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EXHIBIT 10.7
CONFORMED COPY
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT.
THE SYMBOL "[*]" HAS BEEN INSERTED
IN PLACE OF THE PORTIONS SO OMITTED.
MARKETING COOPERATION
AND SALES REPRESENTATION AGREEMENT
between
UNITED AIR LINES, INC.
and
GALILEO INTERNATIONAL, L.L.C.
Dated as of July 30, 1997
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MARKETING COOPERATION
AND SALES REPRESENTATION AGREEMENT
Table of Headings
Section Page
------- ----
1 Definitions......................................................... 1
2 Sales Agency and Territories........................................ 2
2.1 Sales to NTP Subscribers................................... 2
2.1.1 Sales Agency Appointment.......................... 2
2.1.2 Designated Subscribers............................ 2
2.1.3 Multinational Accounts............................ 2
2.2 Sales to CTMS Customers.................................... 3
2.3 Other Sales Agents......................................... 3
2.4 Territorial Reassignment................................... 3
2.5 Trade Names................................................ 4
3 The Administration of this Agreement................................ 4
3.1 GILLC...................................................... 4
3.2 United..................................................... 5
3.3 Meetings and Coordination.................................. 6
4 Responsibilities of United.......................................... 6
4.1 NTP Sales Services......................................... 6
4.2 Multinational Sales Services............................... 7
4.3 CTMS Sales Services........................................ 9
4.4 Support Services........................................... 9
4.5 Responsibilities With Respect to Excluded Subscribers...... 10
4.6 Sales Planning............................................. 10
4.7 Staffing................................................... 10
4.7.1 Staffing Commitment............................... 10
4.7.2 Review of Staffing Levels......................... 10
4.7.3 Employee Proficiency and Training................. 11
4.7.3.1 Introductory Training.................... 11
4.7.3.2 Employee Proficiency..................... 11
4.7.3.3 Training and Test Materials.............. 11
5 GILLC Responsibilities.............................................. 12
5.1 Marketplace Competitiveness................................ 12
5.2 GILLC Support of Sales Services and Support Services....... 12
5.3 Services of GILLC.......................................... 12
5.4 New Services............................................... 12
5.5 CTMS Products.............................................. 13
5.5.1 Base Products..................................... 13
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5.5.2 Demonstrations.................................... 13
5.6 Technical Support.......................................... 13
5.7 Technical Assistance Offices............................... 13
5.8 Help Desk.................................................. 13
6 Reporting........................................................... 14
7 Other Marketing Rights.............................................. 14
7.1 GILLC...................................................... 14
7.2 United..................................................... 14
8 Terms of Payment.................................................... 15
9 Currency............................................................ 15
10 Term................................................................ 15
11 Confidentiality..................................................... 16
11.1 Confidential Information................................... 16
11.2 Service.................................................... 16
12 Service Marks, Patents, Third Party Data............................ 16
12.1 Use of Service Marks.......................................... 16
12.1.1 XXXXX Xxxxx....................................... 16
12.1.2 United Marks...................................... 17
12.2 Patent Indemnity........................................... 17
12.2.1 Actions........................................... 17
12.2.2 Limitation........................................ 17
12.3 Third Party Data........................................... 17
13 Taxes............................................................... 18
13.1 GILLC Responsibilities..................................... 18
13.2 Claims..................................................... 18
14 Limitation of Liability............................................. 18
15 Consequential Damages............................................... 18
16 Termination for Breach.............................................. 18
17 Force Majeure, Delay................................................ 19
18 Indemnification..................................................... 19
19 Guarantee of Performance............................................ 19
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20 Third Party Rights.................................................. 20
21 Assignment.......................................................... 20
22 Relationship of the Parties......................................... 20
23 Severability........................................................ 20
24 Survival............................................................ 20
25 Governing........................................................... 20
26 Notices............................................................. 21
27 Headings............................................................ 21
28 Entirety of Agreement............................................... 21
29 Counterparts........................................................ 21
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Table of Attachments
Appendix I.........................................................Certain Terms
Appendix II.............................................Budgets and Compensation
Attachment A.......................................................Defined Terms
Attachment B........................................Dispute Resolution Procedure
Exhibit A...................................Area of Primary Sales Responsibility
Exhibit B...........................................List of Excluded Subscribers
Exhibit C.................................................Designated Subscribers
Exhibit D...........................................Sales Representative Reports
Exhibit E....................................................Certain Territories
Schedule 1..................................Certain Information Relating to 1997
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MARKETING COOPERATION AND SALES REPRESENTATION AGREEMENT
UNITED AIR LINES, INC. AND GALILEO INTERNATIONAL, L.L.C.
This Marketing Cooperation and Sales Representation Agreement
(this "Agreement") effective as of the 30th day of July, 1997 (the "Effective
Date"), by and between GALILEO INTERNATIONAL, L.L.C., a Delaware limited
liability company ("GILLC") with offices at Xxxxx 000, 0000 Xxxx Xxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx, 00000, and UNITED AIR LINES, INC., a Delaware corporation
("United") with offices at 0000 X. Xxxxxxxxx Xxxx, Xxx Xxxxx Xxxxxxxx, Xxxxxxxx
00000.
RECITALS
WHEREAS United and Apollo Travel Services Partnership, a
Delaware general partnership ("Apollo Partnership"), are parties to a Sales
Representative Agreement, dated as of January 1, 1994 (the "Original
Agreement"); and
WHEREAS GILLC generates computerized reservations services
through GILLC's computer reservation system and distributes such services
worldwide for use by travel-related business entities, by CTMS Customers, and by
individual consumers; and
WHEREAS GILLC desires to appoint Sales Representatives that
will be responsible for the sale of GILLC's reservations services to such
persons and for the provision of ongoing support services to certain of such
persons; and
WHEREAS The parties hereto agree that, because of the
competitiveness of the products and services of GILLC vis-a-vis like products
and services of all other companies within the CRS Industry, United is desirous
of entering into this Agreement; and
WHEREAS The parties hereto agree that, because of United's
knowledge of and contact with a substantial portion of the community of travel
agents within the Territory, GILLC is desirous of entering into this Agreement;
and
WHEREAS United and Apollo Partnership intend to terminate the
Original Agreement and United desires to be a Sales Representative for GILLC
under the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set
forth in this Agreement, GILLC and United hereby agree as follows:
1 Definitions.
Capitalized terms used as defined terms in this Agreement have, unless
otherwise defined elsewhere in this Agreement, the meanings provided for each in
Attachment A hereto.
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2 Sales Agency and Territories.
2.1 Sales to NTP Subscribers.
2.1.1 Sales Agency Appointment.
With respect to the Assigned Subscribers, GILLC
hereby appoints United as the exclusive limited agent of GILLC
to obtain commitments from the Assigned Subscribers to
subscribe for and lease Galileo Services. Except as provided
in Section 4.2 below, United will act as the sales agent of
GILLC only for the limited purposes of negotiating and
obtaining written commitments from NTP Subscribers on terms
and in a form prepared and approved in advance by GILLC.
2.1.2 Designated Subscribers.
Exhibit C hereto lists the NTP Subscribers with
locations in the sales territories of more than one sales
representative for whom United is the designated provider of
Sales Services and Support Services. United is the exclusive
provider of Sales Services and Support Services for all
locations of such NTP Subscribers in the Territory. GILLC may
add or delete NTP Subscribers from such Exhibit C only with
United's consent. All NTP Subscribers listed on Exhibit C are
"Excluded Subscribers" for all other sales representatives of
GILLC, including for GILLC itself.
2.1.3 Multinational Accounts.
An NTP Subscriber whose Headquarters is in the
Territory and that has outlets (whether owned, licensed, or
otherwise) for its business in both the Territory and outside
of the Territory is, for the purposes of this Agreement, a
"Multinational Account". GILLC has overall responsibility with
respect to Multinational Accounts, including the provision of
services to and all payments of Financial Assistance to such
Multinational Accounts, provided, however, that United has
responsibility for the negotiations with Multinational
Accounts with respect to the products and services of GILLC,
and United and GILLC agree that United together with GILLC
shall undertake all such negotiations pursuant to this
Agreement, including, without limitation, the Multinational
Procedure as described in Section 4.2 below. Exhibit C to this
Agreement lists the Multinational Accounts as of the Effective
Date. Subsequent to the Effective Date, United shall assume
the responsibilities described in this Section 2.1.3 with
respect to any National Account that, during the term of this
Agreement, becomes a Multinational Account, whether by growth,
merger, business combination, or otherwise. In the event that
any Multinational Account ceases to be a Multinational Account
during the term of this Agreement (a "Discontinued
Multinational Account"), then such
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Discontinued Multinational Account shall no longer be deemed
to be a Multinational Account but shall be deemed to be a
Designated Subscriber. Subsequent to the Effective Date,
during the term of this Agreement, if any Assigned Subscriber
other than an existing Multinational Account or a National
Account becomes a Multinational Account, whether by growth,
merger, business combination, or otherwise, then GILLC and
United will meet to determine the most appropriate process for
account management for such account.
