and (b) except to the extent of Landlord's
interest in Landlord's Real Estate, no personal liability or personal
responsibility of any sort with respect to any of Landlord's Lease Undertakings
of any alleged breach thereof is assumed by, or shall at any time be asserted or
enforceable against, Landlord, Heitman Capital Management Corporation or Heitman
Properties Ltd., or against any of their respective directors, officers,
employees, agents, constituent partners, beneficiaries, trustees or
representatives. Notwithstanding the foregoing, Landlord agrees for so long as
Landlord of an affiliate of Landlord owns Landlord's Real Estate and Landlord's
current beneficiary or an affiliate of Landlord's beneficiary owns the
beneficial interest in Landlord, Landlord shall maintain an equity interest in
Landlord's Real Estate of not less than Five Million Dollars ($5,000,000).
It is expressly understood and agreed by and between the parties hereto,
anything herein to the contrary notwithstanding, that each and all of the
representations, warranties, covenants, undertakings and agreements herein made
on the part of Landlord while in form purporting to be the representations,
warranties, covenants, undertakings and agreements of Landlord are nevertheless
each and every one of them made and intended, not as personal representations,
warranties, covenants, undertakings and agreements by Landlord or for the
purpose or with the intention of binding Landlord personally, but are made and
intended for the purpose only of subjecting Landlord's interest in the Building,
the Land and the Premises to the terms of the Lease, as amended hereby, and for
no other purpose whatsoever, and in case of default hereunder by Landlord (or
default through, under or by any of its beneficiaries, or agents or
representatives or said beneficiaries), the Tenant shall look solely to the
interests of Landlord in the Building and the land; that this Amendment is
executed and delivered by Landlord not in its own right, but solely in the
exercise of the powers conferred upon it as such Trustee; that neither the
Landlord not any of Landlord's beneficiaries shall have any personal liability
to pay any indebtedness accruing hereunder or to perform any covenant, either
express or implied, herein contained, and no liability or duty shall rest upon
Landlord to sequester the trust estate or the rents, issues and profits arising
therefrom or the proceeds arising from any sale or other disposition thereof;
and that no personal liability or personal responsibility of any sort is assumed
by, nor shall at any time be asserted or enforceable against said Landlord,
American National Bank and Trust Company of Chicago, a national banking
association, individually or personally, but only as Trustee under the
provisions of a Trust Agreement known as its Trust No. 107101-01, or against any
of the beneficiaries under said Trust Agreement, or their respective agents, on
account of the Lease, as amended hereby, or on account of any representation,
warranty, covenan4 undertaking or agreement of Landlord contained in the Lease,
as amended hereby, either express or implied all such personal liability, if
any, being expressly waived and released by Tenant and by all persons claiming
by, through or under Tenant.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly
executed and delivered as of the day and year first written above.
TENANT: LANDLORD:
GALILEO INTERNATIONAL, L.L.C., AMERICAN NATIONAL BANK
a Delaware limited liability company (as AND TRUST
COMPANY OF
successor-by-merger to Galileo International CHICAGO,
not personally but solely as
Partnership) Trustee as aforesaid
By:__________________________
By:_____________________________
Title:________________________
Title:___________________________
Exhibit 10.10
SECOND AMENDMENT TO LEASE AND RENEWAL AGREEMENT
THIS SECOND AMENDMENT TO LEASE AND LEASE RENEWAL AGREEMENT
("Amendment") is made as of the 3rd day of March, 1999, by and between
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, not personally
but solely as Trustee under Trust No. 107101-01 ("Landlord"), and
GALILEO INTERNATIONAL, L.L.C., a Delaware limited liability company
(as successor-by-merger to Galileo International Partnership)
("Tenant").
WITNESSETH:
A. Landlord and Tenant's predecessor-in-interest, Galileo International
Partnership, a Delaware general partnership ("GIP"), entered into a certain
Office Lease and Rider (the "Original Lease") dated March 31, 1995, whereby
Landlord leased to GIP certain premises (the "Original Premises") consisting of
approximately 85,521 rentable square feet located on the concourse level and on
the 3rd, and 4th, floors of that certain building (the "Building") known as
Orchard Point Office Center, located at 9700 Higgins Road, Rosemont, Illinois,
for a five (5) year lease term (the"Original Term) expiring on March 31, 2000.
B. Landlord and GIP amended Section 30.05 of the Original Lease by a
certain letter agreement dated May 12, 1995 (the "Letter Agreement").
C. By First Amendment to Lease dated as of September 19, 1995 ("Amendment
No. l"), Landlord and GIP extended the term of the Second Floor Temporary Space
(as defined in the Original Lease).
D. By Merger Agreement dated as of July 30, 1997, GIP merged into Tenant
and Tenant succeeded to the interest of the "Tenant" under the Lease.
E. By an instrument also entitled First Amendment to Lease dated October 3
0, 1997 (the "First Amendment"), Tenant added to the Original Premises 32,801
rentable square feet of space in the Building consisting of Suites 45 (on the
concourse level), 100 (on the first floor) and 200 (on the second floor). (The
Original Premises, as so expanded, is hereinafter referred to as the "Existing
Premises".)
F. By Automatic Throwover Switch Agreement dated July 24, 1998 (the "ATS
Agreement"), an automatic throwover switch (the "ATO Switch") was purchased and
installed at the Building.
G. Landlord and Tenant desire to extend the Original Term by ten (10) years
and three (3) months on the terms and conditions set forth below.
NOW, THERFFORE in consideration of the mutual covenants and agreements
herein and in the Lease contained, it is hereby agreed as follows:
l. Recitals. The Recitals set forth above shall be deemed to be part of
this Amendment as if they were set forth as numbered paragraphs herein.
2 Defined Terms. Each capitalized term used as a defined term in this
Amendment but not otherwise defined in this Amendment shall have the same
meaning ascribed to such term in the Lease. As used herein, the term "Lease"
shall mean the Original Lease, as amended by the Letter Agreement, Amendment No.
1, the First Amendment and the ATS Agreement. During the extended Term (as
defined in Section 3 below), the "Rentable Area of the premises" shall mean
fifty-eight thousand four hundred eighty-eight (58,488) square feet comprised of
the following spaces (all as shown on the drawings attached hereto as Exhibit
A-l):
(a) Suite 300 -29,244 rentable square feet.
(b) Suite 400 -29,244 rentable square feet.
During the Extended Term, "Tenant's percentage Share" shall mean twenty-one and
two hundred twenty-seven thousandths percent (21.227%). During the Extended
Term, the "Premises" shall mean said suites 3 00 and 400. Notwithstanding the
foregoing, if Tenant exercises the Expansion Option [as defined in Section 16
below], then Rentable Area of file premises, Tenant's Percentage Share and the
Premises each shall have its respective meaning determined pursuant to Section
16 below.
3. Extension of Term. The Original Term is hereby extended for one
additional period of ten (10) years and three (3) months commencing on April l,
2000 and ending on June 30, 2010. Accordingly, the Expiration Date of the Lease
Term is hereby extended from March 31, 2000 to June 30, 2010. As used in this
Amendment the term "Extended Term" shall mean the ten (10) year three (3) month
period commencing on April 1, 2000 and ending on June 30, 2010. As used herein
and in the Lease, the term "Lease Term" shall mean the Original Term, as
extended by the Extended Term. As used in the Work Letter Agreement attached
hereto as Exhibit B (the "Work Letter"), "Lease Year" of the Extended Term shall
mean each one-year period from April 1 through the following March 31 commencing
with the one-year period beginning on April l, 2000, All of the provisions of
the Lease, as amended by this Amendment, shall apply to the balance of the Lease
Term, except as otherwise provided in this Amendment.
4. Base Rent; Abatement. (a) Base Rent. Base Rent for the Premises during
the Extended Term shall be payable by Tenant to Landlord in the following
amounts for the following periods:
Period Annual Base Rent Monthly Base Rent
4/1/2000 - 3/31/2001 $935,808.00 77,984.OO
Period Annual Base Rent Monthly Base Rent
4/1/01 - 3/31/02 963,882.24 80,323.52
4/1/02 - 3/31/03 992,798.76 82,733.23
4/1/03 - 3/31/04 1,022,582.64 85,215.22
4/1/04 - 3/31/05 1,053,260.04 87,771.67
4/1/05 - 3/31/06 1,084,857.84 90,404.82
4/1/06 - 3/31/07 1,117,403.50 93,116.96
4/1/07 - 3/31/08 1,150,925.64 95,910.47
4/1/08 - 3/31/09 1,185,453,36 98,787.78
4/1/09 - 3/31/10 1,221,016.80 101,751.40
4/1/10 - 6/30/10 1,257,647.28 104,803.94
Notwithstanding the foregoing, if Tenant exercises the Expansion Option, then
Base Rent shall be the amounts and for the periods specified in Section 16
below. Except as provided for in Section 4(b) below, there shall be no abatement
of Base Rent under or by reason of this Amendment.
(b) Abatement. Notwithstanding Section 4(a) of this Amendment (containing
the Base Rent provisions) to the contrary, no Monthly Base Rent shall be due for
the first three (3) months of the Extended Term (i.e. - the calendar months of
April, May and June of 2000). Tenant understands that the foregoing abatement
shall pertain only to Monthly Base Rent and not to any other component of Rent
payable under the Lease, as amended by this Amendment and Tenant shall pay all
Rent Adjustments which shall be due during or for each of such months as
provided for in Sections 4.02 and 4.03 of the Original Lease, and all other rent
due during or for each of such months including, without limitation, Storage
Space Rent. Landlord and Tenant further agree that the abatement of Monthly Base
Rent described in the first sentence of this Section 4(b) is conditional
abatement, and that Tenant shall be entitled to such abatement only upon the
condition that no breach or default occurs under the Lease, as amended hereby,
which is not cured within the cure period, if any, provided therefore in the
Lease, either prior to or during the period in which Tenant otherwise would be
entitled to receive such abatement. In the event of the occurrence of any such
breach or default, Tenant shall not be entitled to any abatement of Base Rent
which Tenant otherwise would have been entitled to receive during the pendency
of, and for so long as, such breach or default by Tenant under the Lease remains
uncured.
(c) Rent Adjustments. Tenant shall remain obligated to pay Tax and
Operating Expense Adjustment, as provided for in the Lease, both prior to and
during the Extended Term. Landlord agrees that the amount of the Operating
Expenses for the calendar year of 2000 shall not exceed one hundred five percent
(105%) of the actual Operating Expenses for the calendar year of 1999, and the
Operating Expenses for the calendar year of 2001 shall not exceed one hundred
five percent (105%) of the actual Operating Expenses for the calendar year of
2000. Such limitations on Operating Expenses shall apply only to Operating
Expenses for the calendar years of 2000 and 2001 and not to Property Taxes for
any calendar year or to Operating Expenses for any other calendar year, and such
limitations shall not limit or otherwise effect Tenant's obligations regarding
the payment of any other component of Rent or otherwise limit the amount of
Tenant's Tax and Operating Expense Adjustment for any other calendar year during
the Original Term or the Extended Term.
5. Condition of Premises and Building; Surrender of part of Existing
premises
(a) No Agreement of Landlord to alter, remodel, decorate, clean or improve
the Premises, or any portion thereof, or the Building (or to provide Tenant with
any credit or allowance for file same), and no representation regarding the
condition of the Premises or the Building, have been made by or on behalf of
Landlord or relied upon by Tenant except Landlord has agreed to provide the
Landlord's Contribution (as defined in the Work Letter) during the initial seven
(7) Lease Years of the Extended Term on the term and conditions, and as
otherwise provided for, in the Work Letter Agreement. Tenant agrees to accept
the Premises and the balance of the Building in their respective "as is"
condition and "with all faults".
(b) If Tenant fails to exercise the Expansion Option, then Tenant shall
surrender to Landlord by the commencement date of the Extended Terms all of the
Existing Premises other than Suites 300 and 400 in the condition required by
Section 9.04 of the Original Lease.
6. Storage Space. During the Extended Term, Tenant shall continue to lease
the Storage Space (consisting of 3,085 rentable square feet) identified as
Storage Space No. 6, located on the concourse leve1 of the Building. Tenant
agrees to accept the Storage Space in its "as is" condition and "with all
faults", without any representation, credit or allowance from Landlord with
respect to the improvement thereof Landlord shall continue to provide to the
Storage Space heating, air conditioning, janitorial and freight elevator service
at levels and at times as are substantially in accordance with past practices.
As of the commencement of the Extended Term, Storage Space Rent shall be Three
Thousand Five Hundred Ninety-Nine Dollars and 17/100ths ($3,599.17) per month.
In addition, Tenant shall pay for all electricity consumed in the Storage Space.
Monthly payments of the Storage Space Rent shall be payable at the same time and
in the same manner as monthly installments of Base Rent. Charges for consumption
of supplement services for the Storage Space requested by Tenant shall be
payable within a reasonable period of time after billing. The Storage Space Rent
for the Renewal Term (as defined in Section 7 below), if applicable, shall be
equal to the rental rate Landlord is generally charging the other tenants in the
Building for storage space similar in size, location and level of service to the
Storage Space. In no event, however, shall Tenant have or be entitled to
exercise file remedies set forth in Insert No. 2 of the Rider to the Original
Lease for any purported interruption in services in or for the Storage Space.
