1
EXHIBIT 10.3
CONFORMED COPY
SERVICES AGREEMENT
SERVICES AGREEMENT (this "Agreement"), dated as of July 30,
1997, between GALILEO INTERNATIONAL, L.L.C., a Delaware limited liability
company ("Galileo"), and SWISSAIR SWISS AIR TRANSPORT LTD. (the "Service
Provider").
WHEREAS, the Service Provider has a significant number of
sales personnel and sales offices in the Traviswiss Territory (as hereinafter
defined), and is very knowledgeable about the airline distribution business;
WHEREAS, as a result of the Service Provider's significant
number of sales personnel and sales offices in the Traviswiss Territory and its
knowledge concerning the airline distribution business, Galileo desires to
enlist the Service Provider's assistance with certain marketing and other
services designed to assist Galileo in growing the business operations of
Traviswiss AG ("Traviswiss");
WHEREAS, the Service Provider desires to provide such
marketing and other services designed to assist Galileo in growing the business
operations of Traviswiss;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and intending to be legally
bound hereby, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
The City of New York.
"Cost of Carry Factor" means the number resulting from the
following formula: (1 + Cost of Carry Rate)n, where n is the number of years
between the date hereof and the date of any applicable payment made hereunder
(adjusted pro rata for any fraction of a year).
"Cost of Carry Rate" means 8.625%.
2
2
"Segments" means net air segments, as determined by Galileo's
billing system in accordance with current practices, in respect of transactions
made in the Galileo System within the Traviswiss Territory by (i) Neutral
Travel Providers (and their customers) and Other Customers that have entered
into subscriber agreements with Traviswiss for Reservations Services (or,
following the date hereof, by Neutral Travel Providers and Other Customers
within the Traviswiss Territory that have entered into subscriber agreements
with Galileo for Reservations Services) from which Booking Fee Revenue is
generated which is split between Galileo and Traviswiss, with respect to NTP
Revenue, in accordance with the DSSA between Galileo and Traviswiss, or which
is split between Galileo and Traviswiss, with respect to Other Customer
Revenue, in accordance with the first clause of Section 8.8(a) of the Galileo
International Partnership Agreement (or, following the date hereof, would have
been split between Galileo and Traviswiss, with respect to NTP Revenue, in
accordance with the DSSA between Galileo and Traviswiss or which would have
been split between Galileo and Traviswiss, with respect to Other Customer
Revenue, in accordance with the first Clause of Section 8.8(a) of the Galileo
International Partnership Agreement, had that agreement and that provision,
respectively, continued to have been in effect) and (ii) Other Customers
(corporate only) of the Service Provider utilizing a Customized Product from
which Booking Fee Revenue is generated which is split in accordance with the
first clause of Section 8.8(c) of the Galileo International Partnership
Agreement (or, following the date hereof, which would have been split in
accordance with the first Section 8.8(c) of the Galileo International
Partnership Agreement, had that provision continued to have been in effect).
The calculation of net air segments to be credited to Traviswiss hereunder
excludes net air segments in respect of transactions made in the Galileo System
by Other Customers of the Service Provider utilizing Partner Developed
Products. All capitalized terms used in this definition of the term "Segments"
shall be as defined in the Galileo International Partnership Agreement or the
Distributor Sales and Service Agreement between Galileo and Traviswiss as in
effect immediately prior to the date hereof.
"Transaction Category" means any transaction category, as
determined in accordance with Galileo's customary practices, including, without
limitation, the following transaction categories (together with any transaction
categories that replace the following transaction categories or are
substantially similar thereto): an active confirmed segment input, a passive
segment input, an other segment input, an active confirmed segment cancel, a
passive segment cancel, an other segment cancel, an interactive display
transaction, an interactive sell transaction, an inside availability
transaction, a positive acknowledgement transaction, and a marriage logic
transaction.
"Transaction Category Weighted Average Price" means, with
respect to any applicable Transaction Category during the course of any
applicable year, the weighted average of the published prices for such
Transaction Category during the course of such year, as determined by (i)
multiplying each published list price recorded for such Transaction Category
during the course of such year by a fraction, the numerator of which is the
number
3
3
of days for which such published price was in effect for such Transaction
Category during the course of such year, and the denominator of which is 365,
and (ii) taking the sum of the resulting numbers.
