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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (date of earliest event reported) September 17, 1998
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NAVIGANT INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 000-24387 52-2080967
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(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
84 INVERNESS CIRCLE EAST
ENGLEWOOD, COLORADO 80112
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (303) 706-0800
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Former name or former address, if changed since last report: Not Applicable
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NAVIGANT INTERNATIONAL, INC.
FORM 8-K
SEPTEMBER 17, 1998
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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(a) Pursuant to a Stock Purchase Agreement dated September 17, 1998 by and
among Navigant International, Inc. ("Navigant" or "Registrant"),
Professional Travel Corporation ("PTC"), a wholly-owned subsidiary of
Navigant, World Express Travel, Inc. ("WET") and Robert B. Acree, the sole
shareholder of WET, PTC acquired from Robert B. Acree on September 17, 1998
all of the issued and outstanding shares of capital stock of WET, a
provider of corporate travel management services. The acquisition will be
accounted for as a purchase. The purchase price of $8.2 million in cash,
negotiated at arms' length between the parties, was funded through
Navigant's revolving credit facility from NationsBank, N.A. as
Administrative Agent. A copy of the joint press release of Navigant and WET
with respect to the transaction is included as Exhibit 99.1.
(b) WET will continue to operate as a provider of corporate travel management
services as a subsidiary of PTC.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) As of the date of this Form 8-K, it is impractical for the Registrant to
provide the financial statements for WET, required pursuant to Article 3 of
Regulation S-X. In accordance with Item 7(a) of Form 8-K, such financial
statements for WET, will be filed by amendment to this Form 8-K on or
before November 30, 1998.
(b) As of the date of this Form 8-K, it is impractical for the Registrant to
provide the pro forma financial information required pursuant to Article 11
of Regulation S-X. In accordance with Item 7(b) of Form 8-K, such pro
forma financial information will be filed by amendment to this Form 8-K on
or before November 30, 1998.
(c) Exhibits
2.1 Stock Purchase Agreement dated September 17, 1998 by and among
Navigant International, Inc., Professional Travel Corporation, World
Express Travel, Inc. and Robert B. Acree. Portions of Exhibit 2.1
have been omitted and filed separately with the Commission as
confidential information. As permitted by Rule 601(b)(2) of
Regulation S-K, the Schedules to Exhibit 2.1, which have been deemed
not to be material, are not filed herein. The Registrant agrees to
furnish supplementally a copy of the Schedules to Exhibit 2.1 to the
Commission upon request.
99.1 Joint press release, dated September 22, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
2
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Date: September 30, 1998.
NAVIGANT INTERNATIONAL, INC.
a Delaware corporation
By: /s/ Robert C. Griffith
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Name: Robert C. Griffith
Title: Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
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Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
NAVIGANT INTERNATIONAL, INC.,
WORLD EXPRESS TRAVEL, INC.
AND
ROBERT B. ACREE
MADE EFFECTIVE AS OF SEPTEMBER 17, 1998
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TABLE OF CONTENTS
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1. THE ACQUISITION........................................................................... 1
1.1 The Purchase and Sale............................................................... 1
1.2 Consideration....................................................................... 1
1.3 Post-Closing Adjustments............................................................ 2
1.4 Escrow.............................................................................. 4
1.5 Exchange of Certificates............................................................ 5
1.6 Accounting Terms; Excluded Branches................................................. 5
2. CLOSING................................................................................... 6
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER......................... 6
3.1 Due Organization.................................................................... 6
3.2 Authorization; Validity............................................................. 6
3.3 No Conflicts........................................................................ 7
3.4 Capital Stock of the Company........................................................ 7
3.5 Subsidiaries and Debt Interests..................................................... 8
3.6 Predecessor Status; Etc............................................................. 8
3.7 Required Governmental Filings and Consents.......................................... 8
3.8 Company Financial Conditions........................................................ 8
3.9 Financial Statements................................................................ 9
3.10 Liabilities and Obligations; Claims................................................. 10
3.11 Books and Records................................................................... 10
3.12 Bank Accounts; Powers of Attorney................................................... 11
3.13 Accounts and Notes Receivable....................................................... 11
3.14 Permits............................................................................. 11
3.15 Related Party Transactions.......................................................... 12
3.16 Real Estate and Real Property....................................................... 12
3.17 Personal Property................................................................... 14
3.18 Intellectual Property............................................................... 14
3.19 ARC Accreditation and Bonding Requirements.......................................... 16
3.20 Significant Customers; Preferred Vendors; Material Contracts........................ 16
3.21 Government Contracts................................................................ 18
3.22 Insurance........................................................................... 19
3.23 Environmental Matters............................................................... 19
3.24 Labor and Employment Matters........................................................ 20
3.25 Employee Benefit Plans.............................................................. 21
3.26 Taxes............................................................................... 25
3.27 Conformity with Law; Litigation..................................................... 28
3.28 Relations with Governments.......................................................... 28
3.29 Absence of Changes.................................................................. 29
3.30 Inventory........................................................................... 30
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3.31 Year 2000 Compliance................................................................. 31
3.32 Disclosure........................................................................... 31
4. REPRESENTATIONS OF NII AND PTC............................................................. 32
4.1 Due Organization..................................................................... 32
4.2 Authorization; Validity of Obligations............................................... 32
4.3 No Conflicts......................................................................... 32
4.4 Investment Intent.................................................................... 33
5. COVENANTS.................................................................................. 33
5.1 Tax Matters.......................................................................... 33
5.2 Accounts Receivable.................................................................. 34
5.3 Employee Benefit Plans............................................................... 35
5.4 Related Party Agreements............................................................. 35
5.5 Cooperation.......................................................................... 35
5.6 Access to Information; Confidentiality; Public Disclosure............................ 36
5.7 Notice to Bargaining Agents.......................................................... 36
5.8 Soft Dollars......................................................................... 36
5.9 Transition........................................................................... 36
5.10 [NOT USED]........................................................................... 36
5.11 338 Election......................................................................... 36
5.12 Permitted Distribution............................................................... 37
5.13 Travel and Entertainment Budget...................................................... 37
5.14 Transfer of ARC Number............................................................... 37
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF NII AND PTC......................................... 38
6.1 Representations and Warranties; Performance of Obligations........................... 38
6.2 No Litigation........................................................................ 38
6.3 No Material Adverse Change........................................................... 38
6.4 Consents and Approvals............................................................... 38
6.5 Opinion of Company Counsel........................................................... 38
6.6 Charter Documents.................................................................... 39
6.7 Due Diligence Review................................................................. 39
6.8 Delivery of Closing Financial Certificate............................................ 39
6.9 FIRPTA Compliance.................................................................... 39
6.10 Employment Agreements................................................................ 40
6.11 Escrow Agreement..................................................................... 40
6.12 Estoppel Certificates................................................................ 40
6.13 Resignations......................................................................... 40
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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDER AND THE COMPANY.................................. 40
7.1 Representations and Warranties; Performance of Obligations..................................... 40
7.2 No Litigation.................................................................................. 40
7.3 Consents and Approvals......................................................................... 40
7.4 Employment Agreement........................................................................... 41
7.5 Escrow Agreement............................................................................... 41
8. INDEMNIFICATION......................................................................................... 41
8.1 General Indemnification by the Shareholder..................................................... 41
8.2 General Indemnification by NII and PTC......................................................... 42
8.3 Limitation and Expiration...................................................................... 43
8.4 Indemnification Procedures..................................................................... 44
8.5 Survival of Representations Warranties and Covenants........................................... 45
8.6 Remedies Cumulative............................................................................ 46
8.7 Right to Set Off............................................................................... 46
9. NONCOMPETITION.......................................................................................... 46
9.1 Prohibited Activities.......................................................................... 46
9.2 Confidentiality................................................................................ 47
9.3 Damages........................................................................................ 47
9.4 Reasonable Restraint........................................................................... 47
9.5 Severability; Reformation...................................................................... 48
9.6 Independent Covenant........................................................................... 48
9.7 Materiality.................................................................................... 48
10. GENERAL................................................................................................. 48
10.1 Successors and Assigns......................................................................... 48
10.2 Entire Agreement; Amendment; Waiver............................................................ 49
10.3 Counterparts................................................................................... 49
10.4 Brokers and Agents............................................................................. 49
10.5 Expenses....................................................................................... 49
10.6 Specific Performance; Remedies................................................................. 49
10.7 Notices........................................................................................ 49
10.8 Governing Law.................................................................................. 50
10.9 Severability................................................................................... 51
10.10 Absence of Third Party Beneficiary Rights...................................................... 51
10.11 Mutual Drafting................................................................................ 51
10.12 Further Representations........................................................................ 51
10.13 Definitions.................................................................................... 51
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EXHIBITS AND SCHEDULES
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EXHIBITS AND SCHEDULES
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EXHIBIT A - ESCROW AGREEMENT
EXHIBIT B - EMPLOYMENT AGREEMENT - B. ACREE
EXHIBIT C - EMPLOYMENT AGREEMENT - D. LYLES
Schedule 1.2 -- Add-Backs
Schedule 1.3 -- Post-Closing Audit Checklist
Schedule 3.1 -- Due Organization
Schedule 3.3 -- No Conflicts
Schedule 3.4 -- Capital Stock
Schedule 3.5 -- Subsidiaries, Etc.