Tenant understands and reconfirms that it shall use the Storage Space only for
storage of normal office equipment and supplies and business records and, if
allowed by applicable laws, codes and ordinances, for the operation of computer
equipment and a mail room. Tenant shall keep the Storage Space in a neat and
orderly condition.
7. Option to Renew the Extended Term 7.01 Renewal Option. Tenant shall have
an optional (the "Renewal Option.') to renew the Extended Term with respect to
all (but not less than all) of the Premises demised to Tenant in the Building as
of the expiration date if the Extended Term for one additional period (the
"Renewal Term") of five (5) years, commencing on July l, 2010 and expiring on
June 30, 2015 (which, upon exercise of the Renew Option, shall be the
"Expiration Date" under this Lease), upon the following terms and conditions;
(A) Tenant gives Landlord written notice ("Tenant's Exercise Notice") of
Tenant's election to exercise the Renewal Option no earlier than February 15,
2009 and no later than April 15, 2009; and
(B) The Lease, as amended from time to time, is in full force and effect
and Tenant is not in monetary breach or default under the Lease, as amended from
time to time beyond any applicable cure period, or otherwise in material breach
or default under the Lease, as amended from time to time, beyond any applicable
cure period, either on the date Tenant exercises the Renewal Option or on the
expiration of file Extended Term.
7.02 Terms. if Tenant exercises the Renewa10ption in accordance with the
provisions of Section 7.01:
(A) The Base Rent payable for the Renewal Term shall be equal to the
"market rate of rent" that Landlord reasonably anticipates will be in effect at
the commencement of the Renewal Term. If Tenant timely and properly exercises
the Renewal Option, Landlord agrees to give Tenant written notice setting forth
the "market rate of rent" by May 15, 2009. For purposes of this Section 7.02:
(x) "market rate of rent" shall mean the total rate of rent, including component
parts of such rate of rent such as net rent, fixed and/or indexed rental
adjustments and all rental adjustments for Property Taxes and Operating Expenses
for the Building, and taking into account concessions, if any, such as rent
abatements and improvements allowances, which Landlord is offering to third
party tenants for office space in the Building (taking into account; among other
things, the lengths of the terms and the sizes of the spaces, the levels of
improvement of the spaces demised under such leases to third party tenants, and
the creditworthiness of such tenants); and (y) the base Rent payable during the
Renewal Term shall be subject to adjustment during the Renewal Term as provided
in Landlord's written notice setting forth the market rate of rent. There shall
be no abatement of Base Rent or Tax and Operating Expenses Adjustment for the
Premises during the Renewal Term under or by reason of Tenant's extension of the
Lease Term pursuant to this Article 7.
(B) Tenant shall have no filler options to renew or extend the Extended
Term beyond the expiration date of the Renewal Term.
(C) Tenant agrees to accept the Premises at the commencement of the Renewal
Term in its "as is" condition and "with all faults", without any representation,
credit or allowance from Landlord with respect to the improvement thereof.
(D) Except for the rate of Base Rent and except as otherwise provided
herein, all of the terms and provisions of this Lease shall remain the same and
in full force and effect during the Renewal Term.
(E) Landlord and Tenant shall execute and deliver an amendment to this
Lease reflecting the lease of the Premises by Landlord to Tenant for the Renewal
Term on the terms herein provided prior to the commencement of file Renewal
Term,
7.03 Rate Negotiations; Arbitration. Tenant shall have until June 10, 2009
("Tenant's Review period"), after receipt of Landlord's notice of the proposed
"market rate of rent", to accept such proposed "market rate of rent" or to
object thereto in writing. In the event Tenant so objects, Landlord and Tenant
shall attempt in good faith to agree upon such "market rate of rent". If
Landlord and Tenant fail to reach agreement on the "market rate of rent" by June
25, 2009 (the "Outside Agreement Date"), then Tenant may rescind and cancel its
exercise of the Renewal Option by giving Landlord a written notice of rescission
(a "Rescission Notice") on or before June 30, 2009, in which event the Renewal
Option (and Tenant's exercise thereof shall be null, void and of no further
force or effect and the Extended Term shall expire on June 3 0, 2010. If Tenant
fails to give Landlord a Rescission Notice by June 30, 2009, and Landlord and
Tenant have failed to reach an agreement on the "market rate of rent" by such
date, then Tenant and Landlord each shall submit their respective good faith
determinations of the applicable "market rate of rent" by sealed bid to
arbitration in accordance with the following procedure:
(A) (i) Not later than twenty (20) days following the Outside
Agreement Date, Landlord and Tenant shall each appoint one independent
arbitrator who shall by profession be a real estate appraiser (with the
professional designation of M.A.I. or, if M.A.I. ceases to exist, a
comparable designation from an equivalent professional appraiser
organization) or office leasing broker who shall have been Active over the
ten (10) year period ending on the date of such appointment in appraising
or leasing of commercial office properties in the O'Hare office corridor.
The determination of the arbitrators shall be limited solely to the issue
of whether Landlord's or Tenant's submitted "market rate of rent" for the
Premises is the closest to the "market rate of rent" for the Premises as
determined by the arbitrators, taking into account all relevant elements,
including without limitation, the elements listed in Section 7.02(A) of
this Amendment.
(ii) The two arbitrators so appointed shall within ten (10) days of
the date of the appointment of the last appointed arbitrator agree upon and
appoint a third arbitrator who shall be qualified under the same criteria
set forth hereinabove for qualifications of the initial two arbitrators.
(iii) The three arbitrators shall each be given copies of the sealed
bids submitted by Landlord and Tenant and within thirty (30) days of the
appointment of the third arbitrator, the three arbitrators shall reach a
decision as to whether the parties shall use Landlord's or Tenant's
submitted "market rate of rent" and shall notify Landlord and Tenant
thereof in writing.
(iv) The decision of the majority of the three arbitrators shall be
binding upon Landlord and Tenant and judgment upon such decision may be
entered into by any court having jurisdiction over Landlord and Tenant.
(v) If the two arbitrators fail to agree upon and appoint a third
arbitrator within the time period herein provided, Landlord and Tenant
shall submit the task of appointing the third arbitrator to the Chicago
Office Leasing Brokers Association ("COLBA") and the President of COLBA
shal1 appoint the third arbitrator who shall possess the qualifications
described in clause (A) (i) of this Section 7.03.
(vi) The entire cost of arbitration shall be paid by Landlord if
Tenant's submitted "market rate of rent" is selected and by Tenant if
Landlord's submitted "market rate of rent" is selected.
(vii) Notwithstanding the foregoing, if either Landlord or Tenant
fails to appoint an arbitrator within fifteen (l5) days after the Outside
Agreement Date as provided for in clause (A)(i) of this Section 7.03 and
such failure to appoint an arbitrator is not cured within ten (l O) days
after receipt by such failing party of written demand to do so by the other
party (which other party shall have appointed its arbitrator prior to
sending such written demand), then the arbitrator appointed by the party
sending such demand, acting alone, shall reach a decision on the applicable
"market rate of rent", notify Landlord and Tenant in writing thereof, and
such arbitrator's decision shall be binding on the Landlord and Tenant.
(B) If for any reason whatsoever the applicable "market rate of rent"
for a Renewal Term has not been determined, as provided in this Lease, by
the commencement of such Renewal Term, the "market rate of rent" (and terms
of payment as proposed by Tenant in its sealed bid shall be utilized as the
new rate of Base Rent until such time as the final "marker rate of rent"
for such Renewal term has been conclusively determined (at which time
Tenant, if Landlord's submitted "market rate of rent" is selected as the
rate of rent for the Renewal Term, shall promptly pay Landlord the excess
amount due, if any, for the period during which Tenant's proposed "market
rate of rent" was utilized as the rate of Base Rent for the Premises).
7.04 Termination. The Renewal Option shall automatically terminate and
become void and of no force or effect upon the earlier to occur of (A) the
expiration or termination of the Lease, as amended from time to time, (B)
the termination of Tenant's right to possession of all or any part of the
Premises as a result of a breach or default by Tenant under the Lease, as
amended from time to time, (C) the subleasing by Tenant of space
aggregating more than one-third (1/3rd) of the Rentable Area of the
Premises, or (D) the failure of Tenant to timely or properly exercise the
Renewal Option.
8. Right of First Offer. 8.01 Definition of ROFO Space. For purposes
of this Section 8, the "ROFO Space" shall mean all of the Rentable Area
located on the fifth (5th) floor of the Building provided, that if Tenant
subleases [other than to an Affiliate any space on the same floor as, or on
a floor contiguous to any floor containing, part of the ROFO Space, then
all space on such same or contiguous floor which was part of the "ROFO
Space shall no longer constitute part of the "ROFO Space"). Notwithstanding
the definition of ROFO Space set forth in the preceding sentence, if Tenant
exercises the Expansion, the ROFO Space shall mean, in addition to the
Rentable Area of the fifth (5th) floor of the Building, the Rentable Area
of the first (1st) and eleventh (11th) floors of the Building.
8.02 Right of First Offer In the event that at any time during the
Extended Term but prior to March 31, 2005, Landlord desires to lease the
ROFO Space, or any part thereof, to a third party (excluding any new or
renewal lease or lease expansion with any present tenant of any part of
such ROFO space or with a future tenant [hereinafter called a "Future ROFO
Space Tenant"] that leases any part of such ROFO Space which Tenant has
been offered under this Article 8 but has refused or failed to lease
pursuant to this Section 8.03 below, whether such renewal lease or lease
expansion occurs pursuant to the exercise by such tenant of a renewal or
expansion option contained in such tenant's lease or pursuant to new
negotiations between Landlord and said tenant and Excluding any lease with
a current tenant of the Building or any Future ROFO Space Tenant which has
a preemptive lease right which is superior to the right herein granted to
Tenant), Landlord shall give Tenant written notice thereof ("Landlord's
Notice") prior to Landlord entering into any lease for such ROFO Space,
which notice shall specify (A) the portion of the ROFO Space which Landlord
desires to lease (hereinafter referred to as the "Actual ROFO Space"), (B)
the date upon which such Actual ROFO Space shall be available for occupancy
and (C) the "market rate of rent" (as defined below) per square foot of
rentable area of such Actual ROFO Space to be quoted for a hypothetical
lease having a lease term expiring on the later of (i) five (5) years after
the commencement date of the lease term for the Actual ROFO Space and (ii)
the expiration date of the Extended Term. Tenant shall hereupon have the
right (a "First Offer Right") to lease all, but not less than all, of the
Actual ROFO Space for a lease term commencing on the available occupancy
date for such Actual ROFO Space (as specified in Landlord's Notice) and
expiring on the later of (i) tile expiration date of the Extended Term and
(ii) five (5) years after tile commencement of the lease term for such
Actual ROFO Space, Each First Offer Right is conditioned upon strict
compliance with the following terms and conditions:
(l) Tenant gives Landlord written notice of its election to exercise
the First Offer Fight within five (5) business days after Landlord gives
Tenant the applicable Landlord's Notice for such First Offer Right; and (2)
This Lease is in full force and effect and Tenant is not in monetary breach
or default under this Lease, beyond any applicable cure period, or
otherwise in material breach or default under this Lease, beyond any
applicable cure period, either on the date Tenant exercises the First Offer
Right or on the proposed commencement date of the lease term for the Actual
ROFO Space.
As used in this Section 8, "market rate of rent" shall mean he total
rate of rent, including component parts of such rate of rent such as net
rent, fixed and/or indexed rental adjustments and all rental adjustments
for Property Taxes and Operating Expenses for the Building, and taking into
account tenant concessions, if any, such as rent abatements and improvement
allowances, which Landlord is offering to third party tenants for office
space in the Building (taking into account, among other things, the length
of the terms and the sizes of the spaces, the levels of improvement of the
spaces demised under such leases to third party tenants, and the
creditworthiness of such tenants).
8.03 Limited Future Rights of Tenant. If Tenant does not timely or
properly exercise a First Offer Right, Landlord may at any time thereafter
lease the Actual ROFO Space to any third party on such terms and conditions
as are acceptable to Landlord )but for a period of 120 days, not on
economic terms substantially more favorable to such third party than those
set forth in Landlord's Notice), without any further rights of Tenant to
lease such space unless such space is not leased by a third party within
three hundred sixty-five (365) days after delivery of Landlord's Notice or
such space is vacated by the third party and is again available for
leasing, in each such case Landlord shall again comply with the terms of
this Section 8.