"Traviswiss Territory" means Switzerland and Liechtenstein.
ARTICLE II
PROVISION OF SERVICES
SECTION 2.01. Provision of Services. Subject to the
requirements of applicable law, the Service Provider hereby agrees to use its
expertise with respect to the airline distribution business and its significant
number of sales personnel and sales offices in the Traviswiss Territory to
increase Galileo's competitiveness in the marketplace and generate additional
segments and revenue for Galileo through, but not limited to, the provision,
subject to the reasonable written request of Galileo, of the following services
to Galileo:
(a) Representatives from the marketing divisions of each
of Galileo and the Service Provider shall meet to discuss, co-ordinate and
implement future marketing strategies related to, but not limited to, the
direction of distribution in the marketplace and the emergence of alternative
distribution channels and technologies (i.e., the Internet and other direct
access products).
(b) Representatives of the Service Provider shall assist
Galileo by conducting or participating in meetings and discussions with
vendors, including car, hotel, leisure or marketing or code share air carriers,
that participate or may participate in the Galileo system to strengthen and
bolster such relationships.
(c) The Service Provider's sales staff shall conduct
sales calls (including joint sales calls with the appropriate Galileo account
executives) to users of the Galileo system throughout the Traviswiss Territory,
as mutually agreed between the parties.
(d) Upon reasonable notice, the Service Provider's
marketing personnel shall participate in Galileo's vendor workshops to be held
at various times throughout the year.
(e) Certain of the Service Provider's key staff,
including sales staff, shall within the first six (6) months hereof, and
annually thereafter, attend a local one-day overview session regarding the
Galileo system.
4
4
(f) The Service Provider and Galileo shall co-operate in
exchanging noteworthy information for inclusion in newsletters produced for and
distributed to travel agencies.
(g) Representatives of the Service Provider shall
participate in Galileo's future global automation conferences to enhance
Galileo's global market presence.
(h) Representatives of the Service Provider shall meet
with Galileo as they mutually agree to (i) review the progress of the Service
Provider's performance under this Agreement, (ii) adopt a schedule of meetings
and (iii) consult regarding the appropriate staffing of Service Provider
personnel to perform the Service Provider's obligations under this Agreement.
ARTICLE III
CONTINGENT PAYMENT FOR SERVICES
SECTION 3.01. Contingent Payment for Services. (a) The
payment, if any, that Galileo shall make to the Service Provider in
consideration for the services described in Section 2.01 shall be based upon an
improvement in Galileo's air booking fee revenue, as measured over a five year
period commencing as of the date hereof, and as calculated below. The revenue
improvement shall be measured utilizing two factors, weighted average annual
air segment growth rate ("Weighted Air Segment Growth Rate") and weighted
average annual price increase rate ("Weighted Air Price Increase Rate").
(b) The Service Provider and Galileo will share in the
economic benefit to Galileo of revenue increases which are (i) above the
minimum weighted average annual air segment growth rate ("Minimum Weighted Air
Segment Growth Rate") and at or below the targeted weighted average annual air
segment growth rate ("Targeted Weighted Air Segment Growth Rate") and revenue
increases which are (ii) above the minimum weighted average annual price
increase rate ("Minimum Weighted Air Price Increase Rate") and at or below the
targeted weighted average annual price increase rate ("Targeted Weighted Air
Price Increase Rate"). The Minimum Weighted Air Segment Growth Rate and the
Targeted Weighted Air Segment Growth Rate are 4.1% and 6.1%, respectively. The
Minimum Weighted Air Price Increase Rate and the Targeted Weighted Air Price
Increase Rate are 2.0% and 4.0%, respectively.
(c) The Service Provider shall receive payments,
calculated and paid in accordance with Sections 3.02 through 3.06 below, which
reflect the approximate economic value of the achievement of the first fifty
percent of the range between (i) the Minimum Weighted Air Segment Growth Rate
and the Targeted Weighted Air Segment Growth Rate
5
5
and (ii) the Minimum Weighted Air Price Increase Rate and the Targeted Weighted
Air Price Increase Rate, respectively. Galileo shall retain the approximate
economic value of the achievement of the second fifty percent of such ranges as
well as any economic value from the achievement of a Weighted Air Segment
Growth Rate or a Weighted Air Price Increase Rate which is in excess of such
ranges.