2.2 Sales to CTMS Customers.
With respect to CTMS Customers and CTMS Agents, GILLC hereby
appoints United as its non-exclusive limited agent to obtain
commitments from CTMS Customers and CTMS Agents to purchase, license,
or lease CTMS Services. Pursuant to Section 4.3 below, and except in
those territories where GILLC has granted exclusive distribution rights
to third parties with respect to Galileo Services and CTMS Services, as
listed in Exhibit E hereto, United may act as the sales agent of GILLC
worldwide for the limited purposes of negotiating and obtaining written
commitments from CTMS Customers and CTMS Agents on terms and in a form
prepared and approved in advance by GILLC.
2.3 Other Sales Agents.
Subject to this Section 2 and to Section 3 below, GILLC may at
its discretion appoint other persons as sales agents of GILLC and GILLC
may act on its own behalf as sales agent. GILLC will treat each of its
sales agents in a fair and nondiscriminatory manner and as appropriate
in a manner proportionate to United's responsibilities hereunder with
respect to the terms and conditions of its appointment as a sales
representative, including, but not limited to, the provision of Sales
Services, Support Services, training, the criteria for approvals of
Form Agreements, the compensation arrangements provided by GILLC, and
in all associated support functions that are GILLC's responsibility
hereunder.
2.4 Territorial Reassignment.
A "Territorial Reassignment" shall occur in the event of (i) a
reassignment by GILLC among its sales representatives of territories
outside of the APR but within the Territory, or (ii) the termination of
any arrangement regarding sales agency between GILLC and another sales
representative of GILLC who is performing as a sales agent within the
Territory but not within the APR (an "Other Agent"). In the event of a
Territorial Reassignment, GILLC will offer to United the right of first
refusal to assume sales agent responsibility within such reassigned
territory or within the territory of such terminated Other Agent.
Before such territories are assigned to United, GILLC and United will
negotiate in good faith to adjust the performance objectives and the
compensation therefor as provided in Appendix II. If United and
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GILLC are unable within ninety days (90 days) from the commencement of
such negotiations to agree on the terms of adjustment for the
performance objectives and the compensation then GILLC shall be free to
make the Territorial Reassignment to any other agent or GILLC may
perform such sales function for itself.
2.5 Trade Names.
During the term of this Agreement and except as otherwise
provided in this Agreement, with respect to the APR, GILLC will market,
and United will sell, the Reservations Services and CTMS Services of
GILLC under the "Apollo" trade name. Notwithstanding the foregoing, if,
as a result of United's efforts under this Agreement, a customer of
GILLC commits to purchase GILLC products or services outside of the
Territory then GILLC will determine the trade name for such products or
services outside of the Territory. For the purposes of this Agreement
it is assumed, without obligation on GILLC's part, that such trade name
outside the Territory is "Galileo".
3 The Administration of this Agreement.
United and GILLC agree that the proper and efficient administration of
each party's obligations under this Agreement is essential to meeting the
objectives of the parties hereunder. To this purpose, the parties agree to
dedicate appropriate staff and resources at an executive level, and otherwise,
as follows:
3.1 GILLC.
At all times during the term of this Agreement GILLC will
employ an individual who shall have primary responsibility for meeting
GILLC's obligations under this Agreement, which person shall be a duly
appointed officer of GILLC (the "GILLC Executive"). The GILLC Executive
shall report directly to the President and Chief Executive Officer of
GILLC. The GILLC Executive shall be a person who has experience and
background commensurate with his or her responsibilities. The GILLC
Executive will maintain an office in the Chicago metropolitan region.
The GILLC Executive shall have full authority to bind GILLC in
all matters regarding this Agreement that may arise during the term of
this Agreement, subject to the provisions of the limited liability
company agreement and commitment authorities of GILLC as approved by
GILLC's Managing Member or CEO, including, without limitation:
(i) matters regarding Financial Assistance;
(ii) the approval of agreements with current and potential
customers of GILLC that are negotiated by United on
GILLC's behalf pursuant to this Agreement;
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(iii) the negotiation with United of goals and targets
related to GILLC's and United's performance under
this Agreement;
(iv) the compensation owed United by GILLC under this
Agreement, including the negotiation and payment
thereof;
(v) the quantity, quality of performance and training of
personnel provided by GILLC pursuant to its
obligations under this Agreement;
(vi) the coordination of GILLC's role in negotiations with
any third party where such negotiations involve the
participation of parties other than GILLC, United,
and that third party; and
(vii) the coordination and resolution of any issues arising
under this Agreement that, in United's or GILLC's
estimation, are affected by actions that have been or
may be taken by other sales agents of GILLC or by
GILLC.
The GILLC Executive may delegate to employees of GILLC or to
persons under the control of GILLC such matters that are his or her
responsibility hereunder and as may be, in the GILLC Executive's
discretion, appropriate for delegation provided that, if United
reasonably objects that such delegation will result in a diminishment
of GILLC's performance hereunder or in a detriment to United's ability
to perform its obligations hereunder, or both, then GILLC will review
the proposed delegation and inform United as to how GILLC will address
United's reasonable concerns.
3.2 United.
At all times during the term of this Agreement United will
employ an individual to have primary responsibility for meeting
United's obligations under this Agreement, which person shall be a duly
appointed officer of United (the "United Executive"). The United
Executive shall be a person who has experience and background
commensurate with his or her responsibilities. The United Executive
will maintain an office in the Chicago metropolitan region. The United
Executive shall have full authority to bind United in all matters
regarding this Agreement that may arise during the term of this
Agreement, subject to the provisions of the corporate by-laws and
commitment authorities of United Air Lines, Inc., as approved by United
Air Lines, Inc.'s Board of Directors or CEO, including, without
limitation:
(i) the conduct of United's negotiations with current and
potential customers of GILLC on GILLC's behalf
pursuant to this Agreement;
(ii) the negotiation with GILLC of goals and targets
related to GILLC's and United's performance under
this Agreement;
(iii) the compensation owed United by GILLC under this
agreement, including the negotiation and payment
thereof;
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(iv) the quantity, quality of performance and training of
personnel provided by United pursuant to its
obligations under this Agreement;
(v) the coordination of United's role in negotiations
with any third party where such negotiations involve
the participation of parties other than GILLC,
United, and that third party; and
(vi) the coordination and resolution of any issues arising
under this Agreement that, in United's or GILLC's
estimation, are affected by actions that have been or
may be taken by other sales agents of GILLC or by
GILLC.
The United Executive may delegate to employees of United or to
persons under the control of United such matters that are his or her
responsibility hereunder and as may be, in the United Executive's
estimation, appropriate for delegation, provided that, if GILLC
reasonably objects that such delegation will result in a diminishment
of United's performance hereunder or in a detriment to GILLC's ability
to perform its obligations hereunder, or both, then United will review
the proposed delegation and inform GILLC as to how United will address
GILLC's reasonable concerns.
3.3 Meetings and Coordination.
The GILLC Executive and the United Executive shall meet from
time to time, whether telephonically or in person and on a schedule to
which they mutually agree, to review the progress of each party's
performance under this Agreement as well as general economic and travel
industry market conditions or factors that may potentially affect one
or the other party performance hereunder.
4 Responsibilities of United.
4.1 NTP Sales Services.
Primarily using United's General Sales Personnel, United will
actively engage in the sale, marketing, and promotion of Galileo
Services to the Assigned Subscribers. To this end, United will perform
the following services for GILLC pursuant to this Agreement (such
services are, collectively, "NTP Sales Services"):
(i) Scope. United will engage in NTP Sales Services regarding only
those Galileo Services as directed or authorized in advance by
GILLC.
(ii) Contact. United will maintain current and establish new
personal and telephone contact and sales relationships,
including, where appropriate, in person or telephone sales
calls. At GILLC's expense, United may, on approval of GILLC,
undertake direct mail solicitations, promotions, and other
sales efforts, with NTP Subscribers within the APR. GILLC may
disapprove any sales promotion or solicitation with respect to
the Galileo Services that
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GILLC in its reasonable discretion determines to be contrary
to the objectives or policies of GILLC.
(iii) Commitment Review Procedure. United shall follow the
Commitment Review Procedure described in Appendix I below.
(iv) Support Services. Subject to the NTP Form Agreement and within
the Negotiation Range, United shall offer to NTP Subscribers
within the APR such NTP Support Services as are approved in
advance by GILLC.
(v) Discontinued Services. Upon receipt of a Discontinued Service
Notice, as such term is defined in Section 5.1 below, United
will cease Sales Services regarding such Galileo Service or
feature.
(vi) Changes to United Organization. United will give GILLC prompt
written notice regarding any significant re-organization,
redeployment or change of responsibilities of its General
Sales Personnel (an "Organization Change"). If such
Organization Change is likely to result in an inability of
United to perform NTP Sales Services in a metropolitan area in
the APR that provides a significant portion of Total Revenue
then United will notify GILLC as to whether
(a) United chooses to continue providing services under
this Agreement in such area, in which case United
will propose to GILLC how United will staff the
necessary Sales Force coverage for such area, and
GILLC will review United's proposal in good faith and
determine whether it accepts the proposal; or
(b) United chooses not to continue providing services
under this Agreement in such area.