8.04 Terms. If Tenant exercises a First Offer Right; (A) All of the
terms, covenants and provisions of this Lease shall be applicable to the
lease of the Actual ROFO Space, except that the initial annual rate of Base
Rent per square foot of rentable area of the Actual ROFO Space shall be
equal to the "market rate of rent" per square foot of rentable area of the
Actual ROFO Space specified in the applicable Landlord's Notice. The Base
Rent applicable to the Actual ROFO Space shall be subject to adjustments
during tile lease term of the Actual ROFO Space in accordance with the
applicable Landlord's Notice. There shall be no abatement of Base Rent or
Tax and Operating Expense Adjustment for the Actual ROFO Space under or by
reason of Tenant's leasing of the Actual ROFO Space pursuant to this
Article 8, except that if Tenant elects to perform leasehold improvements
in the Actual ROFO Space to prepare the Actual ROFO Space for Tenant's
occupancy, Base Rent and Tax and Operating Expense Adjustment for the
Actual ROFO Space shall abate during the period Tenant performs such
leasehold improvements, until Tenant first conducts business from any
portion of file Actual ROFO Space (such abatement period not to exceed 30
days).
(B) Tenant agrees to accept possession of the Actual ROFO Space in an
"as is," "where is" condition without any representation, credit or
allowance from Landlord for the improvement thereof.
(C) Landlord and Tenant shall promptly execute and deliver an
amendment to this Lease reflecting the lease by Landlord to Tenant of the
Actual ROFO Space on the terms herein provided.
8.05 Termination. Each First Offer Right granted in this Lease shall
automatically terminate and become null and void upon the earlier to occur
of (A) the expiration or termination of the Lease Term or of the Lease, as
amended from time to time, (B) the termination of Tenant's right to
possession of all or any part of the Premises as a result of a breach or
default by Tenant under the Lease, as amended from time to time, (C) the
failure by Tenant to timely or properly exercise such First Offer Right, or
(D) the exercise by Tenant of a Contraction Right (as defined in Section 13
below).
9. Year 2000 Compliance.
(a) Tenant covenants and agrees that it will take reasonable measures
to ensure that all computer controlled factory components that have been
or hereafter are installed by Tenant in the Premises or elsewhere in the
Building, are operable on and after January 1, 2000, and do not interfere
with Landlord's or Tenant's operations, Building systems or equipment, or
other aspects of Landlord's or Tenant's business activities.
(b) Landlord shall take reasonable measures to ensure that all
computer controlled facility components of the Building operate without
substantial disruption due to the century change on and after January l,
2000. Tenant agrees, however, that Landlord shall not be liable for any
failure to furnish, stoppage of, or interruption in furnishing any of the
services or utilities described in Section 7.01 of the Original Lease, as a
result of disruption due to the century change on or after January 1, 2000,
and, in such event, Tenant shall not be entitled to damages nor shall any
failure or interruption abate or suspend Tenant's obligation to pay Base
Rent and Additional Rent required under this Lease or constitute or be
construed as a constructive or other eviction of Tenant, except Tenant
shall have the remedies specified in Insert No. 2 of the Original Lease if
and to the extent the conditions which give rise to the availability of
such remedies occur.
10. Modifications. The following articles and Sections of the Original Lease
are hereby deleted and shall be of no further force or effect;
(A) clause (v) of insert 4.01(B);
(B) Insert 4.02(B);
(C) Section 28.01;
(D) Article XXX;
(E) Article XXXI;
(F) Article XXXII; and
(G) Article XXXV.
11. Early Termination Option
(a) Tenant shall have three (3) separate options (each being
hereinafter referred to as a "Termination Option") to terminate the
Extended Term with respect to the Premises and the Storage Space leased by
Tenant effective as of 11:59 p.m. on May 1, 2007, May 1, 2008 and May l,
2009, respectively (each being hereinafter referred to as a "Termination
Date"), subject to and in accordance with the following terms and
conditions:
(l) Tenant must give Landlord written notice of Tenant's election to
exercise the Termination Option not later than three hundred sixty-five (3
65) days prior to the proposed Termination Date;
(2) Tenant must not be in breach or default under the Lease, as
amended hereby, either on the date that Tenant exercises the Termination
Option or on the Termination Date; and
(3) Tenant must pay to Landlord a lease termination fee (the
"Termination Fee") in an amount equal to the sum of (A) six (6) months of
Base Rent plus Rent Adjustments (for the (6) months period ending 12 months
prior to the Termination Date) if the Termination Date is May l, 2007; four
(4) months of Base Rent plus Rent Adjustments (for the 4-month period
ending .12 months prior to the Termination Date) if the Termination Date is
May l, 2008; or two (2) months of Base Rent plus Rent Adjustments (for the
2-month period ending 12 months prior to the Termination Date) if the
Termination Date is May l, 2009, plus (B) an amount equal to the
unamortized amount as of the Termination Date of all costs and expenses
paid or incurred by Landlord to lease the Premises to Tenant for the 10year
and 3 month Extended Term (including, without limitation, tenant
improvement allowances and costs, rental abatements and other concessions,
broker commissions, out-of-pocket attorneys' fees), which costs and
expenses, together with interest thereon at a per annum rate of ten percent
(10%), shall be amortized on a straight line basis over the Extended Term,
plus (C) an amount equal to the present value (determined utilizing a per
annum discount rate of 3%) of the Base Rent for the balance of the lease
term for any Actual ROFO Space leased by Tenant the term of which will have
less than five (5) years remaining as of the Termination Date. Tenant shall
pay the Termination Fee to Landlord in two equal installments as follows:
Fifty percent (50%) of the Termination Fee shall be paid to Landlord
concurrently with the delivery to Landlord of such notice of termination
and fifty percent (50%) of the Termination Fee shall be paid to Landlord
sixty (60) days prior to the Termination Date.
(b) Terms. If Tenant properly and timely exercises a Termination
Option, Base Rent, Rent Adjustments and all other monetary obligations of
Tenant under the Lease, as amended from time to time, shall be paid through
and apportioned as of the Termination Date. Neither Landlord nor Tenant
shall have any rights, estates, liabilities or obligations accruing under
the Lease, as amended from time to time, after the Termination Date, except
such rights and obligations which, by the terms of the Lease, as amended
hereby, expressly survive the expiration or termination of the Extended
Term. Notwithstanding the foregoing, the exercise by Tenant of a
Termination Option shall not terminate this Lease with respect to any ROFO
Space Term leases which has not been leased by Tenant for at least five (5)
years as of the Termination Date.
(c) Termination. The Termination Options shall automatically
termination and become null and void upon the earlier to occur of (i) the
termination of the Lease or of Tenant's right to possession of the
Premises, (ii) the assignment of the Lease, as amended hereby, by Tenant in
whole or in part, except to an Affiliate, (iii) the sublease by Tenant of
any portion of file Premises for a sublease term extending beyond the
proposed Termination date, except to an Affiliate, or (iv) the exercise by
Tenant of the Renewal Option.
12. Satellite Dish Installation. Landlord grants to Tenant the right
to install and maintain one satellite dish of no more than five (5) feet in
diameter (the "Satellite Dish") on the roof of the Building in accordance
with all the following terms and provisions of this Section 12:
(a) Tenant shall bear all costs of installation of the Satellite Dish,
related cables and all other related equipment including Landlord-approved
modifications required for the installation and costs of fulfilling all the
requirements set forth in this Section 12.
(b) Landlord shall designate the actual location of the Satellite
Dish, which shall be on the roof, so that no interference with the safety
of the Building or use of the Building by Landlord and other tenants will
occur,
(c) Tenant shall provide Landlord with plans and specifications for
the Satellite Dish and related equipment showing, in detail, the screening
which Tenant will provide to shield such Satellite Dish and equipment from
public view, all which shall be subject to Landlord's prior written
approval.
(d) Access to the roof, cables, mechanical rooms or ocher areas of the
Building, and all work undertaken by Tenant, shall be in accordance with
Landlord's required procedures and regulations.
(e) Tenant shall secure all necessary building permits, FAA and FCC
approvals, and any other approvals of Federal, State or local agency or
government authority required for the Satellite Dish installation, shall
provide copies of same to Landlord, and shall comply with all requirements
of any such agency or authority, including, but not limited to, height
restrictions and screening requirements. Tenant shall provide all
installation specifications and drawings required for the securing of said
permits and approvals.
(f) If required by local codes or ordinances, Tenant shall supply
stamped engineering drawings for the state in which the installation is to
be accomplished, certifying that the proposed site will safely and legally
support the Satellite Dish installation.
(g) Installation shall be performed so as to cause no structural
damage to the Building. Any damage to the Building caused by such
installation or by the operation or existence of the Satellite Dish shall
be repaired by Tenant immediately. At the termination of the Lease by
expiration of time or otherwise, Tenant at its sole cost and expense, shall
promptly remove the Satellite Dish and all related equipment and shall
restore the roof of the Building to its condition existing prior to the
installation of the Satellite Dish ordinary wear and tear excepted. Tenant
shall further repair, at its sole cost and expense, any damage or
destruction caused by the removal of the Satellite Dish. Restoration and
repair hereby required to be performed by Tenant shall be completed under
the supervision of a representative of Landlord at such time and in such
manner as is reasonably satisfactory to Landlord. Landlord at Landlord's
option exercised by written notice to Tenant shall have the right to
perform any repairs and removal and restoration to the Building and not to
the Satellite Dish at Tenant's sole cost and expense and such expense shall
be reimbursed to Landlord by Tenant promptly upon demand. Notwithstanding
anything contained herein, Tenant shall not remove, and shall not be
reimbursed for file cost of, any equipment which is affixed to, embedded in
or permanently attached in or to the Building including, but not limited
to, cables and other wiring, unless Landlord so directs otherwise.
(h) Prior to operation of the Satellite Dish, Tenant shall certify
that the radio frequency transmissions of the Satellite Dish will not
endanger persons in the Building or surrounding premises. Tenant shall hold
the Landlord harmless and shall indemnify and defend the Landlord, its
beneficiaries, and their respective officers, directors, partners,
employees and agents from any and against all loss, cost, injury, claims,
demands and expenses of every kind (including court costs and attorneys'
fees) which arise from Tenant's exercise of the rights granted under this
Section 12 or actions pursuant thereto or any breach by Tenant of its
obligations under this Section 12.
(i) Tenant shall insure that the installation is accomplished so that
the Satellite dish is securely attached to the roof or ground, as the case
may be, and Tenant assumes full responsibility for any physical damage to
the roof or to the area in which it is mounted, if ground-mounted, which
damage may be caused by the Satellite Dish or its support equipment.
(j) Tenant agrees to install and operate the Satellite Dish in a
manner which does not cause interference with existing and subsequent
satellite dish or antenna installations at the Building.
(k) If the entire roof of the Building shall be taken or condemned for
any public purpose, Tenant's right granted hereunder shall terminate as of
the effective date of the condemnation or taking. If less than the entire
roof of the Building shall be taken or condemned or a substantial portion
of the Building shall be taken or condemned, this right of Tenant shall, at
the option of Landlord by notice to Tenant, terminate as of the effective
date of the condemnation of taking. The proceeds from any taking or
condemnation referred to in this Section 12(k) shall be the sole property
of Landlord and Tenant shall have no right or interest to any portion
thereof, but shall be entitled to remove its Satellite Dish and related
equipment, subject to the foregoing provisions of this Section 12.
(L) Landlord and its beneficiaries, and their officers, directors,
shareholders, partners, agents and employees shall not be liable or
responsible to Tenant for any loss or damage to any property or person
relating to the Satellite Dish occasioned by theft, fire, act of God,
public enemy, injunction, riot strike, insurrection, war, court order, or
for any damage or inconvenience relating to the Satellite Dish which may
arise through file maintenance, repair or alteration of any part of the
Building, or the failure to make such repair, or any other cause beyond the
reasonable control of Landlord. Landlord shall not be liable to Tenant for
any interference with Tenant's operation of the Satellite Dish caused by
Landlord's repair, maintenance or replacement of the roof or Building and
Landlord shall be entitled to temporarily suspend operation of the
Satellite Dish if reasonably necessary for performance of such activities
by Landlord,
13. Contraction Option.
13.01 Grant of Contraction Option. If and only if Tenant exercises the
Expansion Option pursuant to Section 16 below, then Tenant shall have one
option (the "Contraction Option") to terminate this Lease with respect only
to a portion of the Premises (hereinafter called the "Contraction Space.')
determined as follows:
(A) Tenant may either eliminate from the Premises a block of space
containing not more than twelve thousand (12,000) rentable square feet as
specified by Tenant in the Contraction Notice (as defined below), if the
Contraction Date falls within the first three (3) Lease Years of the
Extended Term; or
(B) Tenant may eliminate from the Premises a block of space containing
not more than twenty-three thousand four hundred forty-nine (23,449)
rentable square feet as specified by Tenant in file Contraction Notice if
the Contraction Date falls within the fourth (4th) or fifth (5th) Lease
Year of the Extended Term. As provided below, Landlord, in its sole and
absolute discretion, shall determine the location and configuration of the
Contraction Space and shall notify Tenant thereof within thirty (3 0) days
after Landlord receives Tenant's Contraction Notice. If Tenant exercises
the Contraction Option this Lease shall terminate with respect only to the
Contraction Space effective as of any date selected by Tenant (the
"Contraction Date") but which date must occur during the period commencing
on April 1, 2003 and ending on March 31, 2005. In any event, the location
of the Contraction Space shall be on the concourse, first (1st) and/or
tenth (10th) floors of the Building as determined by Landlord as
hereinafter provided.