SECTION 3.02. Calculation of Segment Growth Payment. (a)
The "Segment Growth Payment" shall be calculated in accordance with the
provisions of this Section 3.02:
(i) Within 60 days of the fifth anniversary hereof (or, in the
event Section 3.04(c) is applicable, within 60 days of the
date that is six months after the fifth anniversary hereof),
Galileo shall calculate in accordance with its customary
practices (A) the total number of Segments recorded in the
Traviswiss Territory for the period of twelve months ending on
the date hereof (the "Pre-Closing Year") and for the period of
twelve months ending on each of the first, second, third,
fourth and fifth anniversaries of the date hereof (the
"Post-Closing Years"), and (B) the percentage increase or
decrease in the total number of such Segments for each of the
Post-Closing Years in comparison to the immediately preceding
Pre-Closing Year or Post-Closing Year, as applicable.
(ii) Following the calculations described in clause (i) above,
Galileo shall then weight such percentage increases or
decreases by multiplying such percentage increases or
decreases by the corresponding Weighting Factors set forth on
Exhibit 1 hereto. The sum of the resulting percentages shall
constitute the Weighted Air Segment Growth Rate.
(b) If the Weighted Air Segment Growth Rate is less than or equal
to 4.1%, no Segment Growth Payment shall be made.
(c) If the Weighted Air Segment Growth Rate is greater than or
equal to 5.1%, the Segment Growth Payment shall be $1,300,000.
(d) If the Weighted Air Segment Growth Rate is greater than 4.1%
but less than 5.1%, the Segment Growth Payment shall be an amount equal to
(i) $1,300,000 multiplied by (ii) a fraction, the numerator of which shall
be (A) the Weighted Air Segment Growth Rate minus (B) 4.1%, and the
denominator of which shall be 0.01.
6
6
SECTION 3.03. Calculation of Air Booking Price Increases.
(a) Within 60 days of the fifth anniversary hereof (or, in the event Section
3.04(c) is applicable, within 60 days of the date that is six months after the
fifth anniversary hereof), Galileo shall calculate the "Price Increase Payment"
in accordance with the provisions of this Section 3.03:
(i) Galileo shall calculate the total number of
transactions, by Transaction Category, associated
with the total number of Segments recorded in the
Traviswiss Territory for the Pre-Closing Year.
(ii) Galileo shall then calculate the aggregate revenue in
the Traviswiss Territory for the Pre-Closing Year by
multiplying the Transaction Category Weighted Average
Price for each Transaction Category for the
Pre-Closing Year by the total number of transactions,
by Transaction Category, recorded in the Traviswiss
Territory in the Pre-Closing Year.
(iii) Galileo shall then determine what the total revenue
in the Traviswiss Territory would have been in each
of the Post-Closing Years on a comparative basis to
the Pre-Closing Year by multiplying the Transaction
Category Weighted Average Price for each Transaction
Category for such Post-Closing Year by the total
number of transactions, by Transaction Category,
recorded in the Traviswiss Territory in the
Pre-Closing Year.
(iv) Galileo shall then calculate the percentage increase
or decrease in the aggregate revenue in the
Traviswiss Territory in each of the Post-Closing
Years by taking the results of the calculations
described in clause (iii) above for each of the
Post-Closing Years and dividing them by the results
of the calculations described in clauses (ii) and
(iii) above, as applicable, with respect to the
immediately preceding years, and then subtracting one
from the resulting numbers to derive a percentage
increase or decrease.
(v) Galileo shall weight the percentage price increases
or decreases calculated in accordance with clause
(iv) by multiplying such percentage increases or
decreases by the corresponding Weighting Factors set
forth on Exhibit 1 hereto. The sum of
7
7
the resulting percentages shall constitute the
Weighted Air Price Increase Rate.
(b) If the Weighted Air Price Increase Rate is less than
or equal to 2.0%, there shall be no Price Increase Payment.
