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EXHIBIT 10.5
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
AMENDED AND RESTATED NON-COMPETITION AGREEMENT
dated as of ______________, 1997
among
GALILEO INTERNATIONAL INC.
and
[GROUP MEMBER-OWNER],
[GROUP MEMBER-OWNER DISTRIBUTOR],
[ULTIMATE PARENT ENTITY],
and
[AIR CARRIER AFFILIATE]
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CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. Additional Permitted Marketing and Distribution of Owner-Developed Products and Customized Products . . . . . . 7
SECTION 4. Ethical Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 5. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7. Airline Affiliate Review Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9. Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 10. Rights and Remedies Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 11. Severability of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 12. Blue-Penciling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 13. Attorneys' Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 14. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 15. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 17. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 18. Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 19. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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CONFIDENTIAL TREATMENT (ii)
REQUESTED BY GALILEO
INTERNATIONAL, INC.
SECTION 20. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 21. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
AMENDED AND RESTATED
NON-COMPETITION AGREEMENT
AMENDED AND RESTATED NON-COMPETITION AGREEMENT (the "Agreement"),
dated as of _______, 1997, by and among Galileo International, Inc., a Delaware
corporation ("Galileo"), [to be executed separately by each Owner (the
"Group Member-Owner"), such Group Member-Owner's Distributor (the "Group
Member-Owner Distributor"), such Group Member-Owner's Ultimate Parent Entity
(the "Ultimate Parent Entity") and any Affiliate of such Group Member-Owner that
is an Air Carrier (the "Air Carrier Affiliate")].
WHEREAS, the Group and each Group Member acknowledges that the scope
of the Core Business of Galileo is as defined in Section 1 hereof;
WHEREAS, certain Group Members may have access to the
trade secrets of, and confidential information concerning, the Core Business
which are not available to the public;
WHEREAS, the agreements and covenants contained in this Agreement are
essential to protect the value of the Core Business of Galileo;
WHEREAS, some or all of the Group Members were previously parties to
a Non-Competition Agreement, dated as of September 16, 1993 (the "Original Non
-Competition Agreement"), among some or all of the Group Members and Galileo
In ternational Partnership, a Delaware general partnership (the "Partnership");
WHEREAS, Galileo is the successor in interest by merger
(the "Merger") to all of the Partnership's rights and obligations under the
Original Non-Competition Agreement;
WHEREAS, as a result of the Merger, the Group Member-Owner's former
partnership interest in the Partnership has been converted into its Galileo
Interest;
WHEREAS, the Group Members and Galileo wish to amend and restate the
terms of the Original Non-Competition Agreement as set forth herein;
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CONFIDENTIAL TREATMENT 2
REQUESTED BY GALILEO
INTERNATIONAL, INC.
WHEREAS, the Group Member-Owner acknowledges that its agreements
and covenants set forth herein are an integral part of the arrangements between
itself and its Affiliates, on the one hand, and Galileo and its Affiliates, on
the other hand, and that but for such agreements and covenants, Galileo would
not enter into the arrangements relating to the Group Member-Owner's Galileo
Interest;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Affiliate" means, with respect to any entity at any time, a Person
(i) that at such time owns or controls, directly or indirectly, 50% or more of
the capital stock (or other ownership interest, if not a corporation) of
such entity ordinarily having voting rights, (ii) 50% or more of whose capital
stock (or other ownership interest, if not a corporation) ordinarily having
voting rights at such time is owned or controlled, directly or indirectly, by
such entity or (iii) 50% or more of whose capital stock (or other ownership
interest, if not a corporation) ordinarily having voting rights at such time is
owned or controlled, directly or indirectly, by another Person that at such time
owns or controls, directly or indirectly, 50% or more of the capital stock (or
other ownership interest, if not a corporation) of such entity ordinarily having
voting rights; provided, however, that Galileo shall be deemed not to be an
"Affiliate" of any Owner or any Affiliate thereof; and provided, further, that
(i) no Owner shall be deemed to be an "Affiliate" of any other Owner or any
Affiliate thereof solely by virtue of its Galileo Interest; and (ii) Instituto
Per La Riconstruzione Industriale S.p.A., the Government of the Republic of
Ireland and any ministry thereof, the Republic of Austria and its agencies, the
Republic of Greece and its agencies, the Republic of Portugal and its agencies,
and the Government of The Netherlands or any political subdivision or
instrumentality thereof shall not be deemed to be an "Affiliate" of any Person.
"Air Carrier" means a Person that directly or indirectly or by lease
provides commercial passenger air transportation.
"Air Carrier Competitor" means, with respect to the Group Member-
Owner's Principal Air Carrier Affiliate, an Air Carrier [that such Group Member
-Owner's Principal Air Carrier Affiliate reasonably believes is a significant
competitor thereof either overall or in a particular market segment, provided
that any relief granted pursuant to Section 7 with respect
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CONFIDENTIAL TREATMENT 3
REQUESTED BY GALILEO
INTERNATIONAL, INC.
to an Air Carrier Competitor in a particular market segment shall be limited to
such market segment].
"Board" means the Board of Directors of Galileo.
"Business Day" means any day except a Saturday, Sunday, or other day
on which commercial banks in Chicago, Illinois or London, England are
authorized by law to close.
"Computer Services Agreement" means the Amended and Restated Computer
Services Agreement, dated as of _________________ _, entered into between
Galileo and ________________________.
"Core Business" means the provision of Reservations Services
(excluding Cargo Services) to Neutral Travel Providers.
"CRS Company" means any of SABRE, Amadeus/System One, Abacus, Axxess,
Infini, Worldspan, or any successor in interest thereto, or any other Person
other than Galileo that has earned at least 50% of its revenues in any of its
preceding three fiscal years, or such shorter time that it has been in
business, from the Core Business.
"CRS Owner" means any Person, other than a Group Member with respect
to its direct or indirect ownership interest in Galileo, that is not a CRS
Company and either, (a) beneficially owns, directly or indirectly, an interest
in a CRS Company, or (b) has earned more than 5% but less than 50% of its
revenues in any of its preceding three fiscal years, or such shorter time that
it has been in business, from the Core Business.
"Director" means a director of Galileo.
"Distributor" means a Person which has entered into, or enters into,
a Distributor Agreement with Galileo.
"Distributor Agreement" means any distributor agreement entered into
between Galileo and any Person.
"Effective Date" means the effective date of the IPO.
"Galileo Interest" means an Owner's ownership interest in the capital
stock of Galileo.