Schedule 3.6 -- Predecessor Status
Schedule 3.7 -- Government Filings
Schedule 3.9 -- Financial Statements
Schedule 3.10 -- Liabilities and Obligations
Schedule 3.12 -- Bank Accounts; Powers of Attorney
Schedule 3.13 -- Accounts Receivable
Schedule 3.15 -- Related Party Transactions
Schedule 3.16 -- Real Property
Schedule 3.17 -- Personal Property
Schedule 3.18 -- Intellectual Property
Schedule 3.19 -- ARC Bonding; Debt Memoranda
Schedule 3.20 -- Significant Customers; Material Contracts and Commitments
Schedule 3.21 -- Government Contracts
Schedule 3.22 -- Insurance
Schedule 3.23 -- Environmental Matters
Schedule 3.24 -- Labor and Employment Matters
Schedule 3.25 -- Employee Benefit Plans
Schedule 3.26 -- Taxes
Schedule 3.27 -- Conformity with Law; Litigation
Schedule 3.29 -- Absence of Changes
Schedule 3.30 -- Inventory
Schedule 3.31 -- Year 2000 Compliance
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of this 17th day of September 17, 1998, by and among Navigant
International, Inc., a Delaware corporation ("NII"), Professional Travel
Corporation, a Colorado corporation and wholly-owned subsidiary of NII ("PTC"),
World Express Travel, Inc., an Alaska corporation (the "Company"), and Robert B.
Acree (the "Shareholder"). Except as otherwise set forth in this Agreement,
capitalized terms shall have the definitions set forth in Section 10.13.
BACKGROUND
PTC desires to acquire, and the Shareholder desires to sell to PTC,
all of the outstanding capital stock of the Company (the "Acquisition").
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. THE ACQUISITION
1.1 The Purchase and Sale. At the Closing (as defined in Section 2)
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and subject to and upon the terms and conditions of this Agreement, the
Shareholder shall sell and deliver to PTC and PTC shall purchase from the
Shareholder all of the outstanding shares of capital stock of the Company (the
"Company Capital Stock"), free and clear of all Liens.
1.2 Consideration. For purposes of this Agreement, the
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"Consideration" shall be, subject to adjustment pursuant to this Section 1.2 and
Section 1.3, equal to: (i) (A) the Company's earnings before interest and taxes
("Adjusted EBIT") for the twelve (12)-month period ended July 5, 1998 (the
"Trailing Period"), determined in accordance with generally accepted accounting
principles ("GAAP") consistently applied and adjusted to reflect the add-back of
those nonrecurring expenses specified on Schedule 1.2 attached hereto (the "Add-
Backs"), times (B) * , minus (ii) the sum of (y) the Adjusted Interest Bearing
Debt (as defined below) and (z) the amount by which the Company's tangible net
worth as of August 30, 1998 is less than * . As used in this Agreement,
"Adjusted Interest Bearing Debt" shall be equal to (a) the amount of interest
bearing liabilities owed by the Company as of August 30, 1998 to any third
party, including without limitation, banks, financial institutions, pension
plans, employee benefit plans, other related plans and current or former
stockholders of the Company but excluding office equipment leases and ordinary
course accounts payable, minus (b) the amount of interest bearing debt owed to
financial institutions by the Company to finance its customer accounts
receivable ("A/R Finance Debt"); provided, however, that the deduction for the
A/R Finance Debt shall in no event be greater than ninety percent (90%) of the
total amount of the Company's customer accounts receivable as of August 30,
1998. The parties agree that the calculation of Adjusted EBIT shall include any
deductions for amortization of
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goodwill related to the Acquisition based on a thirty-five (35) year life. The
Consideration shall be paid to the Shareholder, subject to Section 1.4 below, in
immediately available funds at the Closing.
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.
1.3 Post-Closing Adjustments. The Consideration shall be subject to
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adjustment after the Closing Date as specified in this Section 1.3.
(a) Within one hundred twenty (120) days following the Closing
Date, NII shall cause its then current auditor ("NII's Accountant") to audit
(the "Post-Closing Audit") the Company's books to determine the accuracy of the
information set forth on the Closing Financial Certificate (as defined in
Section 6.8). The parties acknowledge and agree that for purposes of determining
the actual tangible net worth of the Company as of August 30, 1998 (the "Actual
Closing Net Worth"), the value of the assets of the Company shall, except with
the prior written consent of NII, be calculated as provided in the last
paragraph of Section 6.8. The Shareholder shall cooperate and shall use his
reasonable efforts to cause the officers and employees of the Company to
cooperate with NII and NII's Accountant after the Closing Date in furnishing
information, documents, evidence and other assistance to NII's Accountant to
facilitate the completion of the Post-Closing Audit within the aforementioned
time period. Without limiting the generality of the foregoing, within two (2)
weeks after the Closing the Shareholder shall provide NII's Accountant with the
information and/or documents requested on the Post-Closing Audit Checklist set
forth as Schedule 1.3 hereto in order to facilitate the completion of the
Post-Closing Audit by NII's Accountant within the aforementioned time period. In
the event that NII's Accountant determines that the actual Adjusted EBIT (the
"Actual Adjusted EBIT") of the Company for the Trailing Period was less than the
Certified Adjusted EBIT (as defined in Section 6.8), or that the Actual Closing
Net Worth was less than both of the Certified Closing Net Worth (as defined in
Section 6.8) and *, NII shall deliver a written notice (the "Financial
Adjustment Notice") to the Shareholder setting forth (i) the determination made
by NII's Accountant of the Actual Adjusted EBIT and/or the Actual Closing Net
Worth, (ii) the amount of the Consideration that would have been payable at
Closing pursuant to Section 1.2 had the Actual Adjusted EBIT and the Actual
Closing Net Worth been reflected on the Closing Financial Certificate instead of
the Certified Adjusted EBIT and the Certified Closing Net Worth, and (iii) the
amount by which the Consideration would have been reduced at Closing had the
Actual Adjusted EBIT and the Actual Closing Net Worth been used in the
calculations pursuant to Section 1.2(c) (the "Consideration Adjustment").
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.
(b) The Shareholder shall have thirty (30) days from the receipt
of the Financial Adjustment Notice to notify NII that the Shareholder disputes
such Financial Adjustment Notice. If NII has not received notice of such a
dispute within such 30-day period, NII shall be entitled to receive from the
Shareholder the Consideration Adjustment. The Consideration Adjustment shall
first be applied against the Escrow Fund. If there is not a sufficient amount
remaining in the Escrow Fund (as defined in Section 1.4) to satisfy the entire
Consideration Adjustment, the remaining unpaid amount of the Consideration
Adjustment shall be promptly paid by the Shareholder in cash. If,
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however, the Shareholder has delivered notice of such a dispute to NII within
such thirty (30)-day period, then NII's Accountant shall select an independent
accounting firm of nationally recognized standing that has not represented any
of the parties hereto within the preceding two (2) years to review the Company's
books, the Closing Financial Certificate and the Financial Adjustment Notice
(and related information) to determine the amount, if any, of the Consideration
Adjustment. Such independent accounting firm shall be ratified by the
Shareholder and NII within five (5) business days of its selection unless there
is an actual conflict of interest. The independent accounting firm shall be
directed to consider only those agreements, contracts, commitments or other
documents (or summaries thereof) that were either (i) delivered or made
available to NII's Accountant in connection with the transactions contemplated
hereby, or (ii) reviewed by NII's Accountant during the course of the Post-
Closing Audit. The independent accounting firm shall make its determination of
the Consideration Adjustment, if any, within thirty (30) days of its selection.
The determination of the independent accounting firm shall be final and binding
on the parties hereto, and upon such determination, NII shall be entitled to
receive from the Shareholder the Consideration Adjustment. The costs of the
independent accounting firm shall be borne by the party (either NII or the
Shareholder) whose determination of the Consideration Adjustment was further
from the determination of the independent accounting firm, or equally by NII and
the Shareholder in the event that the determination by the independent
accounting firm is equidistant between each party's calculation of the
Consideration Adjustment.