(c) If the Weighted Air Price Increase Rate is greater
than or equal to 3.0%, the Price Increase Payment shall be $5,500,000;
(d) If the Weighted Air Price Increase Rate is greater
than 2.0% but less than 3.0%, the Price Increase Payment shall be an amount
equal to (i) $5,500,000 multiplied by (ii) a fraction, the numerator of which
shall be (A) the Weighted Air Price Increase Rate minus (B) 2.0%, and the
denominator of which shall be 0.01.
SECTION 3.04. Grace Period for Certain Price Increases. (a)
The provisions of this Section 3.04 shall apply if the published price for any
Transaction Category in the Traviswiss Territory does not increase during the
course of the first six months of the fifth Post-Closing Year.
(b) With regard to any Transaction Category whose
published price in the Traviswiss Territory does not increase during the course
of the first six months of the fifth Post-Closing Year, but whose published
price does increase on or after the first day of the seventh month of the fifth
Post-Closing Year but prior to the first day of the first month of the sixth
Post-Closing Year, then for purposes of Section 3.03(a)(iii) and the definition
of the term Transaction Category Weighted Average Price, such price increase
shall be deemed to have occurred with regard to such Transaction Category on
the first day of the seventh month of the fifth Post-Closing Year.
(c) If the published price for any Transaction Category
does not increase in the Traviswiss Territory during the course of the fifth
Post-Closing Year, then the calculations set forth in Sections 3.02, 3.03, 3.05
and 3.06 shall not be completed until 60 days (or, in the case of Section 3.06,
65 days) after the date that is six months after the fifth anniversary hereof.
If there is such a price increase as to such Transaction Category in the
Traviswiss Territory during the six month period following the fifth
anniversary hereof, then for purposes of Section 3.03(a)(iii) and the
definition of the term Transaction Category Weighted Average Price, such price
increase shall be deemed to have occurred with regard to such Transaction
Category on the date that is six months prior to the date on which such price
increase actually occurred.
8
8
(d) All other calculations set forth in this Agreement
with regard to Transaction Categories whose published prices in the Traviswiss
Territory do increase during the first six months of the fifth Post-Closing
Year shall be unaffected by the provisions of this Section 3.04.
SECTION 3.05. Calculation of Adjusted Services Payment. The
sum of (i) the Segment Growth Payment calculated in accordance with Section
3.02 and (ii) the Price Increase Payment calculated in accordance with Sections
3.03 and 3.04 shall constitute the "Total Services Payment". The Total
Services Payment shall be multiplied by the Cost of Carry Factor, and the
product of such calculation shall constitute the "Adjusted Services Payment".
SECTION 3.06. Interim Statements; Adjusted Services Payment
Statement; Disputes; Payment of Adjusted Services Payment. (a) Within 60 days
of each of the first four anniversaries hereof, Galileo shall calculate, and
shall deliver to the Service Provider (for informational purposes only), a
written statement (each such statement, an "Interim Statement") setting forth
Galileo's preliminary calculation of the Weighted Air Segment Growth Rate for
the preceding year and the Weighted Air Price Increase Rate as of the end of
the preceding year. In no event shall the Service Provider be entitled to
dispute any of the calculations set forth on an Interim Statement.
(b) Within 65 days of the fifth anniversary hereof (or,
in the event Section 3.04(c) is applicable, within 65 days of the date that is
six months after the fifth anniversary hereof), Galileo shall deliver to the
Service Provider a written statement (the "Adjusted Services Payment
Statement") setting forth Galileo's calculation of the Adjusted Services
Payment.
(c) Disputes. (i) Subject to clause (ii) of this
Section 3.06(c), the Adjusted Services Payment Statement delivered by Galileo
to the Service Provider shall be deemed to be and shall be final, binding and
conclusive on the parties hereto.
(ii) The Service Provider may dispute any amounts
reflected on the Adjusted Services Payment Statement to the extent
such disputed amounts affect the calculation of the Adjusted Services
Payment; provided, however, that the Service Provider shall have
notified Galileo in writing of each disputed item, specifying the
amount thereof in dispute and setting forth, in reasonable detail, the
basis for such dispute, within 15 business days of Galileo's delivery
of the Adjusted Services Payment Statement to the Service Provider.