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CONFIDENTIAL TREATMENT 4
REQUESTED BY GALILEO
INTERNATIONAL, INC.
"Group" means the Group Member-Owner signatory hereto, the Group
Member-Owner Distributor signatory hereto, the Ultimate Parent Entity of such
Group Member-Owner, the Principal Air Carrier Affiliate, and any other Air
Carrier Affiliate of any of the foregoing and the Affiliates of any of them
(each individually a "Group Member").
"Internal Reservations System" means the central processing hardware
utilized by a Group Member-Owner's Air Carrier Affiliate to provide its
Internal Reservations Services.
"National Distributor Coordinating Committee" means the committee
comprised of one individual from each Group Member- Owner Distributor, if
any, which is a party to a Distribution Sales and Service Agreement with
Galileo, which individual shall be appointed by such Group Member-Owner
Distributor.
"National Product" means a Reservations Service, Accounting Service,
or Commercial Service (i) that is not otherwise available from Galileo and
(ii) that is developed or licensed at a Group Member's cost. National Products
will include products not otherwise available from Galileo that are developed as
"National Products" by Galileo in accordance with the terms of the applicable
Distributor Agreement between Galileo and the Group Member-Owner Distributor.
"Owner" means any signatory hereto or to any other Non-Competition
Agreement with Galileo that holds any shares of capital stock of Galileo.
"Preferred Stock" means the Preferred Stock, par value $0.01 per
share, of Galileo, in Series A through G.
"Principal Air Carrier Affiliate" means ________________________;
provided, however, that for purposes of Section 7(c) only, "Principal Air
Carrier Affiliate" means _____________, ______________, ______________,
___________, ______________, and ______________.
"Sales Representation Agreement" means any sales representation
agreement entered into between Galileo and any Group Member.
"Significant Competitor" means (i) any entity that, within the
immediately preceding six-month period, accounted for more than 10% of direct
access product bookings or ticketing within any of the billing territories
established by the Galileo International Global Airline Distribution Agreement,
as substantiated on the basis of independent data provided by
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CONFIDENTIAL TREATMENT 5
REQUESTED BY GALILEO
INTERNATIONAL, INC.
ARC or BSPs or marketing or billing information provided by other Persons,
Galileo to provide any such information which is in its possession and it is
legally permitted to provide, or (ii) if the measure of an entity's market
share cannot be established after consultation with Galileo and exchange
between Group Member and Galileo of information regarding the entity's market
share, any entity that a Group Member Owner's Principal Air Carrier Affiliate
reasonably believes is a Significant Competitor of Galileo.
Other capitalized terms used in this Agreement and not defined in
this Section 1 shall have the meanings ascribed to them elsewhere in this
Agreement or in Annex I hereto; provided, however, that in the event of any
conflict in the definitions of such terms, the definitions in this Section 1 and
elsewhere in this Agreement shall control.
SECTION 2. Non-Competition. (a) Except through the Group Member
-Owner's Galileo Interest, or as otherwise provided in this Agreement or
pursuant to a Distributor Agreement or a Sales Representation Agreement, until
this Agreement is terminated, neither the Group nor any Group Member shall
engage in the Core Business, own an interest in a CRS Company, be a CRS Owner or
own an interest in a CRS Owner.
(b) A Group Member may acquire and own an interest that
represents no more than 5% of the voting interests in a CRS Owner or a CRS
Owner may acquire and own an interest that represents no more than 5% of the
voting interests in a Group Member (either a "De Minimis Interest"); provided,
that in either case the Person acquiring such De Minimis Interest does not have
a representative on the board of directors (or similar governing body, if not a
corporation) of the CRS Owner or Group Member, as the case may be.
(c) A Group Member may acquire and own an interest that
represents no more than 25% of the voting interests in a CRS Owner or a CRS
Owner may acquire and own an interest that represents no more than 25% of the
voting interests in a Group Member (either, a "Minor Interest") so long as the
Group complies with the provisions of Section 4 below, except with respect to a
De Minimis Interest, for which compliance with Section 4 is not required. A
Group Member shall be permitted to acquire and own an interest that represents
more than 25% of the voting interests in a CRS Owner and a CRS Owner shall be
permitted to acquire and own an interest that represents more than 25% of the
voting interests in a Group Member (either, a "Major Interest") so long as the
Group Member complies with the provisions of Section 5 below.
(d) Notwithstanding the foregoing, nothing herein shall prohibit
a Group Member from:
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CONFIDENTIAL TREATMENT 6
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(i) providing Internal Airline Services or Internal
Reservations Services for itself or for another Air Carrier; to the
extent that a Group Member provides Internal Reservations Services to
an Air Carrier that is not a Group Member, use of the Internal
Reservations Services by such Air Carrier shall not be restricted by
this Agreement and the Group and the Group Member providing such
services shall be deemed not to have violated this Agreement as a
result of such use; provided, however, the Group and the Group Member
providing such services shall be deemed to have violated this
Agreement if the Group Member's conduct is such that the probable
result thereof would be material competition with the Core Business;
(ii) providing Cargo Services to any Person;
(iii) providing Reservations Services to Other Customers,
either through its Internal Reservations System or, at its direction,
through the Computer System and marketing such services directly to
Other Customers; provided, that such Group Member shall take all
reasonable steps necessary to ensure that such services are not
used by Neutral Travel Providers, other than for their Non-Neutral
Travel Business (the "Ancillary Use Restrictions");
(iv) providing services (including Reservations Services) to
Other Customers using Direct Access Products, either through its
Internal Reservations System, a Direct Access Distribution Channel
or, at its direction, through the Computer System, or otherwise, and
marketing such Direct Access Products directly to Other Customers;
provided, that, such Group Member shall take all reasonable steps
necessary to ensure that the Ancillary Use Restrictions are complied
with;
(v) providing Owner-Developed Products to any of its Other
Customers;
(vi) competing with Galileo or any other Person outside the
Core Business;
(vii) participating, as a Vendor, in competing computer
reservations systems owned or operated by one or more Vendors or
Vendor Affiliates ("Competing CRS Systems") or in such systems owned
or operated by Persons not Vendors or Vendor Affiliates, such as
Prodigy, Istel, Videotel, Minitel, Smart Phone, Microsoft Network and
Compuserve, that are not otherwise Competing CRS Systems ("Other
Systems"); provided that, except as provided in subsection (viii) or
(xiii) below, no Group Member may assist in the marketing of a
Competing CRS System to any Person or in the marketing of an Other
System to Persons other than individuals;
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CONFIDENTIAL TREATMENT 7
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(viii) promoting its airline products and services distributed
through any distribution channel (including a Competing CRS System), so
long as any such promotion does not, in the view of a reasonable person,
refer negatively to Galileo or its products, either implicitly or
explicitly; provided that the mere participation of such Group Member in
any such distribution channel shall not be deemed in and of itself to
refer negatively to Galileo or its products; provided further that in the
event the promotion in accordance with this clause (viii) involves the
promotion of the product of a Competing CRS and Galileo offers a
comparable product in such distribution channel (in functional, financial
and commercial terms and with due regard to prevailing market conditions)
to the product which a Group Member is promoting through such distribution
channel, then such Group Member shall promote Galileo's product in a
manner similar to, and to the same extent that, such Group Member promotes
the distribution of such comparable product through any such distribution
channel, except to the extent that promotion of Galileo's product would be
commercially unreasonable or not proportionate to the breadth and depth of
Galileo's product; provided further that, for the purposes of this
subsection (viii), a Galileo product which cannot be biased in favor of
the promoting Group Member's Principal Air Carrier Affiliate shall not be
deemed to be comparable to a product of a Galileo competitor which may be
biased in such manner, it being understood that no Group Member will be
required to promote a Galileo product that is biased exclusively in favor
of one or more non-Group Member Air Carriers.