13.02 Exercise of Contraction Option. The Contraction Option is
granted subject to the following terms and conditions:
(A) Tenant shall give Landlord written notice (the "Contraction
Notice") of Tenant's election to exercise the Contraction Option not
earlier than four hundred fifty (450) and not later than three hundred
sixty-five (365) days prior to the Contraction Date, which notice shall
designate (i) the approximate size of the Contraction Space, (ii) the
actual Contraction Date and (iii) Tenant's identification of the space
Tenant's Proposed Contraction Space") it desires to be the Contraction
Space. Within fifteen (15) business days after Landlord's receipt of such
Contraction Notice, Landlord shall notify Tenant in writing ("Landlord's
Contraction Space Response") of whether Landlord has approved Tenant's
Proposed Contraction Space as the actual Contraction Space or whether
Landlord has designated different space (the location and configuration of
which Landlord shall identify in Landlord's Contraction Space Response) to
be the actual Contraction Space. While the determination of the location
and configuration of file actual Contraction Space shall be made by
Landlord in its sole and absolute discretion, Landlord agrees to give
commercially reasonable consideration to Tenant's Proposed Contraction
Space when evaluating the location, configuration and re-leasing
opportunities for Tenant's Proposed Contraction Space in comparison to
other space leased by Tenant on the concourse, first (1st) and tenth (10th)
floors which might be selected as the actual Contraction Space.
(B) The Lease, as amended from time to time, shall be in full force
and effect and Tenant shall not be in breach or default under the Lease, as
amended from time to time, either on the date Tenant exercises the
Contraction Option or on the Contraction Date;
(C) (i) If Tenant selects a Contraction Date which falls within the
first three (3) Lease Years of the Extended Term, then Tenant shall pay to
Landlord, by the date which is one hundred eighty (180) days prior to the
Contraction Date, a Contraction Space termination fee (the "Contraction
Space Termination Fee") in an amount equal to the sum of (a) six (6) times
the monthly Base Rent plus six (6) times the Monthly Rent Adjustment
(calculated utilizing "le amounts of the Base Rent and Rent Adjustment for
the six (6) month period immediately preceding the date the Contraction
Notice is given), plus (b) the unamortized amount as of the Contraction
Date of all costs and expenses paid or incurred by Landlord to lease the
Contraction Space to Tenant for the 10 year and 3 month Extended Term
(including, without limitation, tenant improvement allowances and costs,
rental abatements, and other concessions, broker commissions and
out-of-pocket attorneys' fees), together with interest thereon at a per
annum rate of ten percent (10%), amortized on a straight-line basis over
the ten (10) year and three (3) month extended Term. (In determining the
amount of such costs and expenses paid or incurred by Landlord to lease the
Contraction Space to Tenant, Landlord shall multiply the total of all such
costs and expenses paid or incurred by Landlord to lease "le Premises to
Tenant by a fraction, the numerator of which is the rentable area of the
Contraction Space and the denominator of which is the rentable area of the
Premises.)
(ii) If Tenant selects a Contraction Date which falls within the
fourth (4h) or fifth (5th) Lease Years of the Extended Term, then Tenant
shall pay Landlord, by the date which is one hundred eighty (180) days
prior to the Contraction Date, a Contraction Space Termination Fee in an
amount equal to the unamortized amount as of the Contraction Date of all
costs and expenses paid or incurred by Landlord to lease the Contraction
Space to Tenant for the 10 year and 3 month Extended Term (including,
without limitation tenant improvement allowances and costs, rental
abatements, and other concessions, broker commissions and out-of-pocket
attorneys' fees), together with interest thereon at the per annum rate of
ten percent (10%) amortized on a straight-line basis over the ten (10) year
and three (3) month Extended Term.
13.03 Terms. If Tenant exercises the Contraction Option:
(A) This Lease shall terminate with respect only to the Contraction
Space effective as of the Contraction Date and Rent for the Contraction
Space shall be paid through and apportioned as of the Contraction Date;
(B) Tenant shall surrender and vacate the Contraction Space and
deliver possession thereof to Landlord on or before the Contraction Date in
the condition required under Section 9.04 of the Original Lease;
(C) Neither Landlord nor Tenant shall have any rights, estates,
liabilities or obligations under this Lease with respect to the Contraction
Space first accruing after the Contraction Date, except those which
pursuant to this Lease are to expressly survive the expiration or
termination of the Lease Term;
(D) The Lease shall continue in full force and effect with respect to
the entire remaining portion of the Premises (other than the Contraction
Space) for the balance of the Lease Term. Effective as of the day
immediately following the Contraction Date, (l) the Base Rent payable under
this Lease shall be reduced by the amount of Base Rent which would
otherwise have been payable under this Lease for the Contraction Space
based upon the Rentable Area of the Premises compared to the Rentable Area
of the Premises less the Contraction Space) and (2) Tenant's Percentage
Share shall be reduced to the percentage equivalent of fraction, the
numerator of which is the Rentable Area of the Premises less the
Contraction Space and the denominator of which is the Rentable Area of the
Building; and
(E) Landlord and Tenant shall enter into an amendment to this Lease
reflecting file termination of the Lease with respect only to the
Contraction Space upon the terms herein provided.
13.04 Termination. The Contraction Option shall automatically
terminate and become null and void upon the earlier to occur of (A) the
termination of Tenant's right to possession of all or any part of the
Premises as a result of a breach or default by Tenant under this Lease, (B)
the exercise by Tenant of any First Offer Right pursuant to Section 8 of
this Amendment. or (C) the failure of Tenant to timely or properly exercise
the Contraction Option.
14. ATO Switch. Tenant hereby agrees that title to the ATO Switch is vested in
Landlord such that the ATO Switch is the property of Landlord and shall
remain in file Building at the expiration or prior termination of the Lease
Term, as extended from time to time.
15. Insurance_Limits of Liability. Anything set forth in Section 10,03(A) of
the Original Lease to the contrary notwithstanding, from and after January
1, 1999, the minimum limit of liability for Tenant's general liability
insurance coverage shall be not less than Two Million Dollars ($2,000,000)
combined single limit per occurrence and in the aggregate.
16. Expansion Option.
16.01 Expansion Option. Provided the Lease, as amended by this
Amendment, is then in full force and effect and Tenant is not then in
breach or default under the Lease, as amended by this Amendment, in any
material respect beyond any applicable cure period, Tenant shall have the
option (tile "Expansion Option"), exercisable by giving written notice to
Landlord at any time on or before March 31, 1999, to expand the Premises
effective as of the commencement of tile Extended Term to include all space
currently included in the Existing Premises, which consists of the
following suites with the respective rentable areas indicated below (all as
shown on the drawings attached hereto as Exhibit A-2):
(a) Suite 40 - 3,584 rentable square feet.
(b) Suite 45 - 755 rentable square feet.
(c) Suite 100 - 8,310 rentable square feet.
(d) Suite 200 - 23,736 rentable square feet.
(e) Suite 300 - 29,244 rentable square feet.
(f) Suite 400 - 29,244 rentable square feet.
(g) Suite 1000 - 23,449 rentable square feet
If Tenant exercises the Expansion Option, then notwithstanding anything to the
contrary in Section 2 above -or elsewhere in this Amendment during the Extended
Term the "Premises" shall mean said suites 40, 45, 100, 200, 300, 400 and 1000,
the "Rentable Area of the Premises" shall mean one hundred eighteen thousand
three hundred twenty-two (118,322) square feet and "Tenant's Percentage Share"
shall mean forty-two and nine hundred forty two thousandths percent (42.942%).
16.02 Base Rent. lf Tenant exercises the Expansion Option, then
anything set forth in Section 4(a) of this Amendment to the contrary, Base
Rent for the Premises during the Extended Term shall be payable by Tenant
to Landlord in the following amounts for the following periods:
Period Annual Base Rent Monthly Base Rent
4/1/2000 - 3/31/2000 $1,893,152.04 157,762.67
4/1/01- 3/31/02 1,949,946.60 162,495.55
4/1/02 - 3/31/03 2,008,444.92 167,370.41
4/1/03 - 3/31/04 2,068,698.36 172,391.53
4/1/04 - 3/31/05 2,130,759.24 177,563.27
4/1/05 - 3/31/06 2,194,682.04 182,890.l7
4/1/06 - 3/31/07 2,260,522.44 188,376.87
4/1/07- 3/31/08 2,328,338.16 194,028.18
4/1/08 - 3/31/09 2,398,188.36 199,849.03
4/1/09 - 3/3l/lO 2,470,134.00 205,844.50
4/l/l0 - 6/30/10 2,544,237,96 212,019.83
17. Brokers. Tenant represents and warrants to Landlord that except for the
Kennedy-Wilson Properties, Ltd and Tanguay-Burke-Stratton (collectively,
the "Brokers"), Tenant has not dealt with any real estate broker,
salesperson or finder in connection with the extension of the Lease Term or
otherwise in connection with this Amendment (or anything contained in this
Agreement), and no such other person initiated or participated in the
negotiation of the extension of the Lease Term or any other part of this
Amendment. Tenant hereby agrees to indemnify, defend and hold harmless
Landlord, Heitman and Kennedy-Wilson Properties, Ltd, from and against any
and all liabilities and claims for commissions and fees arising out of a
breach of tile foregoing representations and warranties. Landlord shall be
responsible for the payment of any commissions or fees due to the Brokers
based upon separate agreements with the Brokers,
18. Conflict. In the event of any conflict between any term or provision of the
Lease and any term or provision of this Amendment, the term or provision of
this Amendment shall govern and control.
19. Effect of Amendment. As amended by this Amendment, the Lease shall remain
in full force and effect. Tenant hereby ratifies and confirms all of the
terms and conditions of the Lease, as amended hereby, and acknowledges that
it is bound by all of file liabilities and obligations of the "Tenant"
under file Lease, as amended hereby. Landlord ratifies and confirms all of
the terms and conditions of the Lease, as amended hereby, and acknowledges
that it is bound by all of the liabilities and obligations of the
"Landlord" under the Lease, as amended hereby.
20. Submission. Submission of this Amendment by Landlord or Landlord's
beneficiary or agent to Tenant or its agent or representative for
examination and/or execution shall not constitute a reservation of or
option for the extension of the Lease Term or for rental of the Premises or
in any manner bind Landlord and no obligation on Landlord shall arise under
this Amendment unless and until this Amendment is fully signed and
delivered by Landlord and Tenant; provided, however, the execution and
delivery by Tenant of this Amendment to Landlord shall constitute an
irrevocable offer by Tenant to enter into the transactions described
herein, which offer may not be revoked by Tenant for twenty (20) business
days after much delivery.
21. Landlord's Lease_Undertakings. Notwithstanding anything to the contrary
contained in the Lease, as amended hereby, or in any exhibits, Riders or
addenda hereto attached to the Lease or attached hereto (collectively, the
"Lease Documents"), it is expressly understood and agreed by and between
the parties hereto that: (a) the recourse of Tenant or its successors or
assigns against Landlord with respect to the alleged breach by or on the
part of Landlord of any representation, warranty, covenant, undertaking or
agreement contained in any of the Lease Documents or otherwise arising out
of Tenant's use of the Premises or the Building (collectively, "Landlord's
Lease Undertakings") shall extend only to Landlord's interest in the real
estate of which the Premises demised under the Lease Documents are a part
("Landlord's Real Estate") and not to any other assets of Landlord or its
beneficiaries; and (b) except to the extent of Landlord's interest in
Landlord's Real Estate, no personal liability or personal responsibility of
any sort with respect to any of Landlord's Lease Undertakings or any
alleged breach thereof is assumed by, or shall (at any time be asserted or
enforceable against, Landlord, Heitman Capital Management, LLC,
Kennedy-Wilson properties, Ltd., or against any of their respective
directors, officers, employees, agents, constituent partners,
beneficiaries, trustees or representatives.