In the event of (b), above, or of GILLC's rejection of
United's proposal in (a), above, then GILLC may reassign sales
responsibility in such area to another person, including to
GILLC itself.
4.2 Multinational Sales Services.
United will actively engage in the sale, marketing, and
promotion of Galileo Services to Multinationals. To this end, and
notwithstanding the provisions of Section 4.1 above, United will
perform the following services for GILLC pursuant to this Agreement
(such services are, collectively, "Multinational Sales Services"):
(i) Scope. United will engage in Multinational Sales Services
regarding only those Galileo Services as directed or
authorized in advance by GILLC.
(ii) Multinational Procedure; GILLC Lead; United Lead. With respect
to the management of the account of each Multinational, the
GILLC Executive shall appoint an individual (the "GILLC Lead")
and the United Executive shall appoint an individual (the
"United Lead") who shall have joint responsibility
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for the preparation and conduct of negotiations with that
Multinational. The following procedure (the "Multinational
Procedure") shall apply to the preparation and conduct of such
negotiations:
(a) US Deal. The United Lead shall be the lead negotiator
in negotiations with a Multinational that apply to
Galileo Services that are to be provided by GILLC in
at least the United States of America (a "US Deal").
(b) Sales Calls. All sales calls related to a US Deal and
made in person with the Multinational shall be made
jointly by the United Lead and the GILLC Lead. The
GILLC Lead and the United Lead shall jointly
coordinate contacts and meetings, whether in person
or telephonic or via some other electronic means,
with the Multinational. In the event that the
Multinational initiates contact with one Lead outside
of the presence of the other Lead, then the contacted
Lead will promptly provide the other Lead with
information about such contact insofar as it relates
to the subject matter of this Agreement. In no case
will any GILLC employee or agent discuss any element
of United's business with the Multinational without
United's prior knowledge and consent.
(c) Account Leads - Non-US Deals. In the case of
negotiations with a Multinational that are not
related to a US Deal, this Agreement does not apply,
provided that, GILLC will regularly provide United
with any information related to such non-United
States of America negotiations or services that may
reasonably be understood to be related either to the
conduct and maintenance of United's good relations
with such Multinational or to United's effective
performance under this Agreement, or both. GILLC will
endeavor to provide to United in advance of the
presentation of proposals with respect to non-US
Deals to Multinationals, a summary of the terms of
such proposals. If United provides GILLC with
United's reasonable objections to such terms to the
effect that such terms will, in United estimate, have
a negative effect on United ability to negotiate
acceptable US Deals in the future, with respect to
Financial Assistance or otherwise, then GILLC will
take United's objections into account. If GILLC
negotiates a non-US Deal that includes a level of
Financial Assistance for a Multinational that is
greater than the level of Financial Assistance then
currently agreed with that Multinational under a US
Deal then GILLC will not thereafter attempt to
increase the Revenue Goal or reduce the FA Budget to
offset such increased Financial Assistance.
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4.3 CTMS Sales Services.
United will actively engage in the sale, marketing, and
promotion of CTMS Services to CTMS Customers and CTMS Agents. To this
end, United will perform the following services for GILLC pursuant to
this Agreement (such services are, collectively, "CTMS Sales
Services"):
(i) Scope. United will engage in CTMS Sales Services regarding
only those CTMS Services as directed or authorized in advance
by GILLC.
(ii) Product Licensing. As GILLC's non-exclusive sales agent for
the licensing of CTMS Services, subject to Section 2.2 above,
United may market and license CTMS Services to CTMS Customers
and to CTMS Agents. The parties will work together to develop
marketing plans for CTMS Services, including the name or names
of products.
(iii) Contact. United will maintain current and establish new
personal and telephone contact and sales relationships,
including, where appropriate, in person or telephone sales
calls with CTMS Customers and CTMS Agents. At GILLC's expense,
United may, on approval of GILLC, undertake direct mail
solicitations, promotions, and other sales efforts, with CTMS
Customers and CTMS Agents. GILLC may disapprove any sales
promotion or solicitation with respect to the CTMS Services
that GILLC in its reasonable discretion determines to be
contrary to the objectives or policies of GILLC.
(iv) Commitment Review Procedure. United shall follow the
Commitment Review Procedure described in Appendix I below.
(v) CTMS Support Services. Subject to the CTMS Form Agreement and
within the Negotiation Range, United shall offer to CTMS
Customers or CTMS Agents, or both, as the case may be, such
CTMS Support Services as are approved in advance by GILLC.
(vi) Discontinued Services. Upon receipt of a Discontinued Service
Notice, as such term is defined in 5.1 below, United will
cease CTMS Sales Services regarding such CTMS Service.
4.4 Support Services.
In addition to the Sales Services, United will perform the
following services for GILLC pursuant to this Agreement for those NTP
Subscribers with annual HOL Flow in excess of $5 million (such services
are, collectively, "Support Services").
(i) Support Services Calls. Responses to inquiries from, and
regular premises visits and assistance to, NTP Subscribers in
order to establish and maintain good relations and to improve
relations between NTP Subscribers and GILLC, and to aid in
familiarization with and use of Galileo Services and CTMS
Services.
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(ii) Technical Questions Received. United will relay promptly to
GILLC any technical questions received by United from
customers of GILLC and, as requested by GILLC, will coordinate
responses thereto.
(iii) Area of Support. United will be responsible for Support
Services for locations of NTP Subscribers within the APR, and
as designated by GILLC outside of the APR (although associated
revenue from non-APR Subscribers designated for support will
be included in Total Revenue).
4.5 Responsibilities With Respect to Excluded Subscribers.
United will not enter into sales negotiations with Excluded
Subscribers except with the prior written approval of GILLC. GILLC may
add or delete NTP Subscribers as Excluded Subscribers on Exhibit B
hereto after consulting with and receiving the consent of all affected
sales representatives, including United. Revenues from all Assigned
Subscribers who become Excluded Subscribers will continue to be counted
for that year in the Total Revenue. United may negotiate with NTP
Subscribers regarding sales commitments outside of the APR (i) after
prior notice to GILLC, (ii) after a reasonable period of time in which
GILLC has had the opportunity to coordinate such sales calls with its
own sales force and with GILLC's other sales representatives, and (iii)
after consent of GILLC. Only those sales outside of the APR approved in
advance by GILLC will be included in Total Revenue totals.
4.6 Sales Planning.
Subject to Appendix II, and in no event later than February 28
of each year, GILLC and United jointly will develop a sales plan for
such year, which sales plan will be designed to increase business
opportunities, procure profitable NTP Subscriber accounts for GILLC and
attain or exceed the Revenue Goal.
4.7 Staffing.
4.7.1 Staffing Commitment.
As described in Appendix I, United will staff a Sales
Force who will provide Sales Services to GILLC under this
Agreement.
4.7.2 Review of Staffing Levels.
United will consult with GILLC from time to time as
requested by either party to review the job descriptions,
minimum qualifications, career paths, and other matters in
connection with the Sales Force. United will consult with
GILLC regarding the staffing of Dedicated Personnel and Active
Support Personnel positions to be provided under this
Agreement. Such consultations will include review of job
descriptions and necessary qualifications, consideration of
possible applicants from GILLC and United as
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well as third parties, and full consultation and review of
proposed training schedules for each Dedicated Personnel and
Active Support Personnel.
4.7.3 Employee Proficiency and Training.
4.7.3.1 Introductory Training.
Prior to commencing any Sales Services on
behalf of GILLC hereunder, all Sales Force personnel
of United must attend a five-day introductory
training course and, thereafter, a two-day refresher
training course at least once annually, at a location
or locations to be mutually agreed between United and
GILLC. As new GILLC products or services are released
by GILLC for Sales Services hereunder, GILLC will
provide training with respect thereto to the Sales
Force at a location or locations as agreed by the
parties. GILLC will bear its own expenses in
providing the training and United will bear its own
expenses of the Sales Force in attending such
training.
4.7.3.2 Employee Proficiency.
United will take all reasonable steps to
ensure that all of the Sales Force who are authorized
to sell or support the products and services of GILLC
hereunder have been trained appropriately and are
proficient to provide Sales Services in accordance
with the terms of this Agreement. GILLC shall have
the right to test the proficiency of individual Sales
Force personnel at the time of their refresher
training and to require additional training for such
individuals as do not demonstrate minimum
proficiency. GILLC will provide all course materials,
test materials, and training facilities necessary to
provide such additional training, and United and
GILLC will mutually establish a reasonable schedule
for the administration of such additional training.
Sales Force personnel who have completed such
additional training will be again tested and those
who again demonstrate an inability to achieve the
minimum level of proficiency will not be counted
toward the required staffing levels prescribed in
this Section 4.7.
4.7.3.3 Training and Test Materials.
GILLC will provide to United in advance of
their use copies of all introductory training
materials, refresher training materials, and
proficiency test vehicles to he used pursuant to this
Section 4.7.3 (collectively, the "Training
Materials"). The Training Materials will always be
constructed according to the best practices for
Training Materials then employed by U.S. industry and
shall be related solely to the reasonable skills
required of a person engaged in the sales of
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products and services such as those of GILLC. United
may, at its request, review such Training Materials
in advance of their use hereunder and GILLC will make
all reasonable changes requested by United to the
Training Materials.