(c) Within 120 days following the first anniversary of the
Closing, NII's Accountant shall review the books of the Company to determine (i)
the gross revenues less cash rebates to, and revenue shared with, customers (the
"Net Revenues") of the Company's ten largest customers for the twelve (12)-month
period beginning on the first day of the first calendar month following the
Closing, calculated in accordance with GAAP consistently applied (the "Measured
Revenues"), and (ii) the Net Revenues of the Company's ten largest customers for
the twelve (12)-month period ended on the last day of the month in which the
Closing occurs, calculated in accordance with GAAP consistently applied (the
"Target Revenues"). For the purposes of this provision, Measured Revenues shall
exclude any Net Revenues from such customers shifted to the Company from other
NII agencies at NII's request and Target Revenues shall be reduced by the Net
Revenues from any such customers who transfer from the Company to NII or any
Subsidiary or Affiliate of NII, at NII's request. In addition, Net Revenues
shall exclude (a) complimentary tickets, (b) any consideration the Company is
required to provide to its customers in lieu of complimentary tickets (because
such tickets are not available to the Company due to decisions made, or actions
taken, by NII), and (c) revenues attributable solely and directly to a change in
the manner in which base commissions are calculated and paid by any airline. If,
pursuant to such determination by NII's Accountant, the Measured Revenues are
less than the Target Revenues, then NII shall be entitled to payment out of the
Escrow Fund an amount equal to the Target Revenues minus the Measured Revenues
(the "Revenues Adjustment"); provided, however, that if the Revenues Adjustment
is greater than the the amounts then remaining in the Escrow Fund, the Escrow
Fund shall be reduced to zero. Promptly after such determination by NII's
Accountant, the Company shall deliver to the Shareholder the determination of
NII's Accountants, including the amount of any Revenues Adjustment pursuant to
this Section 1.3(c) ("Revenues Adjustment Notice"). The Shareholder shall have
thirty (30) days from the receipt of the Revenues Adjustment Notice to notify
NII that the
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Shareholder disputes such Revenues Adjustment Notice. If NII has not received
notice of such a dispute within such thirty (30)-day period, NII and the
Shareholder shall instruct the Escrow Agent (as defined in Section 1.4) to
release an amount equal to the Revenues Adjustment to NII from the Escrow Fund.
If, however, the Shareholder has delivered notice of such a dispute to NII, then
NII's Accountant shall select an independent accounting firm of nationally
recognized standing that has not represented any of the parties hereto within
the two (2)-year period preceding the date of the Revenues Adjustment Notice to
review the Company's books and the Revenues Adjustment Notice (and related
information) to determine the amount, if any, of the Revenues Adjustment. Such
independent accounting firm shall be ratified by the Shareholder and NII within
five (5) business days of its selection unless there is an actual conflict of
interest. The independent accounting firm shall be directed to consider only
those agreements, contracts, commitments or other documents (or summaries
thereof) that were used in determining the Target Revenues, the Measured
Revenues and the Revenues Adjustment. The independent accounting shall make its
determination of the Revenues Adjustment, if any within thirty (30) days of its
selection. The determination of the independent accounting firm shall be final
and binding on the parties hereto, and upon such determination, NII shall be
paid the Revenues Adjustment, if any, from the Escrow Fund. The costs of the
independent accounting firm shall be borne by the party (either NII or the
Shareholder) whose determination of the Revenues Adjustment shall be furthest
from the independent accounting firm's determination of the Revenues Adjustment,
or equally by NII and the Shareholder in the event that the determination by the
independent accounting firm is equidistant between each party's determination of
the Revenues Adjustment. Notwithstanding anything to the contrary in this
Agreement, if either the Shareholder's or Dianne M. Lyles' employment with the
Company is terminated without cause or his or her place of employment is
relocated outside of Alaska or Washington without consent of such person (as
provided in each person s employment agreement to be entered into with the
Company on the Closing Date), the Revenues Adjustment under this Section 1.3(c)
will be zero.
1.4 Escrow. Upon Closing, NII shall deliver, or shall cause to be
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delivered, directly to NationsBank, NA, as escrow agent (the "Escrow Agent"),
cash equal to 20% of the Consideration, as such may be adjusted pursuant to
Sections 1.2, 1.3(a) and 1.3(b), to be deducted from the Consideration and held
in an escrow fund (collectively with all interest and earnings thereon, the
"Escrow Fund") pursuant to the terms set forth herein and in an escrow agreement
to be entered into by and among the Shareholder, NII and the Escrow Agent,
substantially in the form attached hereto as Exhibit A (the "Escrow Agreement").
Subject to the terms of this Agreement, the Escrow Fund shall be available to
satisfy any post-Closing adjustment to the Consideration under Sections 1.2,
1.3(a) and 1.3(b), the Revenues Adjustment under Section 1.3(c), or any
indemnification obligations of the Shareholder pursuant to Article 8 for Claims
(as defined in Section 8.4) made on or prior to the twelve (12)-month
anniversary of the Closing Date (the "Release Date"). Promptly following the
Release Date, NII shall sign a Release Certificate (as defined in the Escrow
Agreement) for the release to the Shareholder of the amount remaining in the
Escrow Fund on the Release Date less an amount equal to the sum of (i) the
Target Revenues, (ii) any pending Claim for indemnification made by any
Shareholder Indemnified Party (as defined in Section 8.1), and (iii) any
indemnification obligations of the Shareholder pursuant to Article 8 that have
not yet been fully satisfied as provided herein. Upon the final determination of
the Revenues Adjustment, if any, pursuant to Section 1.3(c)
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(the "Target Revenue Release Date"), NII and the Shareholder shall instruct the
Escrow Agent to release (1) to NII the amount of the Revenues Adjustment, if
any, and (2) to the Shareholder an amount equal to the Target Revenues minus the
sum of (A) the Revenues Adjustment, if any, plus (B) any Claims still pending
under Article 8 as of the Target Revenue Release Date. As promptly as possible
following the final resolution of all claims for indemnification made by a
Shareholder Indemnified Party pending as of the Release Date, NII and the
Shareholder shall deliver to the Escrow Agent a Release Certificate providing
delivery instructions to be followed by the Escrow Agent in paying out the
remaining Escrow Funds, if any, less an amount equal to the Target Revenues if
resolution of pending indemnification claims occurs prior to the Target Revenue
Release Date. The Release Certificate that provides for the release of all
remaining Escrow Funds shall also provide for termination of the escrow and the
Escrow Agreement, as provided in the Escrow Agreement.
1.5 Exchange of Certificates.
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(a) NII to Provide Consideration. In exchange for the
----------------------------
outstanding shares of capital stock of the Company, NII shall cause to be made
available to the Shareholder, the Consideration, as adjusted pursuant to
Sections 1.2 and 1.3.
(b) Certificate Delivery Requirements. At the Closing, the
---------------------------------
Shareholder shall deliver to NII or PTC the certificates (the "Certificates")
representing all Company Capital Stock, duly endorsed in blank by the
Shareholder, or accompanied by blank stock powers duly executed by the
Shareholder and with all necessary transfer tax and other revenue stamps,
acquired at the Shareholder's expense, affixed and canceled. The Shareholder
shall promptly cure any deficiencies with respect to the endorsement of the
Certificates or other documents of conveyance with respect to the stock powers
accompanying such Certificates.
(c) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, NII shall cause payment to be made in exchange for such
lost, stolen or destroyed certificates, upon the execution of an affidavit of
that fact and agreeing to indemnify the Company and NII for any claim that may
be made against NII or the Company with respect to the certificates alleged to
have been lost, stolen or destroyed, which indemnity shall be in such form as
approved by NII; provided, however, that NII may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against NII
with respect to the certificates alleged to have been lost, stolen or destroyed.
(d) No Liability. Notwithstanding anything to the contrary in
------------
this Section 1.4, no party hereto shall be liable to a holder of shares of
Company Capital Stock for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.6 Accounting Terms; Excluded Branches. Except as otherwise
-----------------------------------
expressly provided herein or in the schedules (the "Schedules"), all accounting
terms used in this Agreement shall be
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interpreted, and all financial statements, Schedules, certificates and reports
as to financial matters required to be delivered hereunder, (unless otherwise
specified hereunder or in a Schedule) shall be prepared in accordance with GAAP
consistently applied. In addition, none of the financial data of the Company
included herein, or used to calculated any amounts required as set forth herein
or in the Company Financial Statements (as defined in Section 3.9) shall include
the financial data or results of operations of AWT (as defined in Section 5.14)
or ValuTravel (as defined in Section 5.14).
2. CLOSING
The consummation of the Acquisition and the other transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
94304-1050 on September 17, 1998, providing that all conditions to Closing shall
have been satisfied or waived, or at such other time and date as NII, the
Company and the Shareholder may mutually agree, which date shall be referred to
as the "Closing Date."