It is expressly understood and agreed by and between the parties
hereto, anything herein to the contrary notwithstanding, that each and
all of the representations, warranties, covenants, undertakings and
agreements herein made on the part of Landlord while in form
purporting to be the representations, warranties, covenants,
undertakings and agreements of Landlord are nevertheless each and
every one of them made and intended, not as personal representations,
warranties, covenants, undertakings and agreements by Landlord or for
the purpose or with the intention of binding Landlord personally, but
are made and intended for the purpose only of subjecting Landlord's
interest in the Building, Landlord's Real Estate and the Premises to
the terms of the Lease, as amended hereby, and for no other purpose
whatsoever, and in case of default hereunder by Landlord (or default
through, under or by any of its beneficiaries, or agents or
representatives or said beneficiaries), Tenant shall look solely to
the interests of Landlord in the Building and the Landlord's Real
Estate; that this Amendment is executed and delivered by Landlord not
in its own right, but solely in the exercise of the powers conferred
upon it as such Trustee; that neither tile Landlord nor any of the
Landlord's beneficiaries shall have any personal liability to pay any
indebtedness accruing hereunder or to perform any covenant, either
express or implied, herein contained, and no liability or duty shall
rest upon Landlord to sequester the trust estate or the rents, issues
and profits arising therefrom, or the proceeds arising from any sale,
or other disposition thereof; and that no personal liability or
personal responsibility of any sort is assumed by, nor shall at any
time be asserted or enforceable against, said Landlord, American
National Bank and Trust Company of Chicago, a national banking
association, individually or personally, but only as Trustee under the
provisions of a Trust Agreement known as its Trust No. 107101-01, or
against any of the beneficiaries under said Trust Agreement, or their
respective agents, on account of the Lease; as amended hereby, or on
account of any representation, warranty, covenant, undertaking or
agreement of Landlord contained in the Lease, as amended hereby,
either express or implied, all such personal liability, if any, being
expressly waived and released by Tenant and by all persons claiming
by, through or under Tenant.
IN WITNESS THEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written
above.
TENANT: LANDLORD:
GALILEO INTERNATIONAL, L.L.C., a AMERICAN NATIONAL BANK
Delaware limited liability company (as AND TRUST COMPANY OF
successor-by-merger to Galileo International CHICAGO, not
personally but solely as
Partnership) Trustee as aforesaid.
By:____________________________ By:_____________________________
Title:___________________________
Title:___________________________
Exhibit 10.11
March 22, 1999
Mr. Joseph C. Stevens
Kennedy-Wilson Properties
9700 West Higgins
Rosemont, IL 60018
RE: Orchard Point Office Center
Rosemont, Illinois
Dear Joseph:
Galileo International hereby gives notice of its exercise of the Expansion
Option as stated in Section 16 of the Second Amendment To Lease and Lease
Renewal Agreement, dated March 3, 1999. The Second Amendment extended the Term
with respect to the following spaces:
Suite 300 - 29,244 rentable square feet.
Suite 400 - 29,244 rentable square feet.
Storage Space - 3,085 rentable square feet.
Galileo International's exercise of the Expansion Option will expand the
Premises to include all space currently included in the Existing Premises,
which consists of the following additional space:
Suite 40 - 3,584 rentable square feet.
Suite 45 - 755 rentable square feet.
Suite 100 - 8,310 rentable square feet.
Suite 200 23,736 rentable square feet.
Suite 1000 23,449 rentable square feet.
Please call Gary Nelson, U.S. Facility Manager if you have any questions.
Sincerely,
Paul Bristow
Sr. VP Chief Financial Officer
Galileo International
Exhibit 10.12
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE ("Amendment") is made as of the 1st day
of April, 1999, by and between AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, not personally but solely as Trustee under Trust
No. 107101-01 ("Landlord"), and GALILEO INTERNATIONAL, L.L.C., a
Delaware limited liability company (as successor-by-merger to Galileo
International Partnership) ("Tenant").
W I T N E S S E T H:
1. Landlord and Tenant's predecessor-in-interest, Galileo International
Partnership, a Delaware general partnership ("GIP"), entered into a
certain Office Lease and Rider (the "Original Lease") dated March 31,
1995, whereby Landlord leased to GIP certain premises (the "Original
Premises") consisting of approximately 85,521 rentable square feet
located on the concourse level and on the 3rd, 4th, and 10th floors of
that certain building (the "Building") known as Orchard Point Office
Center, located at 9700 Higgins Road, Rosemont, Illinois, for a five
(5) year lease term (the "Original Term") expiring on March 31, 2000.
2. Landlord and GIP amended Section 30.05 of the Original Lease by a certain
letter agreement dated May 12, 1995 (the "Letter Agreement").
3. By First Amendment to Lease dated as of September 19, 1995 ("Amendment
No. 1"), Landlord and GIP extended the term of the Second Floor Temporary Space
(as defined in the Original Lease).
4. By Merger Agreement dated as of July 30, 1997, GIP merged into Tenant and
Tenant succeeded to the interest of the "Tenant" under the Lease.
5. By an instrument also entitled First Amendment to Lease dated October 30,
1997 (the "First Amendment"), Tenant added to the Original Premises 32,801
rentable square feet of space in the Building consisting of Suites 45 (on the
concourse level), 100 (on the first floor) and 200 (on the second floor). (The
Original Premises, as so expanded, is hereinafter referred to as the "Existing
Premises".)
6. By Automatic Throwover Switch Agreement dated July 24, 1998 (the
"ATS Agreement"), an automatic throwover switch (the "ATO Switch") was
purchased and installed at the Building.
7. By Second Amendment to Lease and Lease Renewal Agreement dated as of
March 3, 1999 (the "Second Amendment"), Landlord and Tenant, among
other things, (i) extended the Original Term by ten (10) years and
three (3) months (the "Extended Term") to expire on June 30, 2010,
with respect to Suite 300 (29,244 rentable square feet) and Suite 400
(29,244 rentable square feet), but not with respect to the balance of
the Existing Premises, and (ii) granted Tenant a right to expand such
reduced premises to include the balance of the Existing Premises.
8. By letter dated March 22, 1999, Tenant exercised an option to expand the
Premises during the Extended Term to include all of the Existing Premises
(thereby adding Suites 40, 45, 100, 200 and 1000) to the Premises.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, it is hereby agreed as follows:
1. Recitals. The Recitals set forth above shall be deemed to be part of
this Amendment as if they were set forth as numbered paragraphs herein.
2. Defined Terms. Each capitalized term used as a defined term in this
Amendment but not otherwise defined in this Amendment shall have the same
meaning ascribed to such term in the Lease. As used herein, the term "Lease"
shall mean the Original Lease, as amended by the Letter Agreement, Amendment
No. 1, the First Amendment, the ATS Agreement and the Second Amendment. As a
result of the exercise by Tenant of the option to expand the Premises during
the Extended Term pursuant to the Second Amendment, and notwithstanding
anything in Section 2 of the Second Amendment to the contrary, during the
Extended Term, the "Rentable Area of the Premises" shall mean one hundred
eighteen thousand three hundred twenty-two (118,322) square feet comprised of
the following spaces (all as shown on the drawings attached hereto as Exhibit
A):
(1) Suite 40 - 3,584 rentable square feet.
(2) Suite 45 - 755 rentable square feet.
(3) Suite 100 - 8,310 rentable square feet.
(4) Suite 200 - 23,736 rentable square feet.
(5) Suite 300 - 29,244 rentable square feet.
(6) Suite 400 - 29,244 rentable square feet.
(7) Suite 1000 - 23,449 rentable square feet.
During the Extended Term, "Tenant's Percentage Share" shall mean forty-two and
nine hundred forty-two thousandths percent (42.942%). During the Extended
Term, the "Premises" shall mean said suites 40, 45, 100, 200, 300, 400 and
1000.
3. Base Rent; Abatement.
(1) Base Rent. As a result of the exercise by Tenant of the option to
expand the Premises during the Extended Term pursuant to the Second
Amendment and notwithstanding anything in Section 4 of the Second
Amendment to the contrary, Base Rent for the Premises during the Extended
Term shall be payable by Tenant to Landlord in the following amounts for
the following periods:
------------------------------------------------------------
Period Annual Base Rent Monthly Base Rent
------------------------------------------------------------
------------------------------------------------------------
4/1/2000 - 3/31/2001 $1,893,152.04 157,762.67
------------------------------------------------------------
------------------------------------------------------------
4/1/01 - 3/31/02 1,949,946.60 162,495.55
------------------------------------------------------------
------------------------------------------------------------
4/1/02 - 3/31/03 2,008,444.92 167,370.41
------------------------------------------------------------
------------------------------------------------------------
4/1/03 - 3/31/04 2,068,698.36 172,391.53
------------------------------------------------------------
------------------------------------------------------------
4/1/04 - 3/31/05 2,130,759.24 177,563.27
------------------------------------------------------------
------------------------------------------------------------
4/1/05 - 3/31/06 2,194,682.04 182,890.17
------------------------------------------------------------
------------------------------------------------------------
4/1/06 - 3/31/07 2,260,522.44 188,376.87
------------------------------------------------------------
------------------------------------------------------------
4/1/07- 3/31/08 2,328,338.16 194,028.18
------------------------------------------------------------
------------------------------------------------------------
4/1/08 - 3/31/09 2,398,188.36 199,849.03
------------------------------------------------------------
------------------------------------------------------------
4/1/09 - 3/31/10 2,470,134.00 205,844.50
------------------------------------------------------------
------------------------------------------------------------
4/1/10 - 6/30/10 2,544,237.96 212,019.83
------------------------------------------------------------
Except as provided for in Section 4(b) below, there shall be no abatement
of Base Rent under or by reason of this Amendment.
(2) Abatement. Notwithstanding Section 4(a) of this Amendment (containing
the Base Rent provisions) to the contrary, no Monthly Base Rent shall
be due for the first three (3) months of the Extended Term (i.e. - the
calendar months of April, May and June of 2000). Tenant understands
that the foregoing abatement shall pertain only to Monthly Base Rent
and not to any other component of Rent payable under the Lease, as
amended by this Amendment, and Tenant shall pay all Rent Adjustments
which shall be due during or for each of such months as provided for
in Sections 4.02 and 4.03 of the Original Lease, and all other rent
due during or for each of such months, including, without limitation,
Storage Space Rent. Landlord and Tenant further agree that the
abatement of Monthly Base Rent described in the first sentence of this
Section 4(b) is conditional abatement, and that Tenant shall be
entitled to such abatement only upon the condition that no breach or
default occurs under the Lease, as amended hereby, which is not cured
within the cure period, if any, provided therefor in the Lease, either
prior to or during the period in which Tenant otherwise would be
entitled to receive such abatement. In the event of the occurrence of
any such breach or default, Tenant shall not be entitled to any
abatement of Base Rent which Tenant otherwise would have been entitled
to receive during the pendency of, and for so long as, such breach or
default by Tenant under the Lease remains uncured.
(3) Rent Adjustments. Tenant shall remain obligated to pay Tax and
Operating Expense Adjustment, as provided for in the Lease, both prior
to and during the Extended Term. Landlord agrees that the amount of
the Operating Expenses for the calendar year of 2000 shall not exceed
one hundred five percent (105%) of the actual Operating Expenses for
the calendar year of 1999, and the Operating Expenses for the calendar
year of 2001 shall not exceed one hundred five percent (105%) of the
actual Operating Expenses for the calendar year of 2000. Such
limitations on Operating Expenses shall apply only to Operating
Expenses for the calendar years of 2000 and 2001 and not to Property
Taxes for any calendar year or to Operating Expenses for any other
calendar year, and such limitations shall not limit or otherwise
affect Tenant's obligations regarding the payment of any other
component of Rent or otherwise limit the amount of Tenant's Tax and
Operating Expense Adjustment for any other calendar year during the
Original Term or the Extended Term.
4. Work Letter Agreement - Landlord's Contribution. As a result of the
exercise by Tenant of the option to expand the Premises during the
Extended Term pursuant to the Second Amendment, the amount of
Landlord's Contribution under Section 8(b) of the Work Letter
Agreement attached as Exhibit B to the Second Amendment (the "Work
Letter") shall be One Million Seven Hundred Thirteen Thousand Six
Hundred Fifty Dollars ($1,713,650). As so modified, the Work Letter
shall remain in full force and effect.
5. Right of First Offer. Section 8 of the Second Amendment is hereby
deleted and the following shall enumerate all of the terms and
conditions of Tenant's right of first offer:
5.01 Definition of Expansion Space. For purposes of this
Section 5, the "Expansion Space" shall mean all of the Rentable Area
located on the first (1st), fifth (5th) and eleventh (11th) floors of
the Building (provided, that if Tenant subleases [other than to an
Affiliate] any space on the same floor as, or on a floor contiguous to
any floor containing, part of the Expansion Space, then all space on
such same or contiguous floor which was part of the "Expansion Space"
shall no longer constitute part of the "Expansion Space").
5.02 Right of First Offer. In the event that at any time during
the Extended Term but prior to March 31, 2005, Landlord desires to lease
the Expansion Space, or any part thereof, to a third party (excluding any
new or renewal lease or lease expansion with any present tenant of any
part of such Expansion Space or with a future tenant [hereinafter called
a "Future Extension Space Tenant"] that leases any part of such Expansion
Space which Tenant has been offered under this Section 5 but has refused
or failed to lease pursuant to this Section 5.03 below, whether such
renewal lease or lease expansion occurs pursuant to the exercise by such
tenant of a renewal or expansion option contained in such tenant's lease
or pursuant to new negotiations between Landlord and said tenant and
excluding any lease with a current tenant of the Building or any Future
Expansion Space Tenant which has a preemptive lease right which is
superior to the right herein granted to Tenant), Landlord shall give
Tenant written notice thereof ("Landlord's Notice") prior to Landlord
entering into any lease for such Expansion Space, which notice shall
specify (A) the portion of the Expansion Space which Landlord desires to
lease (hereinafter referred to as the "Actual Expansion Space"), (B) the
date upon which such Actual Expansion Space shall be available for
occupancy and (C) the "market rate of rent" (as defined below) per square
foot of rentable area of such Actual Expansion Space to be quoted for a
hypothetical lease having a lease term expiring on the later of (i) five
(5) years after the commencement date of the lease term for the Actual
Expansion Space and (ii) the expiration date of the Extended Term.