5 GILLC Responsibilities.
5.1 Marketplace Competitiveness.
GILLC will at all times during the term of this Agreement use
its best efforts to ensure that Galileo Services maintain a superior
level of competitiveness in the CRS Industry. GILLC will give United as
much notice as is reasonably practicable if GILLC discontinues general
distribution or provision of any particular Galileo Service or CTMS
Service or major feature thereof (a "Discontinued Service Notice")
5.2 GILLC Support of Sales Services and Support Services.
With the objective of ensuring the proper level of GILLC
support for Sales Services and for Support Services provided by United
under this Agreement, GILLC will provide the following support to
United (collectively, the "GILLC Support"):
(i) Copies. GILLC will ensure that United at all times has a
current copy of each version of the Form Agreements together
with such commentary or explanation of the Form Agreements as
may be reasonably required by United for the comprehension and
understanding of the Form Agreements.
(ii) Changes to Form Agreements. GILLC will provide United with no
less than 30 days written notice in the event that GILLC
modifies or discontinues the use of any of the Form
Agreements.
5.3 Services of GILLC.
GILLC will provide Galileo Services, CTMS Services and New
Services to NTP Subscribers, CTMS Customers and CTMS Agents, subject to
the terms of the Form Agreements as negotiated by Untied and approved
by GILLC pursuant to this Agreement.
5.4 New Services.
GILLC will not distribute any Galileo Service (but excluding
enhancements or replacements of any Galileo Service) that did not exist
as of the Effective Date (a "New Service") through any sales
representative in the Territory, and including GILLC itself, without
first offering United the right of first refusal to become the
exclusive sales agent for such New Service for the APR. GILLC and
United shall negotiate on the reasonable terms of such agency,
including the performance objectives and the compensation therefor as
provided in Appendix II. Failing agreement with United within ninety
days (90 days) of the inception of such
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negotiations, GILLC may, upon giving notice to United pursuant to
Section 26, below, make the other sales representative arrangements for
the New Service within the Territory.
5.5 CTMS Products.
5.5.1 Base Products.
GILLC has the ultimate role in determining product
specifications and features of any CTMS Service, and GILLC
will ensure that such specifications and product
implementations of such specifications meet prevailing market
needs. To that end, the GILLC Executive shall consult
regularly with the United Executive as to information that
United may gather in the course of its business that United
believes is relevant to ensuring that the CTMS Service is
competitive with like services and products provided by other
service providers.
5.5.2 Demonstrations.
Upon United's request, subject to GILLC's agreement,
GILLC, at its expense, will provide demonstrations of CTMS
Services to CTMS Customers and/or CTMS Agents. GILLC will
coordinate the content and scheduling of such demonstrations
with United.
5.6 Technical Support.
GILLC will provide in a good and workmanlike manner all
installation, connection, and testing of all Galileo Services, CTMS
Services and any field or technical support or field maintenance
required by NTP Subscribers, CTMS Customers, or CTMS Agents. GILLC will
maintain ongoing and appropriate contact with NTP Subscribers, CTMS
Customers and CTMS Agents to facilitate user operation of the Galileo
Services and CTMS Services. Technical sales consulting support will
also be provided by GILLC to the Sales Force.
5.7 Technical Assistance Offices.
GILLC will maintain regional Tech Offices for the use of its
sales representatives that will be staffed by knowledgeable employees
capable of providing technical assistance regarding Galileo Services
and CTMS Services. Such assistance will be available to United during
normal GILLC business hours.
5.8 Help Desk.
GILLC, at its expense, will maintain a telephone call center
or centers for use by the Sales Force, NTP Subscribers, CTMS Customers,
and CTMS Agents during normal business hours for each of those persons
in their places of business. The call centers will be staffed by
knowledgeable persons under the control of GILLC who are
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capable of providing prompt, thorough, courteous, and professional
technical assistance regarding the products and services of GILLC.
6 Reporting.
United will furnish, at no cost to GILLC, the reports and documents set
forth in Exhibit D hereto.
7 Other Marketing Rights.
7.1 GILLC.
GILLC reserves the right to market and to support services in
the Sales APR. During the term of this Agreement, and except as
otherwise provided in this Agreement, GILLC will not designate the
Sales APR of United as the area of primary sales responsibility of any
other sales agent of GILLC, including GILLC itself.
7.2 United.
Subject to the provisions of the Non-Competition Agreement,
while United is the sales agent of GILLC under the terms of this
Agreement, United will not act as a sales agent for the reservations or
accounting services of another entity in the CRS Industry in the APR
without the prior consent of GILLC, provided, however, that nothing in
this Agreement will prevent United from:
(i) having United Group Products and Services displayed or listed
in any person's computer reservation system, schedule, other
electronic or paper communications medium, or otherwise;
(ii) providing to any person any technological or computerized
means of delivering information and automation functionality;
(iii) authorizing any person to use United's trademarks and trade
names in connection with advertising United's participation in
such person's computer information or reservation system, or
otherwise;
(iv) endorsing the products or services of another member of the
CRS Industry, provided, however, that United may not endorse
such products or services of such other member of the CRS
Industry as being preferred to those of GILLC, provided,
however, (a) if GILLC does not itself provide such products or
services, or (b) GILLC provides such products or services but
they do not meet United's needs, then, subject to the
provisions of the Non-Competition Agreement, United may
endorse such products or services of such other member of the
CRS Industry in any manner.
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8 Terms of Payment.
GILLC will pay United quarterly in arrears, upon receipt and acceptance
by GILLC of United's reports pursuant to Section 6 above for the preceding
quarter and of its invoice therefor, an amount equal to one quarter of the Base
Compensation. Invoices will be prepared and mailed on the first work day of
April, July, October and January of each year. After the end of each calendar
year, following receipt and acceptance by GILLC of United's report pursuant to
Section 6 above with results for the year as a whole, adjustments will be made
as required by Appendix II, and GILLC or United, as appropriate, will make
payment to the other in an amount determined in accordance with the application
of such Section. All payments hereunder will be made within 30 days of date of
invoice by wire transfer, banking instructions to be given by the recipient
thereof in advance of each such transfer. All amounts due and payable hereunder
and not paid within 30 days of date of invoice shall be subject to late payment
interest subject to the following: (i) the Interest Rate shall be fixed as of
the due date of the invoice, and (ii) interest shall be calculated, on the basis
of a 360-day year, from the due date.
9 Currency.
For the purposes of this Agreement all currency calculations shall be
in US Dollars and, to the extent paid in a currency other than US Dollars,
revenue received by GILLC or expenses incurred by GILLC will be converted to US
Dollars at the exchange rate in effect at the date of the receipt of such
revenue or payment of such expense, as the case may be.
10 Term.
This Agreement is effective as of the Effective Date, and will continue
until the termination of the Non-Competition Agreement. GILLC may issue, no
earlier than July 1 of each year a conditional notice of termination if GILLC
has reasonably determined that United may, as a result of its own failure to
perform and not as a result of a Material Change, not meet its then current
Revenue Goal; if, as of 120 days after such conditional notice, GILLC reasonably
determines that United will not meet such Revenue Goal and so notifies United,
this Agreement will terminate 90 days after such determination (with no sales
exclusivity during the last 30 days of the 90 day period) and United will be
paid for sales services during the last 30 days only at direct labor cost
(adjusted to reflect time devoted to GILLC) and associated expenses.
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11 Confidentiality.
11.1 Confidential Information.
Confidential information, including, without limitation,
source code, object code, manufacturing, financial and marketing data,
orders, forecasts, plans, designs, drawings and specifications of
either United or GILLC, which is contained in tangible records
designated as "CONFIDENTIAL", "TRADE SECRET" or "PROPRIETARY", or which
is otherwise communicated on the express basis that the information is
confidential, and which is provided to the other party during the
performance of this Agreement (hereafter "Confidential Information"),
will be treated as confidential and not further disclosed to any third
party without the prior written consent of the providing party, except
as provided under the terms of this Agreement, for five years from the
date such Confidential Information was first received, unless such
Confidential Information was already in the possession of the other
party, is placed in the public domain through no fault of the party
receiving such information, or becomes rightfully available to the
other party through other sources without restriction on disclosure.
11.2 Service.
If either party is served with a subpoena or other legal
process requiring the production or disclosure of any Confidential
Information or United Information, then that party will immediately
notify the owner thereof, and will in good faith attempt to permit the
owner at the owner's expense to intervene and contest such disclosure
or production.
12 Service Marks, Patents, Third Party Data.
12.1 Use of Service Marks.
12.1.1 XXXXX Xxxxx.
United will use and display the GILLC trade and
service marks in the form specified by GILLC. United will
market the Galileo Services and CTMS Services under product
names established by GILLC and must identify all such Galileo
Services and CTMS Services as the products or services of
GILLC. United may include its name and identifying marks in
association with the names "Galileo" or "Galileo
International". GILLC reserves the right to disapprove any use
of the trade and service marks and other proprietary rights of
GILLC if GILLC determines in its reasonable discretion that
such use is contrary to the objectives or policies of GILLC.