(ix) providing National Products to Neutral Travel Providers
either through its Internal Reservations System or, at its direction,
through the Computer System, but only until such time as Galileo
develops a "Replacement Product" as defined in the Distributor Agreement;
(x) in the case of the Group Member-Owner Distributor executing
this Agreement, providing Distribution Services or other products or
services that such Group Member-Owner Distributor determines are
required by its National Territory and that Galileo, after consultation
with such Group Member-Owner Distributor, has elected not to provide, so
long as the functionality provided is compatible with and does not
conflict with Galileo's Distribution Services;
(xi) holding an interest in SITA or any other air transportation
industry cooperative organization that is not a CRS Company or a CRS
Owner, or having a representative on the board of directors of any such
organization;
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CONFIDENTIAL TREATMENT 8
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(xii) providing such services to such Persons as may be
mandated, from time to time, under applicable CRS Rules; or
(xiii) marketing and distributing Owner-Developed Products and
Customized Products in accordance with the provisions of Section 3 below.
(e) No Group Member shall refer to any Person other than Galileo
any business opportunity within the scope of the Core Business.
SECTION 3. Additional Permitted Marketing and Distribution of Owner
-Developed Products and Customized Products. (a) A Group Member may develop,
market and distribute Owner-Developed Products and Customized Products
directly to any of its Other Customers other than through Neutral Travel
Providers, provided that the non-competition obligations of the Group Members
under Sections 2(a), (b) and (c) of this Agreement shall remain in full force
and effect. No Group Member, other than a Group Member providing customer
support and service to such Other Customers pursuant to paragraph 4 of
Appendix I of this Agreement, shall receive a booking fee split or any other
revenues from Galileo for any Owner-Developed Product or Customized Product
bookings, or any other direct access product bookings.
(b) In addition to a Group Member's rights under Section 3(a),
nothing herein shall prohibit a Group Member from developing, marketing and
distributing Customized Products to corporate and consumer Other Customers
through Neutral Travel Providers and permitting Neutral Travel Providers to
support the use of such Customized Products by such Other Customers, subject
to Appendix I of this Agreement and the following:
(i) such Customized Products run only against a System used by
Galileo to provide Reservations Services to Neutral Travel Providers and
result in the payment of applicable booking fees to Galileo;
(ii) all customization, when performed by or on behalf of Galileo,
and display services in respect of such Customized Products are consistent
with the provisions of the Computer Services Agreement, or with such
other terms as Galileo and the Group Member agree upon; and
(iii) such Customized Products are distributed by the Group Member
in coordination with Galileo and the distributor or Sales Representative,
if any, for the territory in which such Customized Products are used by,
or distributed through, a Neutral Travel Provider, whether any such
distributor is Galileo itself, a wholly owned
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CONFIDENTIAL TREATMENT 9
REQUESTED BY GALILEO
INTERNATIONAL, INC.
subsidiary of Galileo or a Person acting as a Distributor pursuant to a
Distributor Agreement, provided that nothing herein will require such
Group Member to use the services of any of the aforementioned entities.
(c) In addition to a Group Member's rights under Section 3(a),
in the event that Galileo cannot or, for any reason, does not, produce any
Customized Products on commercially reasonable third party terms, then a Group
Member may develop, market and distribute Owner-Developed Products to corporate
and consumer Other Customers through Neutral Travel Providers in lieu of
Customized Products pursuant to Section 3(b) above, and may permit Neutral
Travel Providers to support the use of those Owner-Developed Products by such
Other Customers, provided that the Group Member shall not develop, market or
distribute any such Owner-Developed Product unless it has given Galileo
reasonable prior written notice of the Group Member's intention to develop,
market and distribute such product.
(d) As required by applicable law and regulation, Galileo may
provide its direct access products and related services (which will not be
deemed to include Owner-Developed Products or Owner-purchased customization
features) to all participating carriers on non-discriminatory terms.
SECTION 4. Ethical Wall. (a) A Group Member or a CRS Owner may
acquire and own a Minor Interest so long as the Group is in compliance with
each of the following:
(i) No Group Member shall disclose any Confidential Information
to the CRS Owner, the CRS Company owned by the CRS Owner (or their
respective Affiliates) or to any Group Member that might make such
Confidential Information available to the CRS Owner or the CRS Company
owned by the CRS Owner (or their respective Affiliates).
(ii) The Group shall have established and shall strictly enforce
internal administrative procedures (an "Ethical Wall") to (x) maintain a
complete segregation of the operations and personnel of Galileo, on the
one hand, and the CRS Owner or the CRS Company owned by the CRS Owner (or
their respective Affiliates), on the other, and (y) restrict the flow of
Confidential Information from the Group to the CRS Owner, the CRS Company
owned by the CRS Owner (or their respective Affiliates) or to any Group
Member that might make such Confidential Information available to the CRS
Owner or the CRS Company owned by the CRS Owner (or their respective
Affiliates).