Tenant shall thereupon have the right (a "First Offer Right") to lease
all, but not less than all, of the Actual Expansion Space for a lease
term commencing on the available occupancy date for such Actual Expansion
Space (as specified in Landlord's Notice) and expiring on the later of
(i) the expiration date of the Extended Term and (ii) five (5) years after
the commencement of the lease term for such Actual Expansion Space. Each
First Offer Right is conditioned upon strict compliance with the
following terms and conditions:
(1) Tenant gives Landlord written notice of its election to
exercise the First Offer Right within five (5) business days after
Landlord gives Tenant the applicable Landlord's Notice for such First
Offer Right; and
(2) This Lease is in full force and effect and Tenant is not in
monetary breach or default under this Lease, beyond any applicable
cure period, or otherwise in material breach or default under this
Lease, beyond any applicable cure period, either on the date Tenant
exercises the First Offer Right or on the proposed commencement date
of the lease term for the Actual Expansion Space.
As used in this Section 5, "market rate of rent" shall mean the total
rate of rent, including component parts of such rate of rent such as net
rent, fixed and/or indexed rental adjustments and all rental adjustments
for Property Taxes and Operating Expenses for the Building, and taking
into account tenant concessions, if any, such as rent abatements and
improvement allowances, which Landlord is offering to third party tenants
for office space in the Building (taking into account, among other
things, the lengths of the terms and the sizes of the spaces, the levels
of improvement of the spaces demised under such leases to third party
tenants, and the creditworthiness of such tenants).
5.03 Limited Future Rights of Tenant. If Tenant does not timely
or properly exercise a First Offer Right, Landlord may at any time
thereafter lease the Actual Expansion Space to any third party on such
terms and conditions as are acceptable to Landlord (but for a period of
120 days, not on economic terms substantially more favorable to such
third party than those set forth in Landlord's Notice), without any
further rights of Tenant to lease such space unless such space is not
leased by a third party within three hundred sixty-five (365) days after
delivery of Landlord's Notice or such space is vacated by the third party
and is again available for leasing, in each such case Landlord shall
again comply with the terms of this Section8.
5.04 Terms. If Tenant exercises a First Offer Right;
(A) All of the terms, covenants and provisions of this Lease shall be
applicable to the lease of the Actual Expansion Space, except that the
initial annual rate of Base Rent per square foot of rentable area of
the Actual Expansion Space shall be equal to the "market rate of rent"
per square foot of rentable area of the Actual Expansion Space
specified in the applicable Landlord's Notice. The Base Rent
applicable to the Actual Expansion Space shall be subject to
adjustments during the lease term of the Actual Expansion Space in
accordance with the applicable Landlord's Notice. There shall be no
abatement of Base Rent or Tax and Operating Expense Adjustment for the
Actual Expansion Space under or by reason of Tenant's leasing of the
Actual Expansion Space pursuant to this Section 5, except that if
Tenant elects to perform leasehold improvements in the Actual
Expansion Space to prepare the Actual Expansion Space for Tenant's
occupancy, Base Rent and Tax and Operating Expense Adjustment for the
Actual Expansion Space shall abate during the period Tenant performs
such leasehold improvements, until Tenant first conducts business from
any portion of the Actual Expansion Space (such abatement period not
to exceed 30 days).
(B) Tenant agrees to accept possession of the Actual Expansion Space
in an "as is," "where is" condition without any representation, credit
or allowance from Landlord for the improvement thereof.
(C) Landlord and Tenant shall promptly execute and deliver an
amendment to this Lease reflecting the lease by Landlord to Tenant of
the Actual Expansion Space on the terms herein provided.
5.05 Termination. Each First Offer Right granted in this Lease shall
automatically terminate and become null and void upon the earlier to
occur of (A) the expiration or termination of the Lease Term or of the
Lease, as amended from time to time, (B) the termination of Tenant's
right to possession of all or any part of the Premises as a result of
a breach or default by Tenant under the Lease, as amended from time to
time, (C) the failure by Tenant to timely or properly exercise such
First Offer Right, or (D) the exercise by Tenant of a Contraction
Right pursuant to Section 13 of the Second Amendment.
6. Brokers. Tenant represents and warrants to Landlord that except for
Kennedy-Wilson Properties Ltd. ("Kennedy-Wilson") and Tanguay-Burke-Stratton
(collectively, the "Brokers"), Tenant has not dealt with any real estate
broker, salesperson or finder in connection with this Amendment (or anything
contained in this Amendment), and no such other person initiated or
participated in the negotiation of this Amendment. Tenant hereby agrees to
indemnify, defend and hold harmless Landlord and Kennedy-Wilson from and
against any and all liabilities and claims for commissions and fees arising out
of a breach of the foregoing representations and warranties. Landlord shall be
responsible for the payment of any commissions or fees due to the Brokers based
upon separate agreements with the Brokers.
7. Conflict. In the event of any conflict between any term or provision of
the Second Amendment or of any other portion of the Lease and any term or
provision of this Amendment, the term or provision of this Amendment shall
govern and control.
8. Effect of Amendment. As amended by this Amendment, the Lease shall
remain in full force and effect. Tenant hereby ratifies and confirms all of
the terms and conditions of the Lease, as amended hereby, and acknowledges that
it is bound by all of the liabilities and obligations of the "Tenant" under the
Lease, as amended hereby. Landlord ratifies and confirms all of the terms and
conditions of the Lease, as amended hereby, and acknowledges that it is bound
by all of the liabilities and obligations of the "Landlord" under the Lease, as
amended hereby.
9. Submission. Submission of this Amendment by Landlord or Landlord's
beneficiary or agent to Tenant or its agent or representative for examination
and/or execution shall not constitute a reservation of or option for the
extension of the Lease Term or for rental of the Premises or in any manner bind
Landlord and no obligation on Landlord shall arise under this Amendment unless
and until this Amendment is fully signed and delivered by Landlord and Tenant;
provided, however, the execution and delivery by Tenant of this Amendment to
Landlord shall constitute an irrevocable offer by Tenant to enter into the
transactions described herein, which offer may not be revoked by Tenant for
twenty (20) business days after such delivery.
10. Landlord's Lease Undertakings. Notwithstanding anything to the
contrary contained in the Lease, as amended hereby, or in any exhibits, Riders
or addenda hereto attached to the Lease or attached hereto (collectively, the
"Lease Documents"), it is expressly understood and agreed by and between the
parties hereto that: (a) the recourse of Tenant or its successors or assigns
against Landlord with respect to the alleged breach by or on the part of
Landlord of any representation, warranty, covenant, undertaking or agreement
contained in any of the Lease Documents or otherwise arising out of Tenant's
use of the Premises or the Building (collectively, "Landlord's Lease
Undertakings") shall extend only to Landlord's interest in the real estate of
which the Premises demised under the Lease Documents are a part ("Landlord's
Real Estate") and not to any other assets of Landlord or its beneficiaries; and
(b) except to the extent of Landlord's interest in Landlord's Real Estate, no
personal liability or personal responsibility of any sort with respect to any
of Landlord's Lease Undertakings or any alleged breach thereof is assumed by,
or shall at any time be asserted or enforceable against, Landlord, Heitman
Capital Management L.L.C., Kennedy-Wilson Properties, Ltd., or against any of
their respective directors, officers, employees, agents, constituent partners,
beneficiaries, trustees or representatives.
It is expressly understood and agreed by and between the parties hereto,
anything herein to the contrary notwithstanding, that each and all of the
representations, warranties, covenants, undertakings and agreements herein made
on the part of Landlord while in form purporting to be the representations,
warranties, covenants, undertakings and agreements of Landlord are nevertheless
each and every one of them made and intended, not as personal representations,
warranties, covenants, undertakings and agreements by Landlord or for the
purpose or with the intention of binding Landlord personally, but are made and
intended for the purpose only of subjecting Landlord's interest in the
Building, Landlord's Real Estate and the Premises to the terms of the Lease, as
amended hereby, and for no other purpose whatsoever, and in case of default
hereunder by Landlord (or default through, under or by any of its
beneficiaries, or agents or representatives or said beneficiaries), Tenant
shall look solely to the interests of Landlord in the Building and the
Landlord's Real Estate; that this Amendment is executed and delivered by
Landlord not in its own right, but solely in the exercise of the powers
conferred upon it as such Trustee; that neither the Landlord nor any of the
Landlord's beneficiaries shall have any personal liability to pay any
indebtedness accruing hereunder or to perform any covenant, either express or
implied, herein contained, and no liability or duty shall rest upon Landlord to
sequester the trust estate or the rents, issues and profits arising therefrom,
or the proceeds arising from any sale, or other disposition thereof; and that
no personal liability or personal responsibility of any sort is assumed by, nor
shall at any time be asserted or enforceable against, said Landlord, American
National Bank and Trust Company of Chicago, a national banking association,
individually or personally, but only as Trustee under the provisions of a Trust
Agreement known as its Trust No. 107101-01, or against any of the beneficiaries
under said Trust Agreement, or their respective agents, on account of the
Lease, as amended hereby, or on account of any representation, warranty,
covenant, undertaking or agreement of Landlord contained in the Lease, as
amended hereby, either express or implied, all such personal liability, if any,
being expressly waived and released by Tenant and by all persons claiming by,
through or under Tenant.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year first written
above.
TENANT:
GALILEO INTERNATIONAL, L.L.C., a Delaware limited liability company (as
successor-by-merger to Galileo International Partnership)
By:
Title:
LANDLORD:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, not personally but solely
as Trustee as aforesaid.
By:
Title:
SCHEDULE OF EXHIBITS
Exhibit A - Floor Plan of the Premises
Exhibit 10.13
- 9 -
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of February 23, 2000 between
GALILEO INTERNATIONAL, L.L.C., a limited liability company organized under
the laws of the State of Delaware and doing business at 9700 West Higgins
Road, Suite 400, Rosemont, Illinois (the "Company"), and JAMES E. BARLETT, an
individual residing at 13350 Buckland Hall Road, St. Louis, Missouri
("Executive").
W I T N E S S E T H :
WHEREAS, the Company is a wholly-owned subsidiary of Galileo
International, Inc., a Delaware corporation (the "Parent"), and is engaged in
the travel services and computer reservation systems business in the United
States, the United Kingdom and elsewhere in the world;
WHEREAS, Executive serves as Chairman, President and Chief
Executive Officer of the Company and the Parent pursuant to the terms of an
Employment Agreement dated as of June 18th 1998 between the Company and the
Executive (the "Existing Employment Agreement"); and
WHEREAS, the Company and Executive wish to terminate the Existing
Employment Agreement, the Company wishes to continue to employ Executive as
the Chairman, President and Chief Executive Officer of the Company and the
Parent pursuant to the terms of this Agreement and Executive wishes to
continue in such employment;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Employment; Position and Responsibilities.
(a) The Company and Executive hereby terminate the Existing
Employment Agreement, provided, however, that such termination shall not
affect any provisions of the Existing Employment Agreement which, by their
terms, are designed to survive such termination. The Company and Executive
agree that such termination shall not be considered a termination without
"Cause" by the Company or for "Good Reason" by the Executive, as such terms
are defined in the Executive Employment Agreement.
(b) The Company agrees to continue to employ Executive, and the
Executive agrees to continue to serve, as President and Chief Executive
Officer of the Company and the Parent. In such capacity, Executive shall have
authority and responsibility, subject to control and direction by the Board
of Directors of the Parent (the "Board"), to administer and manage the
business of the Company, the Parent and the other subsidiaries of the Board,
provided that he is elected to serve in such capacity. Executive will be
located at the Rosemont, Illinois office of the Company or at such other
location as the Board may designate. Executive acknowledges that Executive's
employment hereunder will require substantial travel.
2. Obligations of Executive.
During the Term of this Agreement (as defined in Section 4(a) hereof)
Executive agrees that he will devote substantially all of his time, attention
and energies to the business of the Company, that he will exercise the
highest degree of loyalty and conduct in the performance of his duties and
that he will do nothing that harms, directly or indirectly, the business or
reputation of the Company. Executive shall at all times be subject to,
observe and carry out such rules, regulations, policies, directions and
restrictions as the Company shall from time to time establish.
3. Compensation.
(a) Executive's salary during the Term of this Agreement shall
be at the rate of Six Hundred Five Thousand Dollars ($605,000) per annum,
unless increased by the Compensation Committee of the Board (the
"Committee"). The Committee will review Executive's salary on an annual
basis (normally on or about April 1) and increases (if any) will be at the
discretion of the Committee taking into account Executive's individual job
performance and other factors deemed appropriate by the Committee.