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12.1.2 United Marks.
GILLC will not use the trade or service marks of
United without United's prior written consent. United reserves
the right to disapprove any use of the trade and service marks
and other proprietary rights of United if United determines in
its reasonable discretion that such use is contrary to the
objectives or policies of United.
12.2 Patent Indemnity.
12.2.1 Actions.
GILLC will defend at its expense any suit or
proceeding against United based on a claim that any product or
service of GILLC ("GILLC Product") constitutes an infringement
of the patent, trademark, or copyright laws of the United
States, provided that GILLC is notified promptly in writing
and given full and complete authority, information, and
assistance for the defense of such suit or proceeding. If the
foregoing provision is complied with, GILLC will pay damages
and costs awarded against United, but GILLC will not be
responsible for any compromise or settlement made without its
prior written consent. If any GILLC Product is held to
constitute infringement of such patent, trademark, or
copyright and its use is enjoined, GILLC will, at its election
and expense, either obtain for United the right to continue
using such GILLC Product, modify such GILLC Product so that it
is not infringing, or remove such GILLC Product.
12.2.2 Limitation.
GILLC will not be liable to United with respect to
any claim of infringement which is based upon (a) combination
or utilization of a GILLC Product with products or services
not supplied by GILLC; (b) the unauthorized modification by
United or a person other than GILLC or its designated
representatives of any GILLC Product or (c) the use of any
GILLC Product not in accordance with GILLC's specifications or
recommendations.
12.3 Third Party Data.
GILLC makes no representation or warranty regarding the
accuracy or reliability of any schedule, fare, quote, or other
information provided to GILLC by airlines or by hotels, car rental
companies or other vendors of travel related services. GILLC will not
be responsible for, and United hereby releases and waives any claims
against GILLC conceding, the accuracy or reliability of any such
information provided by such third parties.
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13 Taxes.
13.1 GILLC Responsibilities.
GILLC will pay any sales, use, or personal property taxes
(except for any tax levied upon or measured by United's gross receipts)
imposed by any taxing authority and required to be paid by GILLC or
United as a result of services provided to GILLC under this Agreement.
GILLC will not be liable for any tax levied upon or measured by the
income of United.
13.2 Claims.
If a claim is made against United for any taxes that are to be
paid by GILLC, United will timely notify GILLC. If GILLC so requests in
writing, United will, at GILLC's expense, take such action as GILLC may
reasonably direct with respect to such taxes, including payment of such
taxes under protest. If the tax has been paid, and if requested by
GILLC, United will, at GILLC's expense, take such action as GILLC may
reasonably direct, including allowing GILLC to file a claim or commence
legal action in United's name, to recover such tax payment. In the
event of refund or recovery of any tax, or part thereof, United will
pay to GILLC promptly that portion of the tax paid by GILLC, including
any interest received thereon.
14 Limitation of Liability.
Except as provided under Section 18 below ("Indemnification"), each
party's total liability regarding any claim by the other party for breach of
this Agreement is limited to the amount of compensation earned by United for the
year in which the claim arises or, if based on obligations of a continuing
nature and arising after termination, then the final year of this Agreement, and
each party hereby releases and waives any claims against the other party for
such breach in excess of such amount.
15 Consequential Damages.
NEITHER PARTY WILL BE LIABLE FOR, AND EACH PARTY WAIVES AND RELEASES
ANY CLAIMS AGAINST THE OTHER PARTY FOR, ANY SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, INCLUDING DAMAGE TO OR DESTRUCTION OF PROPERTY, LOST
REVENUES, LOST PROFIT, OR LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE, RESULTING FROM
PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT.
16 Termination for Breach.
If either party (the "Defaulting Party") breaches any of its duties or
obligations under this Agreement, and such breach continues for thirty days (ten
days regarding failure to pay
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amounts due) after written notice of such default from the other party, then the
other party may terminate this Agreement at any time thereafter, effective
immediately upon written notice of termination to the Defaulting Party, without
prejudice to any other rights or remedies the non-defaulting party may have.
Upon notice of such termination, the Defaulting Party will return immediately to
the non-defaulting party any and all confidential or proprietary information,
programs, materials, or other data, and any copies thereof, in the possession or
control of the Defaulting Party.
17 Force Majeure, Delay.
Neither party will be responsible for delays in performance caused by
acts of God or governmental authority, strikes or labor disputes, fires or other
loss of manufacturing facilities, breach by suppliers of supply agreements, or
any other cause beyond the reasonable control of that party.
18 Indemnification.
Each party (the "Indemnitor") will indemnify the other party, its
officers, employees, and agents (collectively "Indemnitees") against and hold
each Indemnitee harmless from all claims, suits, judgments, losses, damages,
fines or costs (including reasonable legal fees and expenses) resulting from any
claim, suit, or demand by any third party for injuries to or deaths of persons
or loss of or damage to property arising out of the Indemnitor's performance or
willful misconduct of the Indemnitor, its employees, officers, or agents in
connection with the Indemnitor's performance of this Agreement, except to the
extent caused by the negligence of any Indemnitee. The Indemnitor's obligations
under this paragraph will survive the termination of this Agreement.
19 Guarantee of Performance.
If either party (the "Insolvent Party") becomes insolvent; if the other
party (the "Insecure Party") has evidence that the Insolvent Party is not paying
its bills when due without just cause; if a receiver of the Insolvent Party's
assets is appointed; if the Insolvent Party takes any step leading to its
cessation as a going concern; or if the Insolvent Party either ceases or
suspends operations for reasons other than a strike, then immediately upon
receipt of written notice from the Insecure Party the Insolvent Party will
provide adequate assurance, satisfactory to the Insecure Party, of the future
performance of this Agreement. If bankruptcy proceedings are commenced with
respect to the Insolvent Party, then the Insecure Party may suspend all further
performance of this Agreement until the Insolvent Party assumes or rejects this
Agreement pursuant to section 365 of the Bankruptcy Code or any similar or
successor provision. Any such suspension of further performance by the Insecure
Party pending the Insolvent Party's assumption or rejection will not be a breach
of this
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Agreement and will not affect the Insecure Party's right to pursue or enforce
any of its rights under this Agreement or otherwise.
20 Third Party Rights.
Nothing contained in this Agreement establishes or creates, or is
intended or will be construed to establish or create, any right in or any duty
or obligation to any third party.
21 Assignment.
United may assign or transfer this Agreement or any rights granted or
provided for hereunder, in whole or in part, to any person or entity that is
controlled by United, otherwise United may not assign or transfer this Agreement
or any rights granted or provided for hereunder, in whole or in part, without
the written Agreement of GILLC. GILLC may assign or transfer this Agreement or
any rights granted or provided for hereunder, in whole or in part, to any person
or entity that is controlled by GILLC, otherwise GILLC may not assign or
transfer this Agreement or any rights granted or provided for hereunder, in
whole or in part, without the written Agreement of United.
22 Relationship of the Parties.
The relationship of the parties is that of principal and limited agent.
United may bind GILLC only as specifically provided in this Agreement.
23 Severability.
If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect, then the Agreement shall he construed to exclude
such provision and to be enforceable in all other respects, unless to do so
would prejudice the rights of either party or result in such a material change
as to cause performance by either party to be unreasonable.
24 Survival.
All provisions of this Agreement which by their terms survive
termination thereof will continue thereafter in full force and effect.
25 Governing Law.
This Agreement, and any dispute arising under or in connection with
this Agreement, including any action in tort, will be governed by the internal
laws of the State of Illinois. Any action brought to (i) preserve the status quo
pending arbitration or (ii) enforce an arbitration proceeding or decision shall
be brought in courts located within Xxxx County, Illinois, the parties hereby
consenting to personal jurisdiction and venue therein.
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26 Notices.
All notices to either party under this Agreement must be in writing and
sent to the following addressee and at the following address:
for GILLC:
Galileo International, L.L.C.
Xxxxx 000
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
for United:
United Airlines Department WHQSS
0000 X. Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attn: Vice President and General Sales Manager
Notices will be deemed effective on the date received. Notices by
certified or registered mail (return receipt requested) will be deemed received
on the date shown on the return receipt. Notices sent by telex or facsimile will
be deemed received on the date transmitted if transmitted before 3:30 p.m. time
of recipient, otherwise on the next business day following transmission.
27 Headings.
The section headings and captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
will not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement will be enforced and
construed as if no heading or caption had been used in this Agreement.
28 Entirety of Agreement.
This Agreement including any Exhibits or attachments, supersedes all
prior oral or written representations or communications between the parties and
constitutes the entire understanding of the parties regarding the subject matter
of this Agreement. This Agreement supersedes the Sales Representation Agreement
between Apollo Travel Services and United, and the parties hereto agree that all
obligations under that agreement are terminated.This Agreement may be modified
only in a writing signed by both parties.
29 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall be considered one and
the same instrument.
27
IN WITNESS WHEREOF, the parties have agreed to and executed this
Agreement by their authorized representatives as of the Effective Date first set
forth above.