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CONFIDENTIAL TREATMENT 10
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(iii) Within 15 days of the date on which a Group Member or CRS
Owner has acquired a Minor Interest, and annually thereafter, the Group
shall deliver to Galileo a valid, binding and irrevocable undertaking,
reasonably satisfactory in form and substance to Galileo, stating that
each Group Member will comply with the terms of this Section 4 and setting
forth the procedures to be utilized by the various parties thereto.
(b) The procedures comprising an Ethical Wall shall include, with
out limitation, the following: (i) preparation of a detailed confidentiality
memorandum approved by Galileo which shall be signed periodically by each
recipient of Confidential Information; (ii) confidentiality legends on
correspondence and memoranda; (iii) use of code names to avoid disclosure of
competitively sensitive information relating to customers, supplier and
vendors; (iv) telephone communications confidentiality procedures; (v)
restriction of internal communications to those persons acknowledged by Galileo
to have a demonstrated "need to know"; (vi) channeling of Confidential
Information through a designated individual approved in advance by Galileo;
(vii) prohibition against responding to outside inquiries concerning the
commercial aspects of the Core Business, which inquiries shall be referred to
Galileo; (viii) internal document control, including file maintenance and
document destruction; (ix) word processing and expense record controls to
assure confidentiality; and (x) appropriate acknowledgment and periodic
compliance certification procedures.
(c) In the event that it is alleged by a majority of the whole
Board (excluding for purposes of determining the size of the Board and the
vote required to obtain a majority of the whole Board any Director or Directors
elected by any Group Member) that the Group or any Group Member has not (x)
established an adequate Ethical Wall or (y) strictly enforced such Ethical Wall
at any time (either, an "Ethical Wall Breach"), and the Group Member-Owner
disputes such allegation, such dispute shall be submitted to arbitration
pursuant to Section 9 hereof to determine whether such an Ethical Wall Breach
has occurred. If (i) the Group Member-Owner does not dispute such allegation
or (ii) the Arbitrator determines that the Group or any Group Member has
committed an Ethical Wall Breach, the Group shall comply with the provisions of
Section 5 below.
SECTION 5. Restrictions. (a) If a Group Member shall be a CRS
Owner, or any Group Member shall acquire or own a Major Interest or shall have
a Major Interest in itself held by a CRS Owner or shall have committed an
Ethical Wall Breach, Galileo and all other Owners will not provide to the
Group any Confidential Information and no Director elected by any Group Member
shall be permitted to attend any meeting of Galileo (including, without
limitation, meetings of the Board or any committee thereof) or to vote on any
matters before the Board or any committee thereof, and, in the case of the
Group Member-Owner Distributor, no representative of such Group Member-Owner
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CONFIDENTIAL TREATMENT 11
REQUESTED BY GALILEO
INTERNATIONAL, INC.
Distributor shall be permitted to attend any meeting of the National
Distributor Coordinating Committee, or any other committee or organization
formed by or for Distributors, for a period of 20 Business Days (the "Freeze
Period") commencing on the date of the event that triggered this Section 5 (the
"Trigger Date") and the Parties shall comply with the following procedures:
(i) within six (6) Business Days of the Trigger Date, the
Group Member-Owner shall submit a written plan (the "Group's Plan") to
Galileo detailing the procedures to be taken by the Group and Galileo to
ensure that the CRS Owner and the CRS Company owned by the CRS Owner,
and their respective Affiliates, will not have access to any
Confidential Information or to any individual who has access to any
Confidential Information;
(ii) within six (6) Business Days of the receipt of the
Group's Plan, the Board shall meet (such meeting may be held
telephonically) to consider the Group's Plan, a majority of the whole
Board (excluding for purposes of determining the size of the Board and
the vote required to obtain a majority of the whole Board any Director
or Directors elected by any Group Member) may accept the Group's Plan or
propose its own plan ("Galileo's Plan") detailing the procedures to be
taken by the Group and Galileo to ensure that the CRS Owner and the CRS
Company owned by the CRS Owner, and their respective Affiliates, will
not have access to any Confidential Information or to any individual who
has access to any Confidential Information; and
(iii) if the Group's Plan is not approved pursuant to
subclause (ii) above, then within three (3) Business Days of the
approval of Galileo's Plan, the Group Member-Owner shall notify Galileo
whether it will accept Galileo's Plan or whether it will submit the
matter to arbitration pursuant to Section 9 hereof; provided, that if
the Group Member-Owner elects to submit the matter to arbitration the
Freeze Period shall be extended until the completion of the arbitration
process.
(b) In formulating Galileo's Plan, the Board
shall consider, among others, the following factors: (i) the nature of the
relationship between the Group and the CRS Owner; (ii) the extent to which the
CRS Owner and the CRS Company compete with Galileo in the Core Business; (iii)
the independence of the Group's management from the management of the CRS Owner
and the CRS Company; (iv) the adequacy of the Ethical Wall to prevent
communication of the Confidential Information among commonly controlled
Persons; (v) the burden that Galileo's Plan will place on the Group; and (vi)
the costs and risks the Group's Plan will impose on Galileo.
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CONFIDENTIAL TREATMENT 12
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(c) If a Group Member shall be a CRS Owner or if the Major
Interest purchased by or invested in a Group Member exceeds 50%, Galileo's Plan
may require divestiture, at such Group Member's option, of (A) the Group
Member's interest in the CRS Owner, (B) the CRS Owner's interest in the Group
Member, or (C) the Group Member's interest in Galileo. In the event the Group
Member elects not to divest its interest in the CRS Owner or elects not to
cause the divestiture of the CRS Owner's interest in the Group Member, then
promptly after the earlier of (i) the approval of Galileo's Plan or (ii) the
rendering of an Award confirming Galileo's Plan, any Director or Directors
elected by any of the Group Members shall immediately resign from the Board and
the Group Member shall begin an orderly divestiture of its shares of Galileo
capital stock in a reasonable manner approved by Galileo's Board.
SECTION 6. Consent. Any Group Member, either alone or in
combination with any other Person, without violating any provision of this
Agreement or any duty of the Group to Galileo or any other Owner or any
Affiliate thereof and without incurring any obligation or liability to Galileo
or any other Owner or any Affiliate thereof, may engage in activities that
would otherwise be prohibited pursuant to Section 2 hereof if: (i) such Group
Member has given written notice to each member of the Board specifying the
nature of such activities, (ii) the Board, by a majority vote of those
Directors (excluding any director elected by any Group Member), specifically
authorizes such Group Member to engage in such activities, and (iii) the Group
Member actively begins to pursue such activities within 90 days of such
authorization.