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER
To induce NII and PTC to enter into this Agreement and consummate the
transactions contemplated hereby, the Company and the Shareholder, jointly and
severally, represent and warrant to NII and PTC as follows (for purposes of this
Agreement, the phrases "knowledge of the Company" or the "Company's knowledge,"
or words of similar import, mean the knowledge of the Shareholder and Dianne M.
Lyles, including facts of which he or she, in the reasonably prudent exercise of
his or her duties, should be aware, except as otherwise provided herein):
3.1 Due Organization. The Company is a corporation duly organized,
----------------
validly existing and is in good standing under the laws of the jurisdiction of
its incorporation and is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities and to
own, operate and lease its properties and to carry on its business in the places
and in the manner as now conducted. The Company is duly qualified, and in good
standing, as a foreign corporation in each other jurisdiction in which it does
business and/or owns or leases property. Schedule 3.l hereto contains a list of
all jurisdictions in which the Company is authorized or qualified to do
business. The Company has delivered to NII true, complete and correct copies of
the Articles of Incorporation and Bylaws (collectively, the "Charter Documents")
of the Company. The Company is not in violation of any Charter Documents. The
minute books of the Company have been made available to NII (and have been or
will be delivered at Closing, along with the Company's original stock ledger and
corporate seal, to NII) and are correct and, except as set forth in Schedule
3.1, complete in all material respects.
3.2 Authorization; Validity. The Company has the full legal right,
-----------------------
corporate power and authority to enter into this Agreement and the transactions
contemplated hereby and to perform its obligations pursuant to the terms of this
Agreement. The Shareholder has the full legal right and authority to enter into
this Agreement and the transactions contemplated hereby. The execution and
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delivery of this Agreement by the Company and the performance by the Company of
the transactions contemplated herein have been duly and validly authorized by
the Board of Directors of the Company and the Shareholder, and this Agreement
has been duly and validly authorized by all necessary corporate action. This
Agreement is a legal, valid and binding obligation of the Company and the
Shareholder, enforceable in accordance with its terms.
3.3 No Conflicts. Except as set forth on Schedule 3.3, the
------------
execution, delivery and performance of this Agreement, the consummation of the
transactions contemplated hereby, and the fulfillment of the terms hereof will
not:
(a) conflict with, or result in a breach or violation of, any of
the Charter Documents of the Company;
(b) (i) conflict with, or result in a default (or would
constitute a default but for any requirement of notice or lapse of time or both)
under, any document, agreement or other instrument to which the Company or the
Shareholder is a party or by which the Company or the Shareholder is bound, or
(ii) result in the creation or imposition of any Lien on any of the Company's
properties pursuant to (x) any law or regulation to which the Company or the
Shareholder or any of their respective property is subject, or (y) any judgment,
order or decree to which the Company or the Shareholder is bound or any of their
respective property is subject;
(c) result in a termination or impairment of any contractual
right or Permit (as defined in Section 3.14); or
(d) violate any law, order, judgment, rule, regulation, decree
or ordinance to which the Company or the Shareholder is subject or by which the
Company or the Shareholder is bound.
3.4 Capital Stock of the Company.
----------------------------
(a) The authorized capital stock of the Company consists of
100,000 shares of common stock, $1.00 par value, of which 5,000 shares are
issued and outstanding. All of the issued and outstanding shares of the capital
stock of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and are owned of record and beneficially by the
Shareholder free and clear of all Liens. All of the issued and outstanding
shares of the capital stock of the Company were offered, issued, sold and
delivered by the Company in compliance with all applicable state and federal
laws concerning the offer, issuance and sale of securities. Further, none of
such shares was issued in violation of any preemptive rights. There are no
voting agreements or voting trusts with respect to any of the outstanding shares
of the capital stock of the Company.
(b) Except as set forth on Schedule 3.4, no option, warrant,
call, subscription right, conversion right or other contract or commitment of
any kind exists of any character, written or oral, which may obligate the
Company to issue, sell or otherwise transfer any shares of capital stock. The
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any
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distribution in respect thereof. As a result of the Acquisition, PTC will be the
record and beneficial owner of all outstanding capital stock of the Company.
3.5 Subsidiaries and Debt Interests.
-------------------------------
(a) The Company has not in the past had and currently has no
Subsidiaries.
(b) Except as set forth in Schedule 3.5 the Company does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, partnership association or business entity, nor is
the Company, directly or indirectly, a participant in any joint venture,
partnership or other noncorporate entity.
(c) Except as set forth in Schedule 3.5, there are no
promissory notes or other debt instruments that have been issued to, or are held
by, the Company.
3.6 Predecessor Status; Etc. Schedule 3.6 sets forth a listing
-----------------------
of all legal names, trade names, fictitious names or other names (including,
without limitation, any names of divisions or operations) of the Company and all
of their predecessor companies during the five-year period immediately preceding
the Closing, including without limitation the names of any entities from which
the Company has acquired material assets. During the five-year period
immediately preceding the Closing, the Company has operated only under the names
set forth on Schedule 3.6 in the jurisdiction or jurisdictions set forth on
Schedule 3.6. The Company has not been a Subsidiary or division of another
corporation or a part of an acquisition which was later rescinded.
3.7 Required Governmental Filings and Consents. Except as set
------------------------------------------
forth on Schedule 3.7, the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and thereby, will
not require any consent, approval, authorization or permit of, or filing with or
notification to, (a) any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended (the
"Securities Act"), state securities or Blue Sky laws and the Bylaws of the
National Association of Securities Dealers, Inc., and (ii) where the failure to
obtain such consents, approvals, authorization or permits, or to make such
filings or notifications, would not prevent or delay consummation of the
Acquisition or otherwise prevent the Company or the Shareholder from performing
its or his obligations under this Agreement or (b) an other third party.
3.8 Company Financial Conditions .
----------------------------
(a) The Company's revenues for (i) the fiscal year ended
January 4, 1998, were not less than $8,000,000, and (ii) the Trailing Period
were not less than $7,200,000.
(b) The Company's earnings before interest and taxes (without
the addition of any add-backs and before any deduction for amortization of
goodwill related to the Acquisition) for the fiscal year ended January 4, 1998,
were not less than $ * (or * % of revenues for such fiscal
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year), and the Company's earnings before interest and taxes (after the addition
of Add-Backs set forth on Schedule 1.2 and before any deduction for amortization
of goodwill related to the Acquisition) for the Trailing Period were not less
than the greater of $ * or * % of the Company's revenues for the Trailing
Period.
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE
SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.
(c) The sum of the Company's outstanding long-term or short-term
indebtedness to banks, the Shareholder, pension plans, employee benefit plans
and other related plans or other financial institutions and creditors
(including, but not limited to, former shareholders of the Company) as of August
30, 1998 and the Closing Date (in each case including the current portion
thereof, but excluding the notes payable to finance customer accounts receivable
(but only to the extent that the amounts due under such notes are equal to, or
less than, 90% of the outstanding balance of the Company's customer accounts
receivable), trade payables, office equipment leases and other ordinary course
accounts payable) shall not be greater than $253,000.
Any damages arising out of this Section 3.8 shall be limited to those
that impact Adjusted EBIT for the Trailing Period or the Company's tangible net
worth as of August 30, 1998, and considered in the calculation of the
Consideration Adjustment pursuant to Section 1.3.
For purposes of Section 3.8(a) and (b), calculation of amounts as of
the Closing shall be made in accordance with the last paragraph of Section 6.8.
3.9 Financial Statements. Schedule 3.9 includes (a) true, complete and
--------------------
correct copies of the Company's unaudited balance sheet as of January 4, 1998
and income statement for the year ended January 4, 1998 (collectively, the
"Year-End Financials") (b) true, complete and correct copies of the Company's
unaudited balance sheet as of July 5, 1998, and unaudited income statement as of
July 5, 1998 (the "July Financials") and (c) true, complete and correct copies
of the Company's unaudited balance sheet (the "Interim Balance Sheet") as of
August 30, 1998 (the "Interim Balance Sheet Date") and income statement, for the
eight (8)-month period then ended (collectively, the "Interim Financials," and
together with the Year-End Financials and the July Financials, the "Company
Financial Statements"). To the best of the Company's and the Shareholder's
knowledge, the Company Financial Statements have been prepared in accordance
with GAAP consistently applied, subject in the case of the Interim Financials,
to (i) normal year-end adjustments, which individually or in the aggregate will
not be material, (ii) the exceptions stated on Schedule 3.9, and (iii) the
omission of footnote information. Each unaudited balance sheet included in the
Company Financial Statements presents fairly the financial condition of the
Company as of the date indicated thereon, and each of the income statements
included in the Company Financial Statements presents fairly the results of its
operations for the periods indicated thereon. Since the dates of the Company
Financial Statements, there have been no material changes in the Company's
accounting policies other than as requested by NII to conform the Company's
accounting policies to GAAP.