GALILEO INTERNATIONAL, L.L.C. UNITED AIR LINES, INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxx
Title: President and Title:
Chief Executive Officer -----------------------------
28
Appendix I
Certain Terms
1. NTP Sales Services.
(i) Quotation. Except as provided in paragraph 1(iii) below, using
the NTP Form Agreement United will quote NTP Subscribers those
terms of the NTP Form Agreement as are appropriately related
to that NTP Subscriber's business.
(ii) Negotiation. On the basis of the NTP Form Agreement United
shall negotiate with NTP Subscribers and attempt to obtain
commitments from NTP Subscribers to purchase Galileo Services
from GILLC.
(iii) [*]
2. Multinational Sales Services.
(i) Terms: US Deals. With respect to US Deals, the GILLC Lead
shall have responsibility for preparing terms, whether
financial terms or otherwise, related to the provision of
GILLC services to the Multinational. The GILLC Lead will
consult with the United Lead on such terms and will take into
account United's reasonable business judgment regarding such
terms. Such terms shall be the subject of the negotiations
relating to a US Deal described in this Multinational
Procedure.
(ii) US Deal Approvals. United and GILLC shall jointly approve any
final agreement negotiated with the Multinational with respect
to a US Deal.
(iii) Resolution of Differences. In the event United and GILLC
cannot reach agreement on any matter relating to a US Deal,
including without limitation the terms thereof, then such
disagreement shall be resolved (a) by the Independent
Directors, in the case of a US Deal that applies solely to the
United States of America, or (b) the Galileo Board, in the
case of a US Deal that applies both to the United States of
America and elsewhere.
3. CTMS Services.
(i) Quotation. Except as provided in paragraph 3(iii) below, using
the Form Agreements for CTMS Services, United will quote CTMS
Customers or CTMS Agents, or both, as the case may be, those
terms of the CTMS Form Agreement as are appropriately related
to that CTMS Customer's or CTMS Agent's business.
(APPENDIX I-1)
29
(ii) Negotiation. On the basis of the CTMS Form Agreement United
shall negotiate and attempt to obtain commitments from CTMS
Customers or CTMS Agents, or both, as the case may be, to
purchase, lease or license CTMS Services from GILLC.
(iii) [*]
4. Staffing.
(i) Dedicated Personnel. United will provide [*] Dedicated
Personnel (minimum [*] PMEs on average per year as measured by
OPS) who will be dedicated [*] of their time to Sales
Services;
(ii) Active Support Personnel. With respect to the Territory,
excluding Mexico, United will provide [*] Active Support
Personnel comprised of [*] account executives ("AE") and [*]
automation sales representatives ("ASR") (totaling a minimum
[*] PMEs on average per year, as measured by OPS) who will be
dedicated [*] of their time to Sales Services; with respect to
Mexico, United will provide [*] PMEs who will be dedicated [*]
of their time to Sales Services; and
(iii) General Sales Personnel. United will provide [*] General Sales
Personnel (minimum [*] PMEs on average per year as measured by
OPS) who will spend a minimum of [*] of their time on Sales
Services on behalf of GILLC.
5. GILLC Support of Sales Services and Support Services.
(i) Form Agreements. GILLC shall prepare all form agreements and
terms including, as applicable and without limitation: the
duration of the form agreements; the quantity and quality of
computer and network equipment to be provided, installed and
maintained by GILLC; list prices such as lease fees, license
fees, penalties and other charges; productivity credits and
other discounts from list prices, related software licenses or
sublicenses, as the case may be; and other terms as may be
determined by GILLC from time to time (the "Form Agreements").
With respect to CTMS Services, GILLC will provide the
following Form Agreements: (a) a form of product license as
between GILLC and the CTMS Customer, and (b) a form of product
license as between GILLC and a CTMS Agent pursuant to which
the CTMS Agent is permitted to use CTMS Services on the behalf
of the CTMS Customer.
(ii) [*]
(iii) [*]
(APPENDIX I-2)
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Appendix II
Budgets and Compensation
1. General Statement of Method.
With respect to those commitments of customers of GILLC to purchase
products and services from GILLC that, pursuant to this Agreement,
United is instrumental in securing there shall be, by mutual agreement
of United and GILLC, annual revenue plans and annual plans for
Financial Assistance spending. In the course of each year of this
Agreement, GILLC will measure and report to United, at least monthly,
actual Total Revenue and Financial Assistance spending. United shall
receive a minimum, guaranteed compensation. Additionally, United shall
receive incentive compensation that is based, for the year in question,
on Total Revenue versus the Revenue Plan and on Financial Assistance
spending versus the FA Budget. Notwithstanding the generality of this
Section 1, the procedure for determining United's compensation under
this Agreement is as described in this Appendix II.
2. Goals.
Subject to Section 4.6 of this Agreement and Section 3 below, in no
event later than February 28 of each year, United and GILLC will
complete negotiations with respect to the goal for Total Revenue for
that year and the budget for Financial Assistance for that year
(respectively, the "Revenue Goal" and the "FA Budget"). Modifications
to the Revenue Goal and the FA Budget are subject to the provisions of
this Agreement. For 1997, the Revenue Goal and the FA Budget are as
shown on Schedule 1 hereto.
3. Financial Assistance.
3.1 FA Budget.
FA Budgets will be determined concurrently with Revenue Goals
for each year during the term of this Agreement and in
accordance with the provisions of Section 2 above. The FA
Budget for each year will (i) include contractual commitments
for the payment of Financial Assistance for that year and for
which GILLC is obligated, (ii) include reasonable estimates
and projections as to additional Financial Assistance that may
be required to gain new business or retain existing customers,
and (iii) be commensurate with the Revenue Goal for that year.
Subject to Section 3.2 below, at no time will United be
required or requested to provide Financial Assistance to any
person either directly or through adjustments to, or
inclusions in, the FA Budget, the Revenue Goal, the Base
Compensation, the Guaranteed Compensation, the Performance
Compensation, or otherwise.
3.2 Adjustments With Respect to Financial Assistance.
(APPENDIX II-1)
31
United will not exceed the FA Budget during any year of this
Agreement; [*] percent of all Financial Assistance
expenditures by United in excess of the FA Budget will be
deducted from Total Revenue counted toward the Revenue Goal
for that year. If GILLC's Financial Assistance expenditures
with respect to the Total Revenue are under the FA Budget for
that year then the difference between such expenditures and
the FA Budget will be added to Total Revenue counted toward
the Revenue Goal for that year.
4 Failure to Agree.
4.1 Dispute Resolution Procedure.
Failing agreement on the Revenue Goal or the FA Budget, or
both, the negotiators will submit their positions to the
Dispute Resolution Procedure as described in Attachment B
hereto.
4.2 Carryover Plan.
Until such time as the Dispute Resolution Procedure is
completed the parties shall operate under this Agreement on
the basis of a "Carryover Plan" that shall include, with
respect to the calendar year in question:
(i) a "Carryover Revenue Goal" for that calendar year
that will function for the purposes of this Agreement
in lieu of the Revenue Goal for that year and that
equals the Revenue Goal for the immediately preceding
calendar year increased or decreased, as the case may
be, by the FAA Factor;
(ii) a "Carryover FA Budget" for that calendar year that
will function for the purposes of this Agreement in
lieu of the FA Budget for that year and that equals
the FA Budget for the immediately preceding calendar
year increased or decreased, as the case may be, by
the FAA Factor; and
(iii) a "Carryover Base Compensation" for that calendar
year that will function for the purposes of this
Agreement in lieu of the Base Compensation for that
year and that equals the Base Compensation for the
immediately preceding calendar year increased by [*]
percent ([*]%).
5. Material Changes.
If a change occurs in the structure of the air transportation industry
or of the CRS Industry, including without limitation changes in the
number or types of competitors, customers, products, or services of
either industry, which change is likely to cause either or both of the
following cases (i) a material change to the flows of revenue through
ARC or the BSP for Mexico, as applicable, or (ii) a requirement that
entails the provision of substantial additional Sales Services in the
APR (in either case a
(APPENDIX II-2)
32
"Material Change"), then, as the case may be, (a) either GILLC or
United may request that the parties renegotiate the Revenue Goal or the
FA Budget, or both, for that year, and (b) United will have the right
of first refusal, exercisable within ten business days of written
notice from GILLC, to elect to provide such additional Sales Services
in the APR. Failing agreement on adjustments to the Revenue Goal or the
FA Budget, or both, such adjustments to the Revenue Goal or the FA
Budget, or both, will be determined as provided in Section 4.1 above.
6. Base Compensation.
"Base Compensation" shall be the prior year's Base Compensation
increased by an amount equal to [*] of such prior year's Base
Compensation prorated, for increases [*], as the percentage of the
prior year's Revenue Goal attained by United increases from [*]. Base
Compensation for 1997 is as provided on Schedule 1.
7. Guaranteed Compensation.
United will be paid [*] of Base Compensation ("Guaranteed
Compensation") if United meets the staffing levels as provided in
Section 4.7 of this Agreement. United will be paid [*] percent of Base
Compensation in any event if United meets its Revenue Goal. [*] of Base
Compensation will be at risk based on the Revenue Goal performance (the
"Performance Compensation").