SECTION 7. Airline Affiliate Review Board. (a) If an Air
Carrier Competitor of a Group Member-Owner's Principal Air Carrier Affiliate
engages in an activity that such Principal Air Carrier Affiliate is prohibited
from engaging in pursuant to Section 2 (other than any activity that is the
subject of Sections 2(b) or (c) or any activity permitted pursuant to Section
6) and such Principal Air Carrier Affiliate (i) reasonably believes that it
will be materially disadvantaged by not being able to engage in such activity
and (ii) either (A) is unlikely in the reasonable judgment of such Principal
Air Carrier Affiliate to receive Board approval to engage in the activity
pursuant to Section 6 because of the activity's probable effect on the business
of Galileo or (B) has sought and failed to receive Board approval pursuant to
Section 6, then such Principal Air Carrier Affiliate (an "AARB Petitioner") may
seek approval to engage in the activity from Galileo's Airline Affiliate Review
Board ("AARB") in accordance with the provisions of this Section 7. Neither
the Principal Air Carrier Affiliate nor any of its Affiliates shall engage in
such activity, whether directly or indirectly, until the later of (x) ten
Business Days after the date on which the AARB reaches a decision permitting
such
16
CONFIDENTIAL TREATMENT 13
REQUESTED BY GALILEO
INTERNATIONAL, INC.
activity or (y) in the event Galileo appeals a decision by the AARB permitting
such activity pursuant to Section 7(l), the date on which an Award is rendered
permitting such activity.
(b) An AARB Petitioner may initiate a review by the AARB of
its requested activity by submitting a written petition (an "AARB Petition") to
Galileo. The AARB Petition shall specify the nature of the activity to be
engaged in, the nature of the relief sought, the likely impact upon the
Principal Air Carrier Affiliate of the denial of such relief, the likely impact
upon Galileo, in the view of the AARB Petitioner, of the granting of such
relief, and suggested terms for the granting of such relief. The AARB
Petitioner may set forth several alternative proposals for relief. Such
petition shall be limited in length to ten (10) typed, single spaced pages
(excluding any evidentiary exhibits included therein).
(c) The AARB shall be composed of one senior executive from
each Principal Air Carrier Affiliate whose Group Member-Owner is entitled to
elect one or more Directors as a result of its ownership of one or more shares
of Preferred Stock, provided that (i) the AARB shall not include any
representative of the AARB Petitioner or its Affiliates, (ii) no Board member
shall be a member of the AARB and (iii) the AARB shall not include any
representative of any Group Member that has terminated or is not in compliance
with its Non- Competition Agreement.
(d) Not later than 20 days after the receipt by Galileo of
an AARB Petition, each Owner entitled to appoint a representative to the AARB
pursuant to the provisions of Section 7(c) shall deliver to all members of the
Board written notice of the identity of the individual nominated by such Owner
to serve as its AARB representative (an "AARB Member").
(e) In the event the AARB would consist of an even number of
members and such number is greater than two, then the AARB shall exclude the
representative of the Owner selected in accordance with the lottery procedures
set forth in Exhibit A hereto. In the event that the AARB would consist of
only one member, or in the event that no AARB may be constituted in accordance
with the foregoing procedures, the AARB Petition shall be resolved in
accordance with the appeal provisions set forth in Section 7(l).
(f) Not later than 30 days after the receipt by Galileo of
an AARB Petition, Galileo may submit to the AARB Petitioner and to each of the
AARB Members a written reply to the AARB Petition (limited in length to ten
(10) typed, single spaced pages (excluding any evidentiary exhibits included
therein)), stating Galileo's position regarding the requested relief (the
"Galileo Response"). Any such Galileo Response shall specify Galileo's views
on the likely result of granting the requested relief, and suggested terms, if
any, for conditioning the
17
CONFIDENTIAL TREATMENT 14
REQUESTED BY GALILEO
INTERNATIONAL, INC.
granting of relief on certain actions by the AARB Petitioner. The Galileo
Response may propose that the requested relief be denied and may also set forth
several alternative conditions to the granting of relief.
(g) Not later than 40 days after the receipt by Galileo of an
AARB Petition, the AARB shall convene, either in person or by telephone or
video conference. The AARB Petitioner and, in the event Galileo submits a
Galileo Response, a representative of Galileo shall each be permitted to
present its views in person to the AARB. The AARB shall reach a decision
within 40 days after the receipt of the Galileo Response.
(h) In reaching its determination, the AARB shall consider,
without limitation, in addition to the damage likely to result to the Principal
Air Carrier Affiliate, on the one hand, and Galileo, on the other hand, whether
allowance of such activity would be inconsistent with the arrangements between
such Principal Air Carrier Affiliate and Galileo, including without limitation
such Principal Air Carrier Affiliate's affiliation with a Distributor, and its
employment as a sales representative of Galileo. The AARB shall not consider
any information other than the information provided in the AARB Petition and
the AARB Petitioner's oral presentation, if any, and in the Galileo Response
and Galileo's oral presentation, if any.
(i) The AARB shall permit the requested activity upon a
Principal Air Carrier Affiliate's demonstration to the AARB's satisfaction that
the damage to such Principal Air Carrier Affiliate from continued prohibition
of such activity would be greater than the damage which would be suffered by
Galileo if such activity were allowed. Such damages will be calculated as the
percentage of the relevant Person's total annual revenue which is represented
by the revenue which would be lost by continued prohibition of the activity, in
the case of the Principal Air Carrier Affiliate, or by allowance of the
activity, in the case of Galileo. Damage to either party may, if appropriate,
be measured over a period of years.
(j) The AARB shall have the right to condition its allowance
of any requested activity upon divestiture of the Group Member-Owner's Galileo
Interest, or of the termination of its right, if any, to sell or otherwise
distribute the products and services of Galileo, or upon the modification or
termination of any of the Group's other arrangements with Galileo. The AARB
may also condition its allowance of any requested activity upon payment of
compensation to Galileo. Upon acceptance of any such allowance of an activity
by the AARB, each Group Member shall be deemed to accept any associated
conditions imposed by the AARB and shall be deemed to waive any right to
appeal, delay, or otherwise contest the associated conditions while pursuing
the requested activity; provided, however, that upon
18
CONFIDENTIAL TREATMENT 15
REQUESTED BY GALILEO
INTERNATIONAL, INC.
rejection of any such allowance of an activity by the AARB, nothing in this
Section 7(j) will prevent a Group Member from appealing any decision of the
AARB.