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3.10 Liabilities and Obligations; Claims.
-----------------------------------
(a) Except as set forth on Schedule 3.10, the Company is not
liable for or subject to any liabilities other than:
(i) those liabilities reflected on the Interim Balance
Sheet and not previously paid or discharged;
(ii) those liabilities arising in the ordinary course of
its business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved or
otherwise (but no liabilities for breaches thereof); and
(iii) those liabilities incurred since the Interim Balance
Sheet Date in the ordinary course of business consistent with past practice,
which liabilities are not, individually or in the aggregate, material (none of
which is a liability for breach of contract, breach of warranty for
infringement, claim or lawsuit).
(b) Schedule 3.10 includes a reasonable estimate of the
maximum amount of each liability which is not fixed or which is contested.
(c) The Shareholder has no claim against the Company, nor is
the Company or the Shareholder aware that any third party has any claims against
the Company.
(d) Schedule 3.10 also includes a summary description of all
plans or projects involving the opening of new operations, expansion of any
existing operations or the acquisition of any real property or existing
business, to which management of the Company has made any material expenditure
in the two-year period prior to the date of this Agreement, which if pursued by
the Company would require additional material expenditures of capital.
(e) For purposes of this Section 3.10, the term "liabilities"
shall include without limitation any direct or indirect liability, indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, either accrued, absolute, contingent, mature,
unmature or otherwise, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured. Schedule 3.10 contains a complete list of
all the Company's interest bearing indebtedness (excluding office leases and
ordinary course accounts payable), including the names of creditors, payment
terms, balances due and security interests.
3.11 Books and Records. The Company has made and kept books and
-----------------
records and accounts, which accurately, completely and fairly reflect the
activities of the Company. The Company has not engaged in any transaction,
maintained any bank account, or used any corporate funds except for
transactions, bank accounts, and funds which have been and are reflected in its
normally maintained books and records.
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<PAGE>
3.12 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 3.12 sets forth a
---------------------------------
complete and accurate list, as of the date of this Agreement, of:
(a) the name of each financial institution in which the Company
has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account;
(d) the name of each Person authorized to draw thereon or have
access thereto; and
(e) the name of each Person holding a general or special power
of attorney from the Company and a description of the terms of such power.
3.13 ACCOUNTS AND NOTES RECEIVABLE. On the Closing Date, the Company
-----------------------------
will deliver to NII a complete and accurate list, as of a date not more than two
(2) business days prior to the Closing Date, of the accounts and notes
receivable of the Company (including without limitation receivables from and
advances to employees, the Shareholder, override receivables and financial
assistance segment receivables), which includes an aging of all accounts and
notes receivable showing amounts due in thirty (30)-day aging categories
(collectively, the "Accounts Receivable"). All Accounts Receivable represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business. The Accounts Receivable are
current and collectible net of any respective reserves shown on the Company's
books and records (which reserves are adequate and calculated consistent with
past practice). Subject to such reserves, each of the Accounts Receivable,
except as set forth on Schedule 3.13, will be collected in full, without any
set-off, within one hundred and twenty (120) days after the Closing Date. There
is no contest, claim, or right of set-off, other than rebates and returns in the
ordinary course of business, under any contract with any obligor of an Account
Receivable relating to the amount or validity of such Account Receivable.
3.14 PERMITS. The Company owns or holds all licenses, franchises,
-------
permits and other governmental authorizations, including without limitation
permits, titles (including without limitation motor vehicle titles and current
registrations), licenses and franchises necessary for the continued operation of
its business as it is currently being conducted (the "Permits"). The Permits are
valid, and the Company has not received any notice that any governmental
authority intends to modify, cancel, terminate or fail to renew any Permit. No
present or former officer, manager, employee or agent of the Company or any
affiliate thereof, or any other Person owns or has any proprietary, financial or
other interest (direct or indirect) in any Permits. The Company has conducted
and is conducting its business in compliance with the requirements, standards,
criteria and conditions set forth in the Permits and other applicable orders,
approvals, variances, rules and regulations and is not in violation of any of
the foregoing.
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<PAGE>
3.15 RELATED PARTY TRANSACTIONS. Except as set forth in SCHEDULE 3.15,
--------------------------
no officer, director or shareholder of the Company, or any ancestor, sibling,
descendant or spouse of any of such Persons, or any Person in which any of such
Persons has an interest (each a "Related Party") has, directly or indirectly,
(i) an interest in any entity that furnished or sold within the immediately
preceding year, or furnishes or sells, services or products that the Company
furnishes or sells, or proposes to furnish or sell, or (ii) an interest in any
entity that purchases from or sells or furnishes to, the Company, any good or
services or (iii) a beneficial interest in any Material Contract (as defined in
Section 3.20); provided, however, that ownership of no more than one percent
(1%) of the outstanding voting stock of a publicly traded corporation shall not
be deemed an "interest in any Person" for purposes of this Section 3.15. Neither
the Shareholder nor any officer or director of the Company has any interest,
either directly or indirectly, in any property, real or personal, tangible or
intangible, used in or pertaining to the Company's business, including any
interest in the Intellectual Property (as defined in Section 3.18), except for
rights as a shareholder, and except for rights under any Company Plan (as
defined in Section 3.25). No employee, shareholder, officer or director of the
Company, or their spouses or children, is indebted to the Company nor is the
Company indebted to any of them.
3.16 REAL ESTATE AND REAL PROPERTY.
-----------------------------
(a) The Company does not own and never has owned any real
estate.
(b) For purposes of this Agreement, "Real Property" means all
interests in real property including, without limitation, leaseholds and
subleaseholds, purchase options, easements, licenses, rights to access,
rights-of-way and all buildings and other improvements thereon, used by the
Company, together with any additions thereto or replacements thereof. Schedule
3.16 contains a complete and accurate description of all Real Property
(including street address, legal description (where known), owner and Company's
use thereof) and, to the Company's knowledge, any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges, covenants, easements,
restrictions, encroachments, leases or encumbrances of any nature thereon
("Encumbrances"). The Real Property listed on Schedule 3.16 includes all
interests in real property necessary to conduct the business and operations of
the Company.
(c) Except as set forth in SCHEDULE 3.16:
(i) The Company has obtained all approvals of governmental
authorities (including certificates of use and occupancy, licenses and permits)
required in connection with the use, occupation and operation of the Real
Property.
(ii) The Real Property is suitable and adequate for the uses
to which it is currently devoted. The Real Property and its continued use,
occupancy and operation as used, occupied and operated in the conduct of the
Company's business does not constitute a nonconforming use and is not the
subject of a special use permit under any applicable law.
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<PAGE>
(iii) The Company is not in violation of any law (including
any code, rule, regulation, zoning or building ordinance or health or safety
ordinance), and no notice from any governmental authority has been served upon
the Company claiming any violation of any such law, or requiring or calling
attention to the need for any work, repairs, construction, alterations or
installations on or in connection with such Real Property with which the Company
has not complied.
(iv) Neither the Real Property nor the structures,
facilities and improvements on the Real Property have suffered any damage by
fire or other casualty which has not heretofore been completely repaired and
restored to its original condition in accordance with the term of the Leases (as
defined below).
(v) There are no parties other than the Company in
possession of any of the Real Property or any portion thereof, and there are no
subleases, licenses, concessions or other agreements, written or oral, granting
to any party or parties the right of use or occupancy of any portion of the Real
Property or any portion thereof.
(vi) All oral or written leases, subleases, licenses,
concession agreements or other use or occupancy agreements pursuant to which the
Company leases from any other party any real property, including all amendments,
renewals, extensions, modifications or supplements to any of the foregoing or
substitutions for any of the foregoing (collectively, the "Leases") are valid
and in full force and effect. The Company has provided NII with true and
complete copies of all of the Leases, all amendments, renewals, extensions,
modifications or supplements thereto, and all material correspondence related
thereto, including all correspondence pursuant to which any party to any of the
Leases declared a default thereunder or provided notice of the exercise of any
option granted to such party under such Lease. The Leases and the Company's
interests thereunder are free of all Encumbrances. The Company has not received
any notice of default under any Leases, and the Company is in full compliance
with the terms and provisions of the Leases and there are no material
maintenance or capital improvement obligations thereon. The Company has not
given notice of default to the lessors under any Leases and, to the knowledge of
the Company, the lessors are in full compliance with the provisions of the
Leases, and there are no material maintenance or capital improvement obligations
or the lessor thereon. No Lease is with a Related Party.