8. [*]
9. Advance Credit.
Notwithstanding anything to the contrary contained in this Appendix II,
in the event United attains [*] of the Revenue Goal for a year then
United may, at its option, be credited, for purposes of determining its
compensation under this Appendix II, with the amount (the "Advance
Credit") necessary to achieve [*] of its Revenue Goal for such year.
United shall exercise its option hereunder to take an Advance Credit by
written notice to GILLC received no later than the fifth business day
of the next succeeding year. The amount of the Advance Credit shall be
deducted from Total Revenue otherwise attributable to United for any
purpose under this Agreement during January of such succeeding year. No
such Advance Credit shall be taken into account in setting the Revenue
Goal. United may not exercise the option under this Section 9 in two
successive years.
10. Penalties: United.
If United meets the staffing minimums provided in Section 4.7 of this
Agreement, United will receive its Guaranteed Compensation as set forth
in this Appendix II. If United fails to meet such staffing minimums and
fails to meet its Revenue Goal, then
[*]
(APPENDIX II-3)
33
Notwithstanding the foregoing, so long as United meets its Revenue Goal
for the year, United will receive its Base Compensation for such year
regardless of staffing goals attained.
(APPENDIX II-4)
34
Attachment A
Defined Terms
As used in this Agreement, including the Attachments, Exhibits and Schedules
hereto, the terms listed in this Attachment A have the meanings ascribed to
them. The use of a term in the singular that is defined herein in the plural is
understood in this Agreement to signify a single instance of such defined
matter.
"Accounting Services" means those travel agency accounting services that are
provided by GILLC to customers of GILLC.
"Active Support Personnel" means General Sales Personnel who will be dedicated
primarily (80 percent of work time) to providing Sales Services pursuant to this
Agreement.
"Administrative Support Personnel" means those General Sales Personnel who
perform primarily administrative or management functions in the provision of
Sales Services pursuant to this Agreement.
"Advance Credit" has the meaning ascribed to that term in Section 9 of Appendix
II.
"APR" means "Area of Primary Sales Responsibility" as defined herein.
"ARC" means Airlines Reporting Corporation.
"Area of Primary Sales Responsibility" means the exclusive geographic area of
primary sales responsibility assigned to United as described in Exhibit A hereto
and as such geographic area may be amended from time to time in accordance with
the provisions of this Agreement.
"Assigned Subscribers" means (i) all NTP Subscribers within the APR and (ii) the
Designated Subscribers, but excluding the Excluded Subscribers.
"Base Compensation" has the meaning ascribed to that term in Section 6 of
Appendix II and, in the event that there is a Carryover Base Compensation, means
such Carryover Base Compensation.
"BSP" means an entity, including, without limitation, IATA, that performs
accreditation, revenue reporting and clearing functions such as those performed
by ARC.
"Cancelled Deal" has the meaning ascribed to that term in Section 5.2 above.
"Carryover Base Compensation" has the meaning ascribed to that term in Section
4.2 of Appendix II.
"Carryover FA Budget" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
(ATTACHMENT A-1)
35
"Carryover Plan" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
"Carryover Revenue Goal" has the meaning ascribed to that term in Section 4.2 of
Appendix II.
"Commitment Review Procedure" has the meaning ascribed to that term in Section
5.2 above.
"Corporate Direct System" means a computerized travel reservations system that
is integrated with desktop travel management software including, for example,
travel policy enforcement, expense management, and management reporting
functionality and is (i) selected by a CTMS Customer for use by its employees,
or (ii) selected for use by a CTMS Agent retained by a CTMS Customer to service
the travel planning and management requirements of such CTMS Customer.
"CRS Industry" means the group of business entities who provide products and
services alike to the products and services of GILLC.
"CTMS Agent" means a Travel Agent, NTP Subscriber, service bureau, or other
person with whom a CTMS Customer has an agreement pursuant to which the CTMS
Agent performs services related to the use of a CTMS and other aspects of that
CTMS Customer's travel planning and travel management requirements.
"CTMS Customer" means a corporation, partnership, or other person who is an
existing or a potential purchaser of CTMS Services from GILLC.
"CTMS Form Agreement" means a Form Agreement that relates to CTMS Services.
"CTMS Sales Services" has the meaning ascribed to that term in Section 4.3
above.
"CTMS Services" means any portion of a Corporate Direct System provided by
GILLC, whether itself, or through an arrangement or arrangements between GILLC
and a third party or third parties.
"CTMS" means a CTMS Service.
"Designated Subscribers" means those NTP Subscribers listed on Exhibit C hereto
and as amended pursuant to this Agreement.
"Dedicated Personnel" means General Sales Personnel of at least Account
Executive level who will be dedicated full-time (100 percent of work time) to
the provision of Sales Services pursuant to this Agreement.
"Discontinued Multinational Account" has the meaning ascribed to that term in
Section 2.1.3 above.
(ATTACHMENT A-2)
36
"Discontinued Service Notice" has the meaning ascribed to that term in Section
5.1 above.
"Dispute" means any dispute, disagreement, claim, or controversy arising in
connection with or relating to this Agreement, or the validity, interpretation,
performance, breach, or termination of this Agreement, including any claim of
breach of representation or warranty or of non-performance.
"Dispute Resolution Procedure" means the procedure described in Attachment B
hereto.
"Dispute Summary" means, with respect to a Dispute and with respect to the party
to the Dispute who shall prepare a Dispute Summary, a written declaration
presenting (i) a statement expressing the issue(s) in Dispute, (ii) facts
relevant to the understanding of the issue(s) in Dispute, and (iii) a statement
expressing the resolution of the Dispute that is sought by the party who
prepares the Dispute Summary.
"Excluded Subscribers" means those NTP Subscribers listed on Exhibit B pursuant
to this Agreement.
"FAA Factor" means, with respect to the Carryover Plan year in question, the
change, expressed as a percentage, in forecast domestic revenue passenger
enplanements for that Carryover Plan year versus the immediately preceding year,
where "forecast domestic revenue passenger enplanements" shall be as provided in
the then-current (as of the time the Carryover Plan is created) "FAA Aviation
Forecasts" issued by the U.S. Department of Transportation, Federal Aviation
Administration, Office of Aviation Policy and Plans.
"Financial Assistance" means the provision by GILLC, and at GILLC's expense, to
any one or more of (i) the Assigned Subscribers, (ii) CTMS Customers, and (iii)
CTMS Agents, of any one or more of: (a) cash payments; (b) indemnification
payments; (c) revenue sharing; (d) booking fee rebates; (e) lease fee waivers;
(f) license fee waivers; (g) productivity or efficiency fee waivers; (h) airline
tickets or other airline, car or hotel perquisites; (i) computer or other
hardware; and (j) other benefits.
"FA Budget" means the amount of Financial Assistance established in accordance
with the provisions of Section 3 of Appendix II and, in the event that there is
a Carryover FA Budget, means such Carryover FA Budget.
"Form Agreements" has the meaning ascribed to that term in Section 5.2 above.
"Galileo Board" means the Board of Directors of GILLC.
"Galileo Services" means, collectively, Reservations Services and Accounting
Services, as provided by GILLC in the APR, excluding CTMS Services.
"General Sales Personnel" means regular, full-time employees of United who
either are in training for or are actively engaged in the sale of air
transportation on United, or other persons as may be agreed by GILLC and United,
including Administrative Support Personnel
(ATTACHMENT A-3)
37
as provided above, but excluding employees of United engaged primarily in
administrative or management positions that supervise sale planning or
implementation policies or processes of United.
"GILLC Executive" has the meaning ascribed to that term in Section 3.1 above.
"GILLC Lead" has the meaning ascribed to that term in Section 4.2 above.
"GILLC Support" has the meaning ascribed to that term in Section 5.2 above.
"Guaranteed Compensation" has the meaning ascribed to that term in Section 7 of
Appendix II.
"Headquarters" means, with respect to the corporation or partnership in
question, the city or place in which that corporation or partnership maintains
its principal offices.
"HOL Flow" means, with respect to an individual NTP Subscriber, the annual sales
of air transportation revenue, as measured by ARC and BSPS, for all locations of
that NTP Subscriber.
"IATA" means the International Air Transport Association.
"Independent Directors" means the members of the Galileo Board who are neither
nominated by an airline owner of GILLC or are members of the executive
management of GILLC.
"Interest Rate" means the mathematical average of the prevailing
dollar-denominated 30 day and 90 day London Interbank Offered Rates (LIBOR), as
reported in the Wall Street Journal for a specified business day, plus 200 basis
points.
"Level One Bonus" has the meaning ascribed to that term in Section 8 of Appendix
II.
"Level Two Bonus" has the meaning ascribed to that term in Section 8 of Appendix
II.
"Managing Member" means the member of GILLC who shall manage GILLC in accordance
with the limited liability company agreement of GILLC, which member is Galileo
International, Inc., a Delaware corporation.
"Material Change" has the meaning ascribed to that term in Section 5 of Appendix
II.