(k) The AARB shall make its determination in accordance with
the vote of a majority of its members, or in the event the AARB is composed of
only two members, by a unanimous vote. The AARB shall issue a written
statement (the "AARB Determination") finding entirely in favor of one of the
proposals set forth in the AARB Petition or entirely in favor of one of the
proposals set forth in the Galileo Response, provided that if there is no
Galileo Response, the AARB Determination shall either be entirely in favor of
one of the proposals set forth in the AARB Petition or shall condition
acceptance of the request for relief on any conditions the AARB deems
appropriate.
(l) Not later than ten days after the earlier of (i) the date
on which the parties determine that an AARB comprised of two or more members
cannot be constituted in accordance with this Section 7, (ii) in the event
there are only two AARB members, the date on which one or both of such AARB
members report to the AARB Petitioner and Galileo that they cannot reach a
unanimous decision with regard to the AARB Petition, or (iii) the rendering of
the AARB Determination, either the AARB Petitioner or Galileo may, in the case
of clauses (i) and (ii) of this Section 7(l), submit the AARB Petition for
arbitration, or, in the case of clause (iii) of this Section 7(l), appeal the
AARB Determination, in each case pursuant to the arbitration provisions of
Section 9. In the event any such arbitration proceeding is commenced, (A)
neither the AARB Petitioner nor Galileo shall be entitled to act on any aspect
of the proposed activity that is the subject of such AARB Petition or an AARB
Determination until any such appeal, if any, has been exhausted, and (B) the
Arbitrator shall make a determination regarding the allowance or the
prohibition of the activity that is the subject of the AARB Petition on the
basis of the standards set forth in this Section 7.
(m) Notwithstanding anything to the contrary herein, subsequent
to the rendering of the AARB Determination or the issuance of an Award there
occurs a significant change in circumstances that was not anticipated by either
Galileo or the AARB Petitioner, nothing shall prohibit Galileo or the AARB
Petitioner from:
(i) seeking a reconsideration of the AARB Determination or the
Award in light of the change in circumstances, in which case any such
reconsideration shall be conducted in accordance with the procedures
established by this Section 7 (substituting, if and as appropriate, Galileo
for the AARB Petitioner, and vice versa), and in connection therewith the
AARB shall take into consideration any newly developed evidence of the
results of allowance or prohibition of the requested activity; or
19
CONFIDENTIAL TREATMENT 16
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(ii) seeking to have the compensation to Galileo
reduced or increased in accordance with the procedures described in
Section 7(m)(i).
(n) Notwithstanding anything to the contrary herein, an AARB
Petitioner may not seek approval to engage in the same or a similar activity
pursuant to this Section 7 more than once in any twelve-month period.
SECTION 8. Confidential Information. Each Group Member shall, and
shall cause its officers, directors, employees and agents (including, without
limitation, any Director elected by any Group Member) (collectively,
"Representatives") to, keep secret and retain in strictest confidence all
Confidential Information, and shall not disclose such Confidential Information
and shall cause its Representatives not to disclose such Confidential
Information to anyone outside such Group Member or Galileo and its agents; nor
may a Group Member or any of its Representatives exploit such Confidential
Information for its benefit or the benefit of other relationships with
customers of any Group Member; provided, however, nothing in this Section 8 is
meant to affect any rights or obligations of the Parties under any license
agreements granted by Galileo. The obligations under this Section 8 shall
survive for a period of five (5) years commencing on the termination of this
Agreement.
SECTION 9. Disputes. Subject to the final sentence of Section 9,
any dispute arising between the parties to this Agreement involving the subject
matters covered by this Agreement shall be submitted to arbitration under this
Section 9. Any party asserting a breach of this Agreement shall notify the
other party of such alleged breach (a "Dispute Notice") and the parties shall
attempt to resolve such dispute amicably. An individual will be appointed by
each party to such dispute and such individuals shall meet and attempt to
negotiate, in good faith, a resolution of the dispute. If such individuals
shall fail to resolve the dispute within fourteen (14) Business Days of the
date of the Dispute Notice, either party to the dispute may notify the other
party that it wishes to commence an arbitration proceeding under this paragraph
(an "Arbitration Request"). The party commencing the arbitration (the
"Petitioner") shall include in the Arbitration Request (a) a statement of the
facts constituting the alleged breach or dispute, (b) a written statement of
position ("Statement") regarding the dispute, and (c) the name of an individual
designated by it to appoint an Arbitrator (an "elector"). The Statement shall
state the facts and arguments in support of the position taken by the party
submitting such Statement and shall detail that party's proposed solution and
relief sought (if any). The party with whom the Petitioner has its dispute
(the "Respondent") shall within five (5) Business Days after the date of the
Arbitration Request designate a second elector by notice to the Petitioner, but
if the Respondent shall fail to do so within such period the Petitioner may
designate an elector on Respondent's behalf. The electors chosen by the
Petitioner and the Respondent shall attempt to agree upon an arbitrator (the
"Arbitrator"), but if they are unable
20
CONFIDENTIAL TREATMENT 17
REQUESTED BY GALILEO
INTERNATIONAL, INC.
to do so within (20) Business Days after the designation of the second elector,
then either elector thereafter may apply to the American Arbitration
Association (the "Association") for the selection of the Arbitrator in
accordance with the Commercial Arbitration Rules of such Association. The
Arbitrator so selected shall have full power to decide any dispute referred to
in this paragraph. The arbitration proceedings shall be conducted in the
English language, and the place of arbitration and the making of the Award (as
defined below) shall be the City of New York. The United Nations Commission on
International Trade Law ("UNCITRAL") rules of commercial arbitration shall
apply to any arbitration commenced pursuant to this paragraph, as modified by
the following procedure:
(a) Within five (5) Business Days of the selection of the
Arbitrator (the "Commencement Date"), the Respondent shall deliver its
Statement regarding the dispute to the Arbitrator and the Petitioner.
(b) Within fifteen (15) Business Days from the Commencement
Date, each of the Petitioner and Respondent shall deliver to the Arbitrator
and to the other party, a response ("Response") to the other party's
Statement setting forth opposing facts and arguments and limited in length
to ten (10) typed, single spaced pages (excluding any evidentiary exhibits
included therein).
(c) Within twenty (20) Business Days from the Commencement
Date each of the Petitioner and the Respondent may deliver to the
Arbitrator and to the other party, a reply to the Response limited to
setting forth facts and arguments in rebuttal to the Statement and Response
of the other party and limited in length to five (5) typed, single spaced
pages (excluding any evidentiary exhibits included therein).