(vii) Except as set forth on Schedule 3.16, none of the
Leases requires the consent or approval of any party thereto in connection with
the consummation of the transactions contemplated hereby.
(viii) All personal property and trade fixtures owned or
leased by the Company and used or usable in the conduct of their business in the
Real Property may be removed from the Real Property at the termination of the
Lease without violating the terms of the Lease.
(d) Notwithstanding the above, with respect to any of the common
areas used by the Company, its employees, consultants or customers, in
connection with the Company's use of any Leased premises, the representations
made in this Section 3.16 shall be limited to the actual knowledge of the
Company and the Shareholder.
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3.17 PERSONAL PROPERTY.
-----------------
(a) SCHEDULE 3.17 sets forth a complete and accurate list of
all personal property included on the Interim Balance Sheet and all other
personal property owned or leased by the Company with a current book value in
excess of $20,000 both (i) as of the Interim Balance Sheet Date and (ii)
acquired since the Interim Balance Sheet Date (the "Personal Property").
SCHEDULE 3.17 also lists all leases for Personal Property (true, correct and
complete copies of which have been provided to NII) and indicates which assets
are currently owned, or were formerly owned, by the Shareholder or business or
personal affiliates of the Shareholder or of the Company.
(b) All leases set forth on SCHEDULE 3.17 are in full force and
effect and constitute valid and binding agreements of the Company, and the
Company is not in breach of any of their terms. The Personal Property used by
the Company that is material to the operation of the business is either owned by
the Company or leased under an agreement listed on SCHEDULE 3.17.
3.18 INTELLECTUAL PROPERTY.
---------------------
(a) The Company is the true and lawful owners of, or are
licensed or otherwise possess legally enforceable rights to use, the Marks (as
defined below) listed on SCHEDULE 3.18. Such schedule lists (i) all of the Marks
registered in the United States Patent and Trademark Office ("PTO") or the
equivalent thereof in any state of the United States or in any foreign country,
and (ii) all of the unregistered Marks, that the Company now owns or uses in
connection with its business. The Company owns or has the unrestricted legally
enforceable right to use all of the trademarks, service marks, and trade names
employed in the operation of its business as currently conducted or proposed to
be conducted. The Marks listed on SCHEDULE 3.18 will not cease to be valid
rights of the Company by reason of the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby. For
purposes of this Section 3.18, the term "Mark" shall mean all right, title and
interest in and to any United States or foreign trademarks, service marks and
trade names used by the Company in the operation of its business as currently
conducted, including any registration or application for registration of any
trademarks and services marks in the PTO or the equivalent thereof in any state
of the United States or in any foreign country, as well as any unregistered
marks used by the Company, and any trade dress (including logos, designs,
company names, business names, fictitious names and other business identifiers)
used by the Company in the United States or any foreign country.
(b) The Company is the true and lawful owner of, or are licensed
or otherwise possess legally enforceable rights to use, all rights in the
Patents (as defined below) listed on SCHEDULE 3.18 and the Copyrights (as
defined below) listed on SCHEDULE 3.18. Such Patents and Copyrights constitute
all of the Patents and Copyrights that the Company now owns or is licensed to
use. The Company owns or has the unrestricted legally enforceable right to use
all Patents and Copyrights employed in the operation of its businesses as
currently conducted or proposed to be conducted. For purposes of this Section
3.18, the term "Patent" shall mean any United States or foreign patent to which
the Company has title as of the date of this Agreement, as well as any
application for a United States or foreign patent made by the Company; and the
term "Copyright"
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<PAGE>
shall mean any United States or foreign copyright (registered or unregistered)
owned by the Company as of the date of this Agreement, including any application
for a United States or foreign copyright registration made by the Company.
(c) The Company is the true and lawful owner of, or is licensed
or otherwise has the unrestricted legally enforceable right to use, all rights
in the software (including, without limitation, software used by the Company in
its mid-office and back office operations), trade secrets, franchises or similar
rights (collectively, "Other Rights") listed on SCHEDULE 3.18. Those Other
Rights constitute all of the Other Rights that the Company now owns or is
licensed to use. The Company owns or has the unrestricted right to use all
software, trade secrets, franchises or similar rights employed in the operation
of its business as currently conducted or as proposed to be conducted.
(d) The Marks, Patents, Copyrights and Other Rights listed on
SCHEDULE 3.18 are referred to collectively herein as the "Intellectual
Property." The Intellectual Property owned by the Company is referred to herein
collectively as the "Company Intellectual Property." All other Intellectual
Property, including software used by the Company's mid-office and back office
operations, is referred to herein collectively as the "Third Party Intellectual
Property." The Company has taken all actions necessary to maintain and protect
the Company Intellectual Property. Except as indicated on SCHEDULE 3.18, the
Company has no obligation to compensate any Person for the use of any
Intellectual Property nor has the Company granted to any Person any license,
option or other rights to use in any manner any Intellectual Property, whether
requiring the payment of royalties or not. SCHEDULE 3.18 includes the name of
each licensor of Third Party Intellectual Property.
(e) The Company is not, and will not be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any Third Party Intellectual Property license,
sublicense or agreement described in SCHEDULE 3.18. The Company has not
infringed or misappropriated nor does it currently infringe or misappropriate
any Third party Intellectual Property. No claims with respect to the Company
Intellectual Property or Third Party Intellectual Property are currently pending
or, to the knowledge of the Company, are threatened by any Person, nor, to the
Company's knowledge, do any grounds for any claims exist: (i) to the effect that
the manufacture, sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by the Company infringes on any
Third party Intellectual Property; (ii) against the use by the Company of any
Intellectual Property used in the Company's business as currently conducted by
the Company; (iii) challenging the ownership, validity or effectiveness of any
of the Company Intellectual Property; or (iv) challenging the Company's license
or legally enforceable right to use of the Third Party Intellectual Property. To
the Company's knowledge, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party.
The Company (x) has not been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
Third Party Intellectual Property and which has not been finally terminated or
been informed or notified by any third party that the Company may be engaged in
such infringement or (y) has never agreed to
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indemnify any Person for or against any interference, infringement,
misappropriation or other conflict with respect to any Intellectual Property.
3.19 ARC ACCREDITATION AND BONDING REQUIREMENTS. The Company is, and
------------------------------------------
at Closing will be, accredited with the Airlines Reporting Company ("ARC"), and
has no knowledge of any fact, matter or circumstance which by itself, or with
the passage of time, may give rise to an action by ARC terminating the Company's
accreditation. SCHEDULE 3.19 includes a list of all currently open and
outstanding correspondence between the Company and ARC during the twelve month
period ending on the date hereof, copies of which have been provided to NII. The
Company does, and at Closing will, have the bond required by ARC, in the amount
required by ARC. SCHEDULE 3.19 sets forth the amount of the bond, the expiration
date of the bond, the name of the company issuing the bond, and the premium for
the bond. Except in the ordinary course of business, the Company has no unpaid
or contested debit memoranda with ARC, or any airline. SCHEDULE 3.19 lists a
representative sample of contested debit memoranda the Company had with ARC or
an airline during the twelve (12) month period ending on the date hereof.
3.20 SIGNIFICANT CUSTOMERS; PREFERRED VENDORS; MATERIAL CONTRACTS.
------------------------------------------------------------
(a) SCHEDULE 3.20(A) sets forth a complete and accurate list of
all Significant Customers and Preferred Vendors. For purposes of this Agreement,
"Significant Customers" are the twenty (20) customers that were responsible for
the highest amount of revenues of the Company during each of the past four (4)
fiscal quarters. For purposes of this Agreement, "Preferred Vendors" are all
airlines with which the Company has override agreements and all hotel and rental
car companies with which the Company has an agreement establishing commission
rates in excess of those generally paid in the industry ("Preferred Vendor
Agreement") or similar arrangements.