(b) Executive will participate, on a basis comparable (except as
otherwise provided in this Agreement) to other executives of the Company, in
the Company's annual management incentive compensation plan (the "MIP"), a
copy of which has been furnished to Executive. The terms of the MIP will
apply to Executive except as otherwise provided by this Agreement. The
annual incentive compensation payment for Executive for each year during the
Term of this Agreement shall be determined by the Committee. Nothing in this
Agreement shall prevent the Company from changing the MIP or from reducing or
terminating annual incentive compensation payments thereunder altogether,
provided that the changes, reductions or terminations are applicable to
executives of the Company generally.
(c) The Committee shall, in its discretion and to the extent
permitted by the Galileo International, Inc. 1997 Stock Incentive Plan, the
1999 Equity and Performance Incentive Plan or any other plan pursuant to
which stock options may be granted to Executive in accordance with this
Section 3(c), grant non-qualified stock options to Executive, as long-term
compensation, each year during the Term of this Agreement. The actual number
of shares of Common Stock subject to each such option shall be determined by
the Committee based upon an annual assessment of Executive's performance
conducted by the Committee or the Board, or both. The terms of the options
to be granted in accordance with this Section 3(c) shall be determined by the
Committee. The Committee may also, in its discretion, make grants of
restricted Common Stock or other stock instruments to the extent permitted by
the Galileo International, Inc. 1997 Stock Incentive Plan, the 1999 Equity
and Performance Incentive Plan or any other plan pursuant to which stock may
be granted to Executive.
(d) Executive shall be entitled to paid annual vacation,
personal leave and holidays during each calendar year during Executive's
employment in accordance with the policies of the Company. Executive will
participate in health, welfare (including disability) and defined benefit and
defined contribution retirement plans, including but not limited to the
pension plan and 401(k) savings plan, that are maintained by the Company on
the same basis as such benefits are generally available to employees of the
Company in the United States, and subject to the right of the Company to
change, reduce or terminate such plans or benefits in respect of employees
generally.
(e) Executive will be reimbursed for reasonable business and
travel expenses in accordance with the normal policies of the Company
including dues, fees and expenses associated with membership in professional
business and civic organizations in which Executive's participation is in the
interest of the Company. The Company will also reimburse Executive for one
club membership (i.e., initial fees and dues) and will provide Executive with
an airfare allowance of up to $25,000 per year. Provided this cost is not
exceeded, the Executive may take flights to this value as a taxable benefit
or may take flights to a lesser value, which may be grossed up for taxes.
The Company will also provide Executive with a monthly car allowance based on
a three year lease of a $45,000 automobile. At the preference of the
Executive, he may substitute the use of a limousine service for the car
allowance, provided that the total cost does not exceed $10,020 per annum.
Except for the situation described in this section 3(e) in respect of the
airfare allowance, the benefits and payments described in this Section 3(e)
shall not include an income tax gross-up, and Executive will be responsible
for any tax on their value. Executive's expenses will be accounted for and
reimbursed through the Company's normal expense reporting and approval
process and Executive's expense reports will also be reviewed annually by the
Board or a committee or designee of the Board.
4. Termination.
(a) This Agreement shall commence as of the date hereof and shall continue
(i) for a period of three (3) years, provided, however, that this Agreement
automatically shall be renewed each February 23rd for a year such that there
always shall be three (3) years remaining on the term of this Agreement each
February 23rd (the "Term of the Agreement") or (ii) in the event of a "Change
in Control", as such term is defined in Section 12 of the Galileo
International, Inc. 1999 Equity and Performance Incentive Plan ("Change in
Control"), this Agreement shall terminate on the date which is 24 months
following the date of such Change in Control (the "Termination Date").
Notwithstanding the foregoing, this Agreement may be terminated effective
immediately by the Company for Cause or by Executive for Good Reason as
herein provided, in which event the date on which notice of termination is
given shall be the Termination Date.
(b) If Executive terminates his employment under this Agreement
without Good Reason as defined in Section 4(b)(ii) hereof, or if the Company
terminates Executive's employment for Cause, as defined in Section 4(b)(i)
hereof, the Company shall have no financial obligation to Executive other
than to pay Executive's base salary through the Termination Date, and
Executive's participation in employee benefit plans of the Company shall
cease as of such Termination Date. The Company shall give Executive written
notice of a termination for Cause and the termination of the Executive's
employment shall be effective on the date that such notice is given.
(i) For purposes of this Agreement, "Cause" shall mean: (A) any
act or omission that constitutes a material breach by Executive of, or
material misrepresentation or omission under, this Agreement; (B) the
commission by Executive of a dishonest, illegal or wrongful act (1) involving
fraud, misrepresentation or moral turpitude, (2) causing damage to the
Company or (3) involving potential damage to the business and reputation of
the Company; (C) Executive's willful and repeated absence from his
employment; or (D) material and prolonged deficiencies in Executive's
performance of Executive's assigned duties and responsibilities. In respect
of events described in clauses (C), and (D) above, the Board shall give
Executive notice, reasonable as to time, place and manner in the
circumstances (notwithstanding that such notice may not comply with Section
9), and an opportunity to cure the absence, failure, refusal or disregard in
question, provided that such absence, failure, refusal or disregard is
reasonably susceptible of cure in the circumstances and, provided further,
that the Executive shall make reasonable efforts to effect such cure within
30 days and shall have effected such cure within 90 days.
(ii) For purposes of this Agreement, "Good Reason" shall mean
the occurrence of either of the following events, provided Executive has not
given Cause for termination or become incapable of performing Executive's
duties by reason of disability (as defined in the Company's disability
plan): (A) the Company shall have defaulted in its obligation to pay
compensation to Executive when, as and if due under the terms of this
Agreement, or (B) the Company shall have failed or refused to appoint and
maintain Executive in a job having a compensation opportunity at least equal
to that of the position set forth in Section 1 hereof. In respect of events
described in clause (A) or (B) above, Executive shall give the Company
written notice and 30 days to cure the default, failure or refusal. If such
default, failure or refusal is not cured during such 30-day cure period,
Executive shall give written notice to the Company of a termination by
Executive for Good Reason.
(c) Subject to Section 4(d) hereof, if the Company terminates
the employment of Executive without Cause or Executive terminates Executive's
employment with Good Reason prior to a Change in Control, then, provided that
Executive complies with the provisions of Section 5 until such time as such
information is generally known through no fault of the Executive and Section
6 hereof for a period of 24 months after the Termination Date, the Company
shall pay compensation and provide benefits to Executive in respect of each
of the following three periods as follows:
(i) Compensation through the Termination Date
Within 30 days after the Termination Date the Company will pay Executive a
lump sum equal to the sum of (x) Executive's annual base salary through the
Termination Date, to the extent not theretofore paid, plus (y) an amount
equal to the annual incentive compensation Executive would have received
under the MIP (assuming termination of employment had not occurred)
attributable to the year in which the Termination Date occurs, assuming 100%
target achievement, multiplied by a fraction, the numerator of which is the
number of days in such year through the Termination Date and the denominator
of which is 365.
(ii) Compensation for additional year
Within 30 days after the Termination Date the Company will pay Executive a
lump sum equal to the sum of (x) Executive's base salary, at its rate in
effect at the Termination Date, for a period of 12 months or the remaining
Term of the Agreement (assuming early termination had not occurred) following
the Termination Date, whichever is less, plus (y) an amount equal to the
annual incentive compensation Executive would have received under the MIP
(assuming termination of employment had not occurred) attributable to the
year in which the Termination Date occurs, assuming 100% target achievement.
(iii) Compensation subject to mitigation
If the period described in section 4(c)(ii) hereof is 12 months, then,
commencing 12 months after the Termination Date and for a period of 24 months
or the remaining Term of this Agreement (assuming early termination had not
occurred) following the date which is 12 months after the Termination Date,
whichever is less, the Company will pay Executive's salary, at its rate in
effect at the Termination Date, on a monthly basis, plus a monthly amount
equal to one-twelfth of the annual incentive compensation Executive would
have received under the MIP (assuming termination of employment had not
occurred) attributable to the year in which the Termination Date occurs,
assuming 100% target achievement. Such monthly payments shall be reduced by
any income Executive may generate by engaging during such period in other
employment or business activities (not including income from personal
investments). Executive shall have an affirmative duty to seek opportunities
to generate such other income in mitigation of the Company's obligation to
make monthly payments to Executive hereunder. Executive shall have an
affirmative duty to inform the Company of the amount of any income that
Executive may earn through other employment or business activities during
this period.
(iv) The Company shall continue to provide to Executive the
group insurance benefits to Executive pursuant to Section 4(d) hereof for a
period of 24 months after the Termination Date to the extent that such
benefits are generally available to employees of the Company in the United
States. Such benefits shall terminate on the date prior to the expiration of
such 24-month period on which Executive shall become entitled to receive
benefits from another employer. Executive shall notify the Company in
writing no later than ten (10) days after the date on which Executive shall
be covered by the benefits of another employer. The Company shall be under
no obligation to continue to make any such benefit or benefit plan generally
available to employees in the United States.
(d) If the Company terminates the employment of Executive
without Cause prior to a Change in Control if such termination of employment
is a condition of the agreement pursuant to which the Change in Control
occurs, or if the Company terminates the employment of Executive without
Cause within two years following a Change in Control, or if Executive
terminates Executive's employment with Good Reason within two years following
a Change in Control, then, provided that Executive complies with the
provisions of Section 5 until such time as such information is generally
known through no fault of the Executive and Section 6 hereof for a period of
24 months after the Termination Date, the payments under Section 4(c) hereof
shall not apply but rather the Company shall pay compensation and provide
benefits to Executive as follows:
(i) Within 30 days after the Termination Date the Company will
pay Executive a lump sum equal to the sum of (x) Executive's annual base
salary through the Termination Date, to the extent not theretofore paid, plus
(y) an amount equal to the annual incentive compensation Executive would have
received under the MIP (assuming termination of employment had not occurred)
attributable to the year in which the Termination Date occurs, assuming 100%
target achievement, multiplied by a fraction, the numerator of which is the
number of days in such year through the Termination Date and the denominator
of which is 365.
(ii) Within 30 days after the Termination Date the Company will
pay Executive a lump sum equal to (A) the sum of (w) Executive's annual base
salary at its rate in effect at the Termination Date, plus (x) an amount
equal to the annual incentive compensation Executive would have received
under the MIP (assuming termination of employment had not occurred)
attributable to the 12-month period following the Termination Date, assuming
100% target achievement on Executive's part (B) multiplied by the number
three.
(iii) The Company shall provide group insurance benefits to
Executive pursuant to Section 4(d) hereof for three years after the
Termination Date; provided, however, that such benefits shall terminate on
the date prior to the expiration of such period on which Executive shall
become entitled to receive benefits from another employer.
(e) If the employment of Executive terminates by reason of
retirement with the approval of the Board, death or disability, Executive
shall be entitled to the benefits applicable to Executive provided pursuant
to the plans, policies and programs of the Company then in effect, but
Executive shall not be entitled to any payment or benefit pursuant to this
Agreement except with respect to retirement with the approval of the Board to
the extent provided in Section 4(c)(v) hereof.
(f) In the event it shall be determined by the Company's public
accounting firm that any payment or distribution by the Company or its
affiliated companies to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any adjustment
required under this Section 4(f)) (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended or any amendment, replacement or similar provision thereto, or any
interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then Executive
shall be entitled to receive within 30 days following such determination or
such occurrence, as the case may be, an additional payment (a "Gross Up
Payment") in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment, equal
to the Excise Tax imposed upon the Payments.
(g) The payments to Executive pursuant to Section 4 hereof shall
be paid in lieu of any other amount of severance relating to salary or bonus
continuation to be received by Executive upon termination of employment of
Executive under any severance plan, policy or arrangement of the Company.
5. Confidentiality. During and after the Term of this
Agreement, Executive covenants and agrees that, other than as required by
law, Executive will not disclose to anyone (including representatives of
airlines that are stockholders of the Parent) without the Company's written
consent, any confidential materials, documents, records or other information
of any type whatsoever concerning or relating to the business and affairs of
the Company that Executive may have acquired in the course of Executive's
employment hereunder, including but not limited to: (i) trade secrets of the
Company; (ii) lists of customers or clients of the Company; and (iii)
information relating to methods of doing business (including information
concerning operations, technology and systems) in use or contemplated use by
the Company and not generally known in the industries in which the Company
competes or actually or demonstrably anticipates competing.
6. Nonsolicitation. (a) Executive covenants and agrees that
during the Term of this Agreement, and for a period of 24 months after the
Termination Date, Executive will not personally solicit, or encourage others
to solicit, employees of the Company to leave the employ of the Company for
the purpose of engaging in any employment competitive with the Company or
otherwise.
(b) Executive and the Company recognize that, as a result of
the globalization of markets and technology through advances in
telecommunications systems and the internationalization of the travel
services and computer reservation system business, the market for the
aforedescribed business is not susceptible to geographic definition.
Consequently, and given the nature of the position Executive holds with the
Company, Executive and the Company agree that the restrictions contained in
Section 6(a) upon the activities of Executive are geographically unlimited
and reasonable as such.