(d) Within twenty-five (25) Business Days from the
Commencement Date each of the Petitioner and the Respondent shall present
an oral summation of its position to the Arbitrator in the presence of the
other party in accordance with such rules of procedure including, without
limitation, length of presentation and right of cross-examination, as the
Arbitrator shall determine in writing and deliver to the parties not less
than three (3) Business Days prior to such hearing; provided, however, that
such hearing shall not exceed eight (8) hours in total and may not be
adjourned except for the extraordinary circumstances beyond the control of
the parties.
(e) The Arbitrator shall either issue his decision and award
("Award") or request a further meeting of the parties within fifteen (15)
days of the hearing.
21
CONFIDENTIAL TREATMENT 18
REQUESTED BY GALILEO
INTERNATIONAL, INC.
(f) Any such further meeting of the parties shall
take place within five (5) Business Days of the request therefor and
shall be conducted as determined by the Arbitrator. The Arbitrator
shall issue his Award no later than fifteen (15) days after any such
further meeting of the parties.
(g) The Award shall be in writing and shall be limited
to a decision either completely in favor of Petitioner's request for
relief or completely in favor of Respondent's request for relief. The
Award shall be final and binding upon the parties and judgment may be
entered thereon in any court of competent jurisdiction and the costs
and expenses of such arbitration shall be borne by the party losing
such arbitration.
This section shall in no way affect the right of any
party to seek such interim relief, and only such relief, as may be required to
maintain the status quo in aid of the arbitration in any court of competent
jurisdiction.
SECTION 10. Rights and Remedies Upon Breach. (a)
Notwithstanding anything in Section 9 hereof, if a Group Member breaches, or
threatens to commit a breach of, any of the provisions of Section 2 or Section
8 hereof (the "Group Member Restrictive Covenants"), Galileo shall have the
right and remedy to have the Group Member Restrictive Covenants specifically
enforced by any court having jurisdiction, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to
Galileo and that money damages will not provide an adequate remedy to Galileo.
Nothing in this Section 10 shall be construed to limit the right of Galileo to
collect money damages in the event of a breach of the Group Member Restrictive
Covenants.
(b) Notwithstanding anything in Section 9 hereof,
if Galileo breaches, or threatens to commit a breach of, any of the provisions
of Section 7 hereof (the "Galileo Restrictive Covenants"), each Group Member
shall have the right and remedy to have the Galileo Restrictive Covenants
specifically enforced by any court having jurisdiction, it being acknowledged
and agreed that any such breach or threatened breach will cause irreparable
injury to the Group and that money damages will not provide an adequate remedy
to the Group. Nothing in this Section 10 shall be construed to limit the right
of any Group Member to collect money damages in the event of a breach of the
Galileo Restrictive Covenants.
SECTION 11. Severability of Covenants. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid, illegal or unenforceable, the remainder of the Restrictive Covenants
shall, to the extent enforceable under applicable law, not thereby be affected
and shall be given full effect, without regard to the portions which have
22
CONFIDENTIAL TREATMENT 19
REQUESTED BY GALILEO
INTERNATIONAL, INC.
been declared invalid, illegal or unenforceable, provided that if the economic
or legal substance of the principles and transactions contemplated in this
Agreement is affected in a manner materially adverse to any party as a result
of the determination that a provision hereof is invalid, illegal or
unenforceable, the parties hereto agree to negotiate in good faith to modify
this Agreement so as to effect the original interest of parties as closely as
possible in an acceptable manner to the end that the principles and
transactions contemplated hereby are fulfilled to the closest extent possible,
provided further that each Group and Group Member shall enter into the same
modification with respect to its non-competition agreement with Galileo.
SECTION 12. Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, it is the intention of the
parties that such court shall have the power to modify any such provision, to
the extent necessary to render the provision enforceable, and such provision as
so modified shall be enforced.
SECTION 13. Attorneys' Fees and Costs. In the event of any dispute
arising out of the subject matter of this Agreement, the prevailing party shall
recover, in addition to any other damages assessed, its reasonable attorneys'
fees and court costs incurred in litigating or otherwise settling or resolving
such dispute. In construing this Agreement, none of the parties shall have any
term or provision construed against such party solely by reason of such party
having drafted the same.
SECTION 14. Cumulative Remedies. Each of the several rights and
remedies provided in this Agreement, or by law or in equity, shall be
cumulative, and no one of them shall be exclusive of any other right or remedy,
and the exercise of anyone of such rights or remedies shall not be deemed a
waiver of, or an election to exercise, any other such right or remedy. No waiver
of any term or condition of this Agreement shall be construed as a waiver of any
other term or condition; nor shall any waiver of any default hereunder be
construed as a waiver of any other default hereunder.
SECTION 15. Amendments. This Agreement may not be amended except by
an instrument in writing signed by the Parties.
SECTION 16. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of New York applicable to
contracts made and to be performed in such State.
23
CONFIDENTIAL TREATMENT 20
REQUESTED BY GALILEO
INTERNATIONAL, INC.
SECTION 17. Notice. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 17):
(a) if to Galileo:
Galileo International, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: 212-848-7179
Attention: ▇▇▇▇▇ ▇'▇▇▇▇▇, Esq.
(b) if to the Group Member-Owner:
______________________________________
______________________________________
______________________________________
Telecopy:_____________________________
Attention:____________________________
24
CONFIDENTIAL TREATMENT 21
REQUESTED BY GALILEO
INTERNATIONAL, INC.
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
(c) If to the Ultimate Parent Entity:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
(d) If to the Air Carrier Affiliate:
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
25
CONFIDENTIAL TREATMENT 22
REQUESTED BY GALILEO
INTERNATIONAL, INC.
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopy:______________________________
Attention:_____________________________
SECTION 18. Assignability. This Agreement and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, successors and assigns. This
Agreement may not be assigned by any party without the prior written consent of
the other parties and any attempt to assign this Agreement without such consent
shall be void and of no effect.
SECTION 19. Headings. The captions and other headings contained in
this Agreement are for reference purposes only and shall not be considered a
part of or affect the construction and interpretation of any provision of this
Agreement.
SECTION 20. Termination. Subject to the provisions of Section 8
hereof, this Agreement shall terminate in its entirety as provided below.