(b) Except as set forth in SCHEDULE 3.20(B), the Company is
not a party to any written or oral (i) collective bargaining agreement or
contract with any labor union; (ii) bonus, pension, profit sharing, retirement,
stock bonus, thrift or other form of incentive, deferred or other compensation
plan; (iii) stock purchase, stock option or similar plan or practice, whether
formal or informal; (iv) contract for the employment of any officer, individual
employee, or other Person on a full-time or consulting basis; (v) other contract
with any of its employees, officer or directors; (vi) agreement or indenture
relating to the borrowing of money or to mortgaging, pledging or otherwise
placing a lien on any of its assets; (vii) guaranty of any obligation for
borrowed money or otherwise, other than endorsements made for collection; (viii)
lease or agreement under which it is lessee of, or holds or operates any
property, real or personal, owned by any other party involving in excess of
$20,000 per year; (ix) lease or agreement under which it is lessor of or permits
any third party to hold or operate any property, real or personal, owned or
controlled by it involving in excess of $20,000, (x) contract, purchase order or
group of related contracts or purchase orders with the same party for the sale
of products or services under which the undelivered balance of such products or
services has a sales price in excess of $20,000; (xi) other contract or group of
related contracts with the same party either continuing over a period of more
than six months from the date or dates thereof, not terminable by it on 30 days'
or less notice without penalty or involving more than $20,000; (xii) Preferred
Vendor Agreement or airline override agreements, (xiii) ARC Agency
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Agreements and bonds required by ARC; (xiv) contract which prohibits it from
freely engaging in business anywhere in the world; (xv) franchise agreement;
(xvi) assignment, license, indemnity or other agreement with respect to any form
of Intellectual Property or any Computer Reservation Systems ("CRS") Agreement;
(xvii) warranty agreement with respect to services rendered or products
licensed; (xviii) life, hospitalization, medical, dental or disability insurance
or other welfare benefit plan, program or arrangement, whether formal or
informal; (xix) agreements regarding the provision of telephone and other
communication services; or (xx) other agreement material to any of them or not
entered into in the ordinary course of business (collectively all referred to
herein as the "Material Contracts.")
(c) SCHEDULE 3.20(C) contains a description of the Company's
policies with respect to booking back-to-back tickets and passive or phantom
segments. SCHEDULE 3.20(C) also contains a description of the Company's policies
regarding clearance of hotel commissions.
(d) Except to the extent set forth on SCHEDULE 3.20(D), (i)
none of the Company's Significant Customers has canceled or substantially
reduced or, to the knowledge of the Company, is currently attempting or
threatening to cancel or substantially reduce, any purchases from the Company,
(ii) none of the Company's Preferred Vendors has altered, modified, reduced or
canceled, or threatened to alter, modify, reduce or cancel, the terms of any
Material Contract of which it is a party, (iii) the Company has complied with
all of their commitments and obligations and are not in default under any of the
Material Contracts, and no notice of default has been received with respect to
any thereof, and (iv) there are no Material Contracts that were not negotiated
at arm's length. The Company has not received any material customer complaints
concerning its services.
(e) Each Material Contract, except those terminated pursuant
to Section 5.4, is valid and binding on the Company and is in full force and
effect and is not subject to any default thereunder by any party obligated to
the Company pursuant thereto. Except as specifically identified on SCHEDULE
3.20(E) (the "Unobtained Consents"), the Company has obtained all necessary
consents, waivers and approvals of parties to any Material Contracts that are
required in connection with any of the transactions contemplated hereby, or are
required by any governmental agency or other third party or are advisable in
order that any such Material Contract remain in effect without modification
after the Acquisition and without giving rise to any right to termination,
cancellation or acceleration or loss of any right or benefit ("Third Party
Consents"). All Third Party Consents are listed on SCHEDULE 3.20(E). The
Shareholder agrees to provide all Unobtained Consents to NII promptly after
Closing.
(f) The Company is not a "women's business enterprise" ("WBE")
or "woman-owned business concern" as defined in 48 C.F.R.ss. 52.204-5, or a
"minority business enterprise" ("MBE") or "minority-owned business concern" as
defined in 48 C.F.R.ss.52.219- 8, nor has it held itself out to be such to any
of its customers.
(g) The outstanding balance on all loans or credit agreements
either (i) between the Company and any Person in which the Shareholder owns a
material interest, or (ii) guaranteed by
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the Company for the benefit of any Person in which the Shareholder owns a
material interest, are set forth in SCHEDULE 3.20(G).
(h) The pledge, hypothecation or mortgage of all or
substantially all of the Company's assets (including, without limitation, a
pledge of the Company's contract rights under any Material Contract) will not,
except as set forth on Schedule 3.20(h), (i) result in the breach or violation
of, (ii) constitute a default under, (iii) create a right of termination under,
or (iv) result in the creation or imposition of (or the obligation to create or
impose) any lien upon any of the assets of the Company (other than a lien
created pursuant to the pledge, hypothecation or mortgage described at the start
of this Section 3.20) pursuant to any of the terms and provisions of, any
Material Contract to which the Company is a party or by which the property of
the Company is bound.
3.21 GOVERNMENT CONTRACTS.
--------------------
(a) Except as set forth on SCHEDULE 3.21, the Company is not a
party to any government contracts.
(b) The Company has not been suspended or debarred from bidding
on contracts or subcontracts for any agency or instrumentality of the United
States Government or any state or local government, nor, to the knowledge of the
Company, has any suspension or debarment action been threatened or commenced.
There is no valid basis for the Company's suspension or debarment from bidding
on contracts or subcontracts for any agency of the United States Government or
any state or local government.
(c) The Company has not been, nor is it now being, audited, or
investigated by any government agency, or the inspector general or auditor
general or similar functionary of any agency or instrumentality, nor, to the
knowledge of the Company, has such audit or investigation been threatened.
(d) The Company has no dispute pending before a contracting
office of, nor any current claim (other than the Accounts Receivable) pending
against, any agency or instrumentality of the United States Government or any
state or local government, relating to a contract.
(e) The Company is not in default or violation of any government
contracts and has not, with respect to any government contract, received a cure
notice advising the Company that it is or was in default or would, if it failed
to take remedial action, be in default under such contract.
(f) The Company has not submitted any inaccurate, untruthful, or
misleading cost or pricing data, certification, bid, proposal, report, claim, or
any other information relating to a contract to any agency or instrumentality of
the United States Government or any state or local government.
(g) No employee, agent, consultant, representative, or affiliate
of the Company is in receipt or possession of any competitor or government
proprietary or procurement sensitive
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information related to the Company's business under circumstances where there is
reason to believe that such receipt or possession is unlawful or unauthorized.
(h) Each of the Company's government contracts has been
issued, awarded or novated to the Company in the Company's name.
3.22 INSURANCE. SCHEDULE 3.22 sets forth a complete and accurate
---------
list, as of the Interim Balance Sheet Date, of all insurance policies carried by
the Company and all insurance loss runs or workmen's compensation claims
received for the past two (2) policy years. The Company has delivered to NII
true, complete and correct copies of all current insurance policies, all of
which are in full force and effect. All premiums payable under all such policies
have been paid and the Company and are otherwise in full compliance with the
terms of such policies. Such policies of insurance are of the type and in
amounts customarily carried by Persons conducting businesses similar to that of
the Company. To the knowledge of the Company, there have been no threatened
terminations of, or material premium increases with respect to, any of such
policies.
3.23 ENVIRONMENTAL MATTERS.
---------------------
(a) Hazardous Material. To the Company's and the Shareholder's
------------------
actual knowledge, other than as set forth on SCHEDULE 3.23, no underground
storage tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state, local or other applicable
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
properly and safely maintained (a "Hazardous Material"), are present in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that the Company has at any time owned, operated,
occupied or leased. SCHEDULE 3.23 identifies all underground and aboveground
storage tanks, and the capacity, age and contents of such tanks, located on Real
Property owned or leased by the Company.
(b) Hazardous Materials Activities. The Company has not
------------------------------
transported, stored, used, manufactured, disposed of or released, or exposed its
employees or others to, Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has the Company disposed of, transported, sold,
or manufactured any product containing a Hazardous Material (collectively,
"Company Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Company Hazardous Material Activity.
(c) Permits. The Company does not hold any environmental
-------
approvals, permits, licenses, clearances and consents and, to the actual
knowledge of the Company, none is required for
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the conduct of the Company's business as such business is currently being
conducted or is proposed to be conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
-------------------------
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
actual knowledge of the Company, threatened concerning any Hazardous Material or
any Company Hazardous Materials Activity. To the actual knowledge of the
Company, there are no past or present actions, activities, circumstances,
conditions, events, or incidents that could involve the Company (or any Person
whose liability the Company has retained or assumed, either by contract or
operation of law) in any environmental litigation, or impose upon the Company
(or any Person whose liability the Company has retained or assumed, either by
contract or operation of law) any environmental liability including, without
limitation, common law tort liability.