(c) It is the desire and intent of the parties that the
provisions of Section 5 hereof, of this Section 6 and of Section 7 hereof
shall be enforced to the fullest extent permissible under the laws and public
policies of the State of Illinois. If any particular provisions or portions
of Section 5 hereof, of this Section 6 or Section 7 hereof shall be
adjudicated to be invalid or unenforceable, Section 5 hereof, this Section 6
and Section 7 hereof shall be deemed amended to delete therefrom such
provision or portion adjudicated to be invalid or unenforceable, such
amendment to apply only in the particular case and jurisdiction in which such
adjudication is made.
7. Systems and Technology Ownership.
Executive acknowledges and agrees that during the Term of this Agreement
Executive will disclose to the Company all material products, ideas,
processes, systems inventions and business plans developed by Executive which
relate, directly or indirectly, to the travel services and systems business
of the Company (collectively, the "Intellectual Property"). Executive
further agrees that any Intellectual Property so developed will be the sole
property of the Company and that Executive will, at the Company's request and
cost, do whatever is necessary to secure the rights thereto by patent,
copyright or otherwise to the Company. In connection with the foregoing,
Executive represents, warrants and covenants that any Intellectual Property
or other copyrightable or patentable subject matter that Executive delivers
to the Company has been or will be created solely by Executive or that at the
time of delivery thereof Executive will have the right to transfer such
subject matter to the Company for use in its travel services and computer
reservation systems business. Further, and not by way of limitation,
Executive hereby assigns to the Company all of Executive's right, title and
interest in and to any Intellectual Property from the moment of creation
thereof. This Section 7 shall not apply to any Intellectual Property or
invention for which no equipment, supplies, facility or trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (a) the Intellectual Property or invention
relates (i) to the business of the Company, or (ii) to the Company's actual
or demonstrably anticipated research or development, or (b) the Intellectual
Property or invention results from any work performed by Executive for the
Company.
8. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois,
not including its conflict of laws principles. If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, judicial interpretation binding on the parties,
regulation or ordinance, such portion shall be deemed to be modified or
altered to conform thereto or, if that is not possible, to be omitted from
this Agreement, and the invalidity of any such portion shall not affect the
force, effect or validity of the remaining portions hereof.
9. Notices. All notices required to be given under this
Agreement shall be in writing and shall be deemed effective when received and
shall be delivered in person; or by facsimile transmission (with confirmation
of receipt); or by mail, postage prepaid, for delivery as registered or
certified mail; or by overnight carrier service, addressed, (a) in the case
of Executive, to Executive at Executive's then current business address with
the Company, with a copy to Executive's residential address as reflected
above (or such other residential address as Executive may notify the Company
from time to time) or, (b) in the case of the Company, to the Company's
Senior Vice President - Human Resources or to such other person as the
Company may designate in writing to Executive.
10. Resolution of Disputes.
(a) The parties each hereby specifically submit to the
jurisdiction of any federal or state court located in the State of Illinois
and further agree that service of process may be made within or without the
State of Illinois by giving notice in the manner provided in Section 9. Each
party hereby waives any right to a trial by jury in any dispute between
them. In the event the principal offices of the Company are moved to a state
other than Illinois, arbitration of disputes hereunder shall take place in
such state, and the parties shall be deemed to have consented to personal
jurisdiction in such state.
(b) Executive recognizes that irreparable injury would be
caused to the Company, not adequately compensable by money damages, by
Executive's violation of any provision of Section 5, 6 or 7 of this
Agreement. Executive further agrees that in the event of any such violation
or threatened violation the Company or any of its direct or indirect
subsidiaries or affiliates, in addition to such other rights and remedies as
may exist in its or their favor, may apply to a court of law or equity to
enforce the specific performance of such provisions and, without notice to
Executive, may apply for an injunction or temporary restraining order against
any act which would violate any such provisions.
(c) The covenants of Executive contained in Sections 5, 6 and 7
of this Agreement shall be construed as independent of all other provisions
contained in this Agreement and shall survive the Term of this Agreement.
11. Miscellaneous.
(a) Executive represents and warrants to the Company that
Executive has no contracts or agreements of any nature that Executive has
entered into with any other person, firm or corporation that contain any
restraints on Executive's present or future services. Executive further
represents that Executive has brought to Executive's employment hereunder,
and will use in connection with such employment, no customer lists or
proprietary information including computer software that was used by
Executive or to which Executive had access by reason of Executive's prior
employment and that is the property of Executive's former employer.
(b) Executive acknowledges and agrees that this Agreement
constitutes the entire understanding between the Company and Executive
relating to the employment of Executive by the Company, the Parent or any
direct or indirect subsidiary or affiliate of the Company, and supersedes all
prior written and oral agreements and understandings with respect to the
subject matter of this Agreement except for that certain Existing Employment
Agreement to the extent described in Section 1(a) hereof.
(c) This Agreement may be amended by a subsequent written
agreement signed by Executive and the Company. In addition, the Company
shall have the right prior to a Change in Control, in its sole discretion,
pursuant to action by the Board, to approve the amendment or termination of
this Agreement, which amendment or termination shall not become effective
until the date fixed by the Board for such amendment or termination, which
date shall be at least 12 months after notice thereof is given by the Company
to Executive in accordance with Section 9 hereof; provided, however, that no
such action shall be taken by the Board within 12 months after the date of
this Agreement or during any period of time when the Board has entered into
discussions relating to a Change in Control until, in the opinion of the
Board, such person has abandoned or terminated its efforts to effect a Change
in Control; and provided further, that in no event shall this Agreement be
amended or terminated without the prior written agreement of Executive in the
event of a Change in Control. In the event that a Change in Control occurs
after a notice of amendment or termination has been given by the Company as
described in the immediately preceding sentence and during the notice period
specified in such notice, such notice shall be of no force or effect and the
Term of this Agreement automatically shall be extended until the date which
is 24 months after the date of such Change in Control.
(d) No waiver by either party of or failure to assert any
provision or condition of this Agreement to be performed or right to be
exercised shall be deemed a waiver of such or similar or dissimilar
provisions and conditions or rights at the same time or any prior or
subsequent time.
(e) This Agreement and all rights and obligations of Executive
are personal to Executive and shall not be assignable and any purported
assignment in violation hereof shall not be valid or binding on the Company.
(f) This Agreement may be signed in counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the year and day first above written.
GALILEO INTERNATIONAL, L.L.C.
By
Mina Gouran
Chair of the Compensation Committee
EXECUTIVE: James E. Barlett
Exhibit 10.14
The Plan's Objectives
>> To attract, retain, and motivate a top quality management team.
>> Focus management's attention and energy on Company financial goals.
>> Create a strong and direct link between cash compensation and both
individual and corporate annual performance.
Plan Overview
Plan Period
The plan period is January 1, 1999 through December 31, 1999.
Eligibility
>> Individuals are eligible to participate in the Management Incentive
Plan based upon duties and responsibilities of their positions and
ability to impact the overall results of Galileo International.
Individuals with Galileo International assigned grade of M3 and above
or T9 are eligible
>> Employees participating in another incentive plan, e.g. Corporate
Profit Sharing Plan, are not eligible. If an employee becomes eligible
for the Management Incentive Program, participation in the other
incentive plan ends. The payment terms for each plan will apply and
payment in both plans will be prorated as appropriate. New hires or
new participants in the Plan during the year are eligible to receive
prorated awards.
>> Individuals must be participants prior to September 1st to be eligible
for an award.
>> The Company and/or Compensation Committee of the Board reserves the
right to remove individual participants from the Plan permanently or
during any given year due to absence, individual performance issues or
other reasons affecting their ability to contribute to corporate
results.
Incentive Opportunities
Corporate Target and Award Levels
>> The Chief Executive Officer and the Compensation Committee of the Board
determine the corporate performance measure and targets.
>> Bonus payments are based on achievement of both individual and
corporate objectives 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 your salary grade. The
salary grade and local competitive and Galileo International practice
determine the targets.
>> Awards are calculated using the applicable year's base pay on December
31st of the year.
>> The Chief Executive Officer, through his senior executives, is
responsible for developing appropriate individual goals for
participants.
>> These goals should be established early in the first quarter of the
year and documented. Each objective should be weighted to
represent its importance to the other objectives. The total of
assigned weights must equal 100.
>> During the year, and as needed, these goals should be reviewed and
modified to continue to support business needs. The manager and
employee should agree as to the status of the objectives.
>> Significant changes in the goals initially established should be
discussed. To ensure thorough and accurate communication, these
changes should be documented.
>> Incentive opportunities vary by individual and/or job level and are
determined primarily by local country incentive pay practices.
>> Table 1 is used to determine the award payable to each participant in
the year.
>> A portion of this award is based on corporate results and the remainder
is based on the achievement of individual performance goals.
>> 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
- --------------------------------------------------------------------------------
Salary Portion of Award Attributable to
-------------------------------------------------
-------------------------------------------------
Title Level Grade Corporate Results Individual Results
- --------------------------------------------------------------------------------
-------------------------------------------------
Chief Executive M7 100% 0%
Officer
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Senior Vice President M6 100% 0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Vice President M5 75% 25%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Director M5 50% 50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Director M4 50% 50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Senior Manager M3 25% 75%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Engineer T9 25% 75%
- --------------------------------------------------------------------------------
Performance Measures and Standards
>> Corporate financial performance measures are the same for all
participants. Individual performance measures will vary by individual.
>> 1999 corporate financial performance for the 1999 Management Incentive
Plan is measured on Earnings Per Share (EPS). Threshold, target and
maximum award levels are shown in Table 2.
Table 2
- --------------------------------------------------------------------------------
Performance vs 1999 MIP Target Potential Target Award
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
92.5% 50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
100% 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
107.5% 150%
- --------------------------------------------------------------------------------
>> 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 the
Compensation Committee's and/or Board's 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.
Company Performance
>> The Board approves the Company's financial performance based on the
audited results.
Individual Performance
>> The Board approves the total award payout amount.
>> The Board requires detailed review and approval of award payments for
the Corporate Officers and those individuals with base pay of $150,000
(USD) or more.
Calculating Individual Awards
>> As soon as practicable after the Plan year, the manager and participant
review the level of achievement of each of the objectives. A rating is
assigned to each objective. Based on the weighting and rating, an
overall rating is assigned.
>> The results are summarized and approved by the Senior Vice President.
A finalized version documenting the individual and overall results is
signed and sent to Human Resources.
>> Human Resources calculates the payout amounts and implements award
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 year, the Company's performance is
slightly above target and is paid out at 103.85 and the individual
receive a rating of 90% against individual objectives.
Table 3
- --------------------------------------------------------------
Portion of Award
Attributable to
----------------------------------
----------------------------------
Bonus Payment Calculation Corporate Individual Award
Results Results Payment
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Actuals Assumptions 50% 50%
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Prior Year's Base 12/31 %100,000 50,000 50,000
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Target Level 35% 35% 35%
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Target Performance Level $17,500 $17,500 $35,000
- 100% for both
Corporate and Individual
- -------------------------- ----------------------------------
- -------------------------------------------------------------------------
Performance Levels 103.85% 90%
- -------------------------------------------------------------------------
- -------------------------- ----------------------------------
Example Award Payment 18,173.75 $15,750 33,923.75
- -------------------------------------------------------------------------
>> Participants included for part of the year receive prorated payments.
>> Participant promoted during the year receive prorated 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. The base pay's currency remains in
effect for each calculation.
Award Payment
>> Participants who leave Galileo International employment for any reason
at any time prior to payment being made will forfeit any award which
may have been available under this Plan.
Plan Provisions
>> The Company retains the right to, at its sole discretion, amend, modify
or terminate this Plan at any time.
>> Participants in any one year do not automatically participate in a
management incentive plan in subsequent years, nor is the level of
participation guaranteed.
>> Award payments are subject to applicable taxes.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit 27.1
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Form 10-Q for the quarter ended March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001039300
<NAME> Galileo International, Inc.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 47,885
<SECURITIES> 0
<RECEIVABLES> 267,340
<ALLOWANCES> 9,398
<INVENTORY> 0
<CURRENT-ASSETS> 348,469
<PP&E> 442,225
<DEPRECIATION> 260,393
<TOTAL-ASSETS> 1,554,917
<CURRENT-LIABILITIES> 281,679
<BONDS> 691,146
0
0
<COMMON> 1,051
<OTHER-SE> 483,901
<TOTAL-LIABILITY-AND-EQUITY> 1,554,917
<SALES> 0
<TOTAL-REVENUES> 440,738
<CGS> 0
<TOTAL-COSTS> 341,463
<OTHER-EXPENSES> 11,659
<LOSS-PROVISION> 2,022
<INTEREST-EXPENSE> 10,016
<INCOME-PRETAX> 87,616
<INCOME-TAX> 40,216
<INCOME-CONTINUING> 47,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,400
<EPS-BASIC> 0.52
<EPS-DILUTED> 0.52
</TABLE>