(a) This Agreement shall automatically terminate in its entirety
at such time as no Group Member owns any interest in Galileo's common stock,
provided that subject to section 20(b) below, if at such time a Distributor is a
Group Member, this Agreement shall remain in effect with respect to such
Distributor until the Distributor Agreement to which such Distributor is a party
is terminated. This Agreement shall automatically terminate with respect to any
Group Member at the time such Group Member ceases to be an Affiliate of the
Group Member-Owner.
(b) If a Distributor remains subject to this Agreement pursuant to
the proviso to section 20(a), this Agreement shall only apply to such
Distributor and to the Affiliates of such Distributor in which such Distributor
owns or controls 50% or more of the capital stock (or other ownership interest,
if not a corporation) ordinarily having voting rights, and not to any other
Affiliates of such Distributor.
(c) If the Group Member-Owner continues to own an interest in
Galileo's capital stock, this Agreement will be terminable at the option of the
Group Member-Owner on
26
CONFIDENTIAL TREATMENT 23
REQUESTED BY GALILEO
INTERNATIONAL, INC.
at least 12 months' prior written notice to Galileo, which notice may be
given at any time after the second anniversary of the Effective Date;
provided that (i) following the third anniversary of the Effective Date, this
Agreement may be terminated at the option of the Group Member-Owner on at least
6 months prior written notice and (ii) in any case, no notice may be given as
long as a Group Member controls a Distributor. Upon such notice, (i) any
Distributor formerly controlled by a Group Member shall lose all exclusive
distribution and most favored nation rights under its Distributor Agreement,
and (ii) Galileo, at its option, may terminate such Distributor Agreement,
subject to the wind-down and transition provisions of Section 22 of such
Distributor Agreement.
(d) Upon the termination of this Agreement pursuant to Section
20(a) or upon Galileo's receipt of notice of termination pursuant to Section
20(c), Galileo, at its option, may terminate any Sales Representation Agreement
with any Group Member.
SECTION 21. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall be considered one and the same instrument.
27
CONFIDENTIAL TREATMENT 24
REQUESTED BY GALILEO
INTERNATIONAL, INC.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
GALILEO INTERNATIONAL, INC.
By
_____________________________
Name:
Title:
[GROUP MEMBER-OWNER]
By
_____________________________
Name:
Title:
[GROUP MEMBER-OWNER DISTRIBUTOR]
By
_____________________________
Name:
Title:
28
CONFIDENTIAL TREATMENT 25
REQUESTED BY GALILEO
INTERNATIONAL, INC.
[ULTIMATE PARENT ENTITY]
By
____________________________
Name:
Title:
[AIR CARRIER AFFILIATE]
By
____________________________
Name:
Title:
[PRINCIPAL AIR CARRIER
AFFILIATE]
By
____________________________
Name:
Title:
29
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
APPENDIX I
Where a Group Member markets and distributes a Customized
Product to other Customers through Neutral Travel Providers pursuant to Section
3(b) of this Agreement, the following shall apply:
[INFORMATION OMITTED -- CONFIDENTIAL TREATMENT REQUESTED]
[TWO PAGES OMITTED]
30
CONFIDENTIAL TREATMENT
REQUESTED BY GALILEO
INTERNATIONAL, INC.
EXHIBIT A
---------
AARB EXCLUSION PROCESS
----------------------
In the event that the Airline Affiliate Review Board ("AARB")
constituted pursuant to Section 7 of this Agreement shall consist of an even
number of members which is greater than two, a Group Member-Owner's Air Carrier
Affiliate's designee who would otherwise be entitled to participate in the AARB
process shall be excluded from that process as provided herein.
GROUP MEMBER-OWNER'S
--------------------
AIR CARRIER AFFILIATE ASSIGNED NUMBER
--------------------- ---------------
British Airways 1
KLM 2
Swissair 3
United 4
US Airways 5
In the event that any owner of Galileo not associated with an
Assigned Number as designated above shall become entitled to appoint an AARB
member, each such owner shall receive an Assigned Number which follows, in
ascending numerical order, the highest previously designated Assigned Number.
The Group Member representative excluded from the AARB shall
be the representative of the Group whose Assigned Number appears as the units
digit of the closing Dow ▇▇▇▇▇ Industrial Average on the first Monday following
the date on which the relief request notice issued pursuant to Section 7 is
received by the Chairman of the Board (e.g., 7234.22: excluded Group is
United), the Monday so chosen to be referred to hereinafter as the "Exclusion
Day." If the number appearing as the units digit is not the Assigned Number of
a Group which would be entitled to participate in the AARB process, the
excluded Group Member representative shall be determined by the appearance of
an otherwise participating Group Member's Assigned Number in the locations
listed hereinafter, with such locations to be
31
CONFIDENTIAL TREATMENT 2
REQUESTED BY GALILEO
INTERNATIONAL, INC.
examined in the sequences listed, and with the process concluding upon the
first appearance of an excludable Group's Assigned Number in a location:
(1) Closing Dow ▇▇▇▇▇ Industrial Average on Exclusion
Day, tenth-point digit (e.g., 7237.22: excludable
Group is KLM);
(2) Exclusion Day Dow ▇▇▇▇▇ Industrial High, units digit;
(3) Exclusion Day Dow ▇▇▇▇▇ Industrial High, tenth-point
digit;
(4) Exclusion Day Dow ▇▇▇▇▇ Industrial Low, units digit;
(5) Exclusion Day Dow ▇▇▇▇▇ Industrial Low, tenth-point
digit;
In the event that the foregoing process does not produce a
Group Member for exclusion from the AARB, or in the absence of a Dow ▇▇▇▇▇
Industrial Average on the designated Exclusion Day, the excluded Group Member
shall be chosen by the application of the foregoing process to the Dow ▇▇▇▇▇
Industrial Average results produced on the next Business Day following the
Exclusion Day. Such process shall be applied to each subsequent Business Day
until a Group Member has been selected for exclusion from the AARB.
At any time after the selection of an excludable Group Member
pursuant to the foregoing process and before the convening of the AARB, the
Group Member seeking AARB review shall notify Galileo and each member of the
Board of the Group Member excluded from the AARB. Any party (including
Galileo) may object to such notice on the grounds that the excludable Group
Member was improperly selected, and upon any failure to resolve such dispute,
any party may seek resolution of the dispute via the arbitration provisions of
this Agreement. A dispute regarding the composition of the AARB shall, for its
duration, toll the running of any of the time periods established for AARB
review by Section 7 of this Agreement.