Galileo and the Service Provider shall attempt in good faith to
resolve the matter in dispute. If Galileo and the Service Provider,
notwithstanding such good faith effort, shall have failed to resolve
the matter or matters in dispute within 15
9
9
business days after receipt by Galileo of the Service Provider's
written notice of dispute, Galileo and the Service Provider shall
submit the items remaining in dispute for resolution to an independent
accounting firm of international reputation mutually acceptable to,
and independent of, Galileo and the Service Provider (such accounting
firm being referred to herein as the "Independent Accounting Firm "),
which shall, within 45 business days after such submission, determine
and report to Galileo and the Service Provider upon such remaining
disputed items, and such report shall be final, binding and conclusive
on the parties hereto. The fees and disbursements of the Independent
Accounting Firm shall be allocated among Galileo and the Service
Provider in the same proportion that the aggregate amount of such
disputed items so submitted to the Independent Accounting Firm that is
unsuccessfully disputed by Galileo, on the one hand, or the Service
Provider, on the other hand (as finally determined by the Independent
Accounting Firm), bears to the total amount of disputed items so
submitted.
(iii) In acting under this Agreement, the Independent
Accounting Firm shall be entitled to the privileges and immunities of
an arbitrator.
(d) Cooperation. For purposes of complying with the
terms set forth herein, each party shall within the limits of possible
obligations to maintain secrecy according to the requirements of applicable
corporate or other law (i) co-operate with and promptly make available to the
other party and their respective auditors and representatives, all information,
records, data, auditors' working papers, and access to its personnel, (ii)
permit access to its facilities and (iii) permit the other party and its
auditors and representatives to make copies of all information, records, data
and auditor's working papers, in each case as may be reasonably required in
connection with the analysis of the Adjusted Services Payment Statement, the
calculation of the Adjusted Services Payment and the resolution of any
dispute(s) thereunder.
(e) Adjusted Services Payment. Within 5 business days of
the earliest of (i) the date that is 15 business days after the delivery of the
Adjusted Services Payment Statement pursuant to the provisions set forth in
Section 3.06(b) hereof if such Adjusted Services Payment Statement is not
disputed by the Service Provider, (ii) the resolution of all disagreements with
respect to the Adjusted Services Payment Statement directly by Galileo and the
Service Provider and (iii) the issuance of the report of the Independent
Accounting Firm, Galileo shall pay to the Service Provider in immediately
available funds to an account designated in writing by the Service Provider not
later than two business days prior to the date of such payment the Adjusted
Services Payment, if any. For purposes of such payment, the Adjusted Services
Payment shall be recalculated to give effect to the Cost of Carry Factor for
10
10
the period between the delivery of the Adjusted Services Payment Statement and
the actual date of payment.
SECTION 3.07. Change in Galileo Pricing Methodology. In the
event that, between the date hereof and the fifth anniversary hereof, there is
a fundamental change in Galileo's pricing methodology such that the provisions
of this Article III cannot be implemented in the manner currently intended by
the parties hereto, they shall negotiate in good faith with a view to amending
the provisions of this Article III in order to reflect such fundamental change.
In the absence of any agreement among the parties with regard to such
amendments, the provisions of this Article III shall be applied in a manner
designed to effectuate, to the greatest possible extent, the parties' original
intentions.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Representations and Warranties. Each of the
parties hereto represents and warrants that this Agreement has been duly
authorized, executed and delivered by such party and constitutes a legal, valid
and binding obligation of such party, enforceable against it in accordance with
the terms of this Agreement.
SECTION 4.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, facsimile, telegram or telex or by registered or certified
mail (postage prepaid, return receipt requested) or by a nationally recognized
overnight courier service to the respective 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 4.02):
(i) if to Galileo:
Galileo International, L.L.C.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000, XXX
Facsimile: (000) 000-0000
Attention: General Counsel
11
11
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X'Xxxxx, Esq.
(ii) if to Service Provider:
Swissair Swiss Air Transport Ltd.
XX-0000
Xxxxxx Xxxxxxx
Xxxxxxxxxxx
Facsimile: 00-0-000-0000
Attention: Corporate Finance, DF
SECTION 4.03. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated by this Agreement
are not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 4.04. Term of Agreement. The provisions of this
Agreement (other than Articles I and IV) shall terminate and be of no further
force and effect, automatically and without any required actions of the parties
hereto, on the fifth anniversary of the date hereof; provided, however, that
(i) the provisions of Article III shall terminate on the date that all payments
to be made thereunder are made (or the date on which the parties agree that no
such payment is required to be made), and (ii) the parties may extend the
provisions of any other provision of this Agreement beyond the fifth
anniversary hereof pursuant to an instrument in writing signed by all of the
parties hereto.
