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EXHIBIT 10.3
SERVICES AGREEMENT
SERVICES AGREEMENT (this "Agreement"), dated as of _________ __, 1997,
between GALILEO INTERNATIONAL, INC., a Delaware corporation ("Galileo"), and
SWISSAIR SWISS AIR TRANSPORT COMPANY 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%.
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"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
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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.
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(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
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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.
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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
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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.
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(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
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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 [Name of Accounting Firm] (or, if
such firm shall decline to act or is not, at the time of such submission,
independent of Galileo and the Service Provider, to another independent
accounting firm of international reputation mutually acceptable to Galileo
and the Service Provider) (either [Name of Accounting Firm] or such other
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
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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 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:
__________________________
__________________________
__________________________
Facsimile: _______________
Attention: ______________
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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:
__________________________
__________________________
__________________________
Facsimile: ______________
Attention: _____________
with a copy to:
__________________________
__________________________
__________________________
Facsimile: ______________
Attention: _____________
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
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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
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
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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 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
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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 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.
(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.
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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
("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.
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, INC.
By:_____________________________________
Name:______________________________
Title:_____________________________
SWISSAIR SWISS AIR TRANSPORT
COMPANY LTD.
By:_____________________________________
Name:______________________________
Title:_____________________________
16
EXHIBIT 1
Weighting Factors
Post-Closing Year Weighting
1 24%
2 22%
3 20%
4 18%
5 16%