"Multinational Accounts" means (i) those Designated Subscribers listed under
"(A) Multinational Accounts" on Exhibit C hereto, and (ii) any other NTP
Subscriber who may become a "Multinational Account" as provided in Section 2.1.3
above.
"Multinational Procedure" has the meaning ascribed to that term in Section 4.2
above.
"Multinational Sales Services" has the meaning ascribed to that term in Section
4.2 above.
(ATTACHMENT A-4)
38
"National Accounts" means those Designated Subscribers listed under "(B)
National Accounts" on Exhibit C hereto.
"Negotiation Range" has the meaning ascribed to that term in Section 5.2 above.
"Neutral Travel Provider" means any Travel Agent that sells the products and
services of Vendors and holds itself out as a neutral source of information
regarding Vendors and their services or products.
"New Service" has the meaning ascribed to such term in Section 5.4 above.
"Non-Competition Agreement" means the Amended and Restated Non-Competition
Agreement, dated as of July 30, 1997, among GILLC, United Air Lines, Inc., UAL
Corporation and Covia L.L.C.
"Non-Vendor Revenue" means all revenue received by GILLC from NTP Subscribers,
CTMS Customers, CTMS Agents, and other persons and including, without
limitation, lease and license payments, install/deinstall charges, variable
charges (including but not limited to charges for tickets, itineraries and
invoice documents), and backroom lease and license fees, net of discounts, but
not including Vendor Revenue.
"NTP" means Neutral Travel Provider, as defined herein.
"NTP Form Agreement" means a Form Agreement that relates to Galileo Services,
but excluding CTMS Services.
"NTP Sales Services" has the meaning ascribed to that term in Section 4.1 above.
"NTP Subscriber" means a Neutral Travel Provider who is an existing or a
potential purchaser of Galileo Services from GILLC.
"OPS" means United's Organizational Pay Summary system or any replacement system
that United may use, in United's sole discretion, and which is a proprietary
system that tracks United PMEs.
"Other Agent" has the meaning ascribed to that term in Section 2.4 above.
"Performance Compensation" has the meaning ascribed to that term in Section 7 of
Appendix II.
"PME" means Paid Manpower Equivalent, which is commonly used in United's
business practices as a measure of average employee headcount for the period of
time in question.
"Reporting Number" means an account number issued by the Airline Reporting
Corporation or by the International Air Transport Association, or both, to an
individual or entity for the purpose of authorizing such individual or entity to
operate as a travel agency.
(ATTACHMENT A-5)
39
"Reservations Services" means the computerized display, reservation, ticketing,
or sale of the services or products of Vendors including the availability and
price thereof, as generated by GILLC to any person other than Vendors.
"Revenue Goal" has the meaning ascribed to that term in Section 2 of Appendix
II.
"Sales Services" means, collectively, NTP Sales Services, Multinational Sales
Services, and CTMS Sales Services.
"Sales Force" means, collectively, the Active Support Personnel, Dedicated
Support Personnel and General Sales Personnel.
"Senior Review Committee" means a committee consisting of GILLC's President and
United's Senior Vice President - North America.
"Support Services" has the meaning ascribed to that term in Section 4.4 above.
"Tech Office" means a technical support center (at times referred to
colloquially as a "TN" office) operated and staffed by GILLC with personnel
proficient in all technical aspects of the use by end-users of GILLC products
and services.
"Territorial Reassignment" has the meaning ascribed to that term in Section 2.4
above.
"Territory" means, collectively, the United States of America together with its
territories and protectorates, and the Republic of Mexico.
"Total Revenue" means the sum of Non-Vendor Revenue and Vendor Revenue, with
respect to the APR plus such revenue generated from Designated Subscribers less
such revenue generated from Excluded Subscribers, provided that any such revenue
generated from the location of an Excluded Subscriber in the calendar year in
which such location commences purchasing Galileo Services shall be included in
the Total Revenue only for the sales representative who was responsible for such
sale of Galileo Services.
"Training Materials" has the meaning ascribed to that term in Section 4.7.3.3
above.
"Travel Agent" means an individual or entity, that has been assigned a Reporting
Number.
"United Executive" has the meaning ascribed to that term in Section 3.2 above.
"United Group Products and Services" means with respect to United and any
carrier that uses United's airline designator code in the display of certain
designated flights (collectively, the "group carriers") the schedule, seat
availability, and price thereof of the group carriers, including, without
limitation, air and/or non-air travel packages that may include ancillary air
segments on non-group-carrier airlines.
"United Lead" has the meaning ascribed to that term in Section 4.2 above.
(ATTACHMENT A-6)
40
"US Deal" has the meaning ascribed to that term in Section 4.2 above.
"US Dollar" means the lawful currency of the United States of America.
"Vendor" means a vendor of travel-related services, such as an airline, hotel,
or rental car company, tour package, cruise operator, or travel insurance
company, that has purchased or subscribed for Reservations Services.
"Vendor Revenue" means all revenue received by GILLC from Vendors with respect
to booking fees and other service charges or fees as a result of bookings and
other transactions for which GILLC charges a fee to Vendors, which such bookings
and other transactions are generated by NTP Subscribers, CTMS Customers, CTMS
Agents, and other persons.
(ATTACHMENT A-7)
41
Attachment B
Dispute Resolution Procedure
1. General Procedure.
Except as otherwise stated in the Agreement, the parties hereto shall
resolve all Disputes in accordance with this procedure:
(a) Each party shall instruct its appropriate representative to promptly
negotiate in good faith with the other party's appropriate
representative to resolve the Dispute. The GILLC Executive shall be the
representative of GILLC. The United Executive shall be the
representative of United.
(b) If the representatives do not resolve the Dispute within ten business
days (or such longer period as the Representatives may agree) after the
date of referral of the Dispute to them, the representative of each
party will prepare a Dispute Summary with respect to that party's
position in the Dispute. The Dispute shall be referred (by either or
both of the representatives) to the Senior Review Committee for
resolution on the basis of the Dispute Summaries prepared by each
party.
(c) If the Senior Review Committee does not resolve the Dispute within ten
business days (or such longer period as that Committee may agree) from
the date of referral to it, either party may submit the Dispute to
binding arbitration in accordance with Section 2 of this Attachment.
2. Arbitration Procedure
The Arbitration Procedure shall be the "baseball" arbitration procedure provided
in Section 5.04 of the Amended and Restated Computer Services Agreement between
United and GILLC, modified as necessary with respect to defined terms in this
Agreement.
(ATTACHMENT B-1)
42
Exhibit A
Area of Primary Sales Responsibility
[*]
[ONE PAGE OMITTED]
(EXHIBIT A-1)
43
Exhibit B
List of Excluded Subscribers
[*]
[ONE PAGE OMITTED]
(EXHIBIT B-1)
44
Exhibit C
Designated Subscribers
[*]
[ONE PAGE OMITTED]
(EXHIBIT C-1)
45
Exhibit D
Sales Representative Reports
1) Staffing Report. A quarterly written advice of staffing levels.
2) Account Activity Reports setting forth: Gains (signed contracts/OA's);
Losses, Renewals; Changes/Updates to target lists - due on last day of
each month.
3) Redistricting Reports and Administrative Files. On GILLC's request,
contains account alignments and assignments.
(EXHIBIT D-1)
46
Exhibit E
Certain Territories
PARTNER HOME NATIONAL TERRITORIES
Austria
Canada
Greece
Ireland
Italy
Japan
Portugal
The Netherlands
United Kingdom
ASSOCIATE DISTRIBUTOR TERRITORIES
1. ARABI
Algeria
Bahrain
Djibouti
Egypt
Iraq
Jordan
Kuwait
Lebanon
Libya
Mauritania
Morocco
Oman
Qatar
Saudi Arabia
Somalia
Sudan
Syria
Tunisia
United Arab Emirates
Yemen
2. SOUTHERN CROSS
Australia
New Zealand
Papua New Guinea
(EXHIBIT E-1)
47
Islands in the South Pacific Ocean (other than dependencies of
the USA)
3. GALILEO DANMARK
Denmark
4. GALILEO NORDISKA
Finland
Norway
Sweden
5. XXXXX
Xxxxxxx
0. SAA
South Africa
Independent Homelands
Namibia
Botswana
Lesotho
Swaziland
7. AVENSA
Venezuela
8. THY
Turkey
9. INTERGLOBE
India
10. PHATARAPRASIT
Thailand
11. RELIANCE
Malaysia
12. MERCATOR
(EXHIBIT E-2)
48
Pakistan
13. GETS
Cambodia
Vietnam
Malawi
Mauritania
Papua New Guinea
Tanzania
Croatia
Ukraine
Netherlands Antilles
Aruba
Guyana
Nigeria
Ethiopia
Benin
Burundi
Eritrea
Zaire
Djibouti
Ghana
Gambia
Kenya
Mozambique
Sudan
Cape Verde
Uganda
(EXHIBIT E-3)
49
Schedule 1
Certain Information Relating to 0000
XXXXXX XXXXXX APR MEXICO APR
----------------- ----------
1997 REVENUE GOAL $[*] $[*]
1997 BASE COMPENSATION $[*] $[*]
1997 FA BUDGET $[*] $[*]
[*]
(Schedule 1-1)