SECTION 4.05. Default; Cure Period; Remedies. (a) Upon a
breach of any of the covenants set forth in this Agreement by the Service
Provider, the
12
12
Service Provider shall use its reasonable efforts to cure such breach within 30
days of receipt of written notice of such breach from Galileo.
(b) Upon a breach of any of the covenants set forth in
this Agreement by Galileo, Galileo shall use its reasonable efforts to cure
such breach within 30 days of receipt of written notice of such breach from the
Service Provider.
(c) Galileo acknowledges that its sole and exclusive
remedy for the breach by the Service Provider of its obligations pursuant to
Article II (other than a breach resulting from the wilful misconduct or gross
negligence of the Service Provider) shall be specific performance.
SECTION 4.06. Confidentiality. Each of the parties hereto
shall keep confidential any information with respect to any of the parties
hereto provided in connection with this Agreement that is not otherwise
generally available to the public, except as may be required by applicable law.
SECTION 4.07. Entire Agreement; Assignment. This Agreement
(including the Exhibits, which are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise.
SECTION 4.08. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 4.09. Governing Law. This Agreement shall be
governed by the laws of the State of New York, excluding (to the greatest
extent permissible by law) any rule of law that would cause the application of
the laws of any jurisdiction other than the State of New York.
SECTION 4.10. Arbitration. (a) Subject to Section 4.10(b),
any dispute arising between the parties hereto involving the subject matters
covered by this Agreement shall be submitted to arbitration under this Section
4.10. Any party asserting a breach of this Agreement by the other party shall
notify the other party of such alleged breach (a "Dispute Notice") and the
parties shall attempt to resolve such dispute amicably and if they shall fail
to resolve it within thirty (30) days of the date
13
13
of the Dispute Notice, either party may notify the other party that it wishes
to commence an arbitration proceeding under this Section 4.10 (an "Arbitration
Request"). In any arbitration proceeding 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 elector
designated by it. 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). Copies of any
Arbitration Request shall be furnished at the same time to the other party
hereto. 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 (copies of which shall
be furnished to the other party), but if it 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 to do so within
twenty (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 Section 4.10.
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 UNCITRAL rules of commercial arbitration shall apply
to any arbitration commenced pursuant to this Section 4.10, as modified by the
following procedure:
(i) 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 to the
Petitioner.
(ii) 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).
(iii) 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
14
14
limited in length to five (5) typed, single spaced pages (excluding
any evidentiary exhibits included therein).
(iv) Within twenty-five (25) Business Days from the
Commencement Date, each of the Petitioner and 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
extraordinary circumstances beyond the control of the parties.
(v) 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.
(vi) 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.
(vii) 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 hereto and judgment
may be entered thereon in any court of competent jurisdiction and the
costs and expenses of such arbitration (and of enforcing any Award),
including attorneys' fees, shall be borne by the party losing such
arbitration.
(viii) In the event that the Arbitrator fails to render his
Award within the time limits contained in Sections 4.10(a)(v) or (vi),
the Arbitrator shall, nonetheless, retain jurisdiction over the
dispute for a reasonable period of time.
(b) This Section 4.10 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 4.11. Value Added Tax. To the extent any payments to
be made by Galileo to the Service Provider hereunder are subject to value added
tax
15
15
("VAT"), (i) such payments shall be deemed to be inclusive of the applicable
VAT, and (ii) Galileo shall use its reasonable efforts to obtain a refund of
such VAT in accordance with applicable law and hereby assigns its right to any
such refund to the Service Provider.
SECTION 4.12. Headings. The descriptive headings contained
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 4.13. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
16
16
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
GALILEO INTERNATIONAL, L.L.C.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President,
Legal and General Counsel
SWISSAIR SWISS AIR TRANSPORT LTD.
By: /s/ Xxxxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: President and CEO
17
EXHIBIT 1
Weighting Factors
-----------------
Post-Closing Year Weighting
----------------- ---------
1 24%
2 22%
3 20%
4 18%
5 16%