3.24 LABOR AND EMPLOYMENT MATTERS. With respect to employees of and
----------------------------
service providers to the Company:
(a) for purposes of this Section 3.24 and Section 3.25, the
phrases "Company's knowledge," "to the knowledge of the Company" or words of
similar import include, in addition to those Persons designated in the first
paragraph of this Section, the knowledge of anyone responsible for the Company's
human resources;
(b) the Company is and has been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation any such laws respecting employment discrimination, sexual
harassment, workers' compensation, family and medical leave, the Immigration
Reform and Control Act, and occupational safety and health requirements, and
have not and are not engaged in any unfair labor practice;
(c) there is not now, nor within the past three (3) years has
there been, any unfair labor practice complaint against the Company pending or,
to the Company's knowledge, threatened, before the National Labor Relations
Board, the Equal Employment Opportunity Commission or any other comparable state
or local authority;
(d) there is not now, nor within the past three (3) years has
there been, any labor strike, slowdown or stoppage actually pending or, to the
Company's knowledge, threatened, against or directly affecting the Company;
(e) to the Company's knowledge, no labor representation
organization effort exists nor has there been any such activity within the past
three (3) years;
(f) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and, to the Company's
knowledge, no claims therefor exist or have been threatened;
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(g) the employees of the Company are not now and have never
been represented by any labor union, and no collective bargaining agreement is
binding and in force against the Company or currently being negotiated by the
Company;
(h) all Persons classified by the Company as independent
contractors do satisfy and have satisfied the requirements of law to be so
classified, and the Company has fully and accurately reported their compensation
on IRS Forms 1099 when required to do so. SCHEDULE 3.24 contains a list of all
IRS Forms 1099 that have been issued by the Company in the last three (3) fiscal
years, and the aggregate amount in dollars reported under IRS Forms 1099 for
each such fiscal year;
(i) the Company is not aware that any executive or key
employee or any group of employees has plans to terminate his, her or their
employment with the Company; and
(j) except as described in SCHEDULE 3.24, there have been no
claims or allegations brought against the Company or any officer, director or
employee of the Company or other Person with whom an employee may have dealings
through his or her employment by Company, with respect to employment, employment
practices or terms or conditions of employment, including without limitation
claims alleging sexual harassment or discrimination.
3.25 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Definitions.
-----------
(i) "Benefit Arrangement" means any benefit
arrangement, obligation, custom, or practice, whether or not legally
enforceable, to provide benefits, other than salary, as compensation for
services rendered, to present or former directors, employees, agents, or
independent contractors, other than any obligation, arrangement, custom or
practice that is an Employee Benefit Plan, including, without limitation,
employment agreements, severance agreements, executive compensation
arrangements, incentive programs or arrangements, sick leave, vacation pay,
severance pay policies, plant closing benefits, salary continuation for
disability, consulting, or other compensation arrangements, workers'
compensation, retirement, deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs, any plans subject to Section 125 of the
Code, and any plans providing benefits or payments in the event of a change of
control, change in ownership, or sale of a substantial portion (including all or
substantially all) of the assets of any business or portion thereof, in each
case with respect to any present or former employees, directors, or agents.
(ii) "Code" means the Internal Revenue Code of 1986, as
amended.
(iii) "Company Benefit Arrangement" means any Benefit
Arrangement sponsored or maintained by the Company or with respect to which the
Company has or may have any liability (whether actual, contingent, with respect
to any of its assets or otherwise) as of the Closing Date, in each case with
respect to any present or former directors, employees, or agents of the Company.
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(iv) "Company Plan" means, as of the Closing Date, any
Employee Benefit Plan for which the Company is the "plan sponsor" (as defined in
Section 3(16)(B) of ERISA) or any Employee Benefit Plan currently or formerly
maintained by the Company or to which the Company is obligated to make payments,
in each case with respect to any present or former employees of the Company.
(v) "Employee Benefit Plan" has the meaning given in
Section 3(3) of ERISA.
(vi) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and all regulations and rules issued
thereunder, or any successor law.
(vii) "ERISA Affiliate" means any Person that, together
with the Company, would be or was at any time treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA and any general partnership of
which the Company is or has been a general partner.
(viii) "IRS" means the Internal Revenue Service.
(ix) "Multiemployer Plan" means any Employee Benefit
Plan described in Section 3(37) of ERISA.
(x) "Qualified Plan" means any Employee Benefit Plan
that meets, purports to meet, or is intended to meet the requirements of Section
401(a) of the Code.
(xi) "Welfare Plan" means any Employee Benefit Plan
described in Section 3(1) of ERISA.
(b) SCHEDULE 3.25 contains a complete and accurate list of all
Company Plans and Company Benefit Arrangements. SCHEDULE 3.25 specifically
identifies all Company Plans (if any) that are Qualified Plans.
(c) With respect, as applicable, to Employee Benefit Plans and
Benefit Arrangements:
(i) true, correct and complete copies of all the
following documents with respect to each Company Plan and Company Benefit
Arrangement, to the extent applicable, have been delivered to NII or its
designee: (A) all documents constituting the Company Plans and Company Benefit
Arrangements, including but not limited to, trust agreements, insurance
policies, service agreements, and formal and informal amendments thereto; (B)
the most recent Forms 5500 or 5500C/R and any financial statements attached
thereto and those for the prior three (3) years; (C) the last Internal Revenue
Service determination letter, the last IRS determination letter that covered the
qualification of the entire plan (if different), and the materials submitted by
the Company to obtain those letters; (D) the most recent summary plan
description; (E) the most recent written descriptions of all non-written
agreements relating to any such plan or arrangement; (F) all
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notices that were given within the four (4) years preceding the date of this
Agreement by the IRS, Department of Labor, or any other governmental agency or
entity with respect to any plan or arrangement; and (G) employee manuals or
handbooks containing personnel or employee relations policies;
(ii) the World Express Travel Savings & Retirement Plan
(the "Company 401(k) Plan") is the only Qualified Plan and is further described
on SCHEDULE 3.25. The Company has never maintained or contributed to another
Qualified Plan. The Company 401(k) Plan qualifies under Section 401(a) of the
Code, and any trusts maintained pursuant thereto are exempt from federal income
taxation under Section 501 of the Code, and nothing has occurred with respect to
the design or operation of any Qualified Plan that could cause the loss of such
qualification or exemption or the imposition of any liability, lien, penalty, or
tax under ERISA or the Code;
(iii) the Company has never sponsored or maintained, had
any obligation to sponsor or maintain, or had any liability (whether actual or
contingent, with respect to any of its assets or otherwise) with respect to any
Employee Benefit Plan subject to Section 302 of ERISA or Section 412 of the Code
or Title IV of ERISA (including any Multiemployer Plan);
(iv) each Company Plan and each Company Benefit
Arrangement has been maintained in accordance with its constituent documents and
with all applicable provisions of the Code, ERISA and other laws, including
federal and state securities laws;
(v) there are no pending claims or lawsuits by,
against, or relating to any Employee Benefit Plans or Benefit Arrangements that
are not Company Plans or Company Benefit Arrangements that would, if successful,
result in liability of the Company or the Shareholder, and no claims or lawsuits
have been asserted, instituted or, to the knowledge of the Company, threatened
by, against, or relating to any Company Plan or Company Benefit Arrangement,
against the assets of any trust or other funding arrangement under any such
Company Plan, by or against the Company with respect to any Company Plan or
Company Benefit Arrangement, or by or against the plan administrator or any
fiduciary of any Company Plan or Company Benefit Arrangement, and the Company
does not have knowledge of any fact that could form the basis for any such claim
or lawsuit. The Company Plans and Company Benefit Arrangements are not presently
under audit or examination (nor has notice been received of a potential audit or
examination) by the IRS, the Department of Labor, or any other governmental
agency or entity, and no matters are pending with respect to the Company 401(k)
Plan under the IRS's Voluntary Compliance Resolution program, its Closing
Agreement Program, or other similar programs;
(vi) no Company Plan or Company Benefit Arrangement
contains any provision or is subject to any law that would prohibit the
transactions contemplated by this Agreement or that would give rise to any
vesting of benefits, severance, termination, or other payments or liabilities as
a result of the transactions contemplated by this Agreement;
(vii) with respect to each Company Plan, there has
occurred no non-exempt "prohibited transaction" (within the meaning of Section
4975 of the Code) or transaction prohibited
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by Section 406 of ERISA or breach of any fiduciary duty described in Section 404
of ERISA that would, if successful, result in any liability for the Company or a
shareholder, officer, director, or employee of the Company;
(viii) all reporting, disclosure, and notice requirements
of ERISA and the Code have been fully and completely satisfied with respect to
each Company Plan and each Company Benefit Arrangement;
(ix) all amendments and actions required to bring the
Company Benefit Plans into conformity with the applicable provisions of ERISA,
the Code, and other applicable laws have been made or taken except to the extent
such amendments or actions (A) are not required by law to be made or taken until
after the Closing and (B) are disclosed on SCHEDULE 3.25;
(x) payment has been made of all amounts that the
Company is required to pay as contributions to the Company Benefit Plans as of
the last day of the most recent fiscal year of each of the plans ended before
the date of this Agreement; all benefits accrued under any unfunded Company Plan
or Company Benefit Arrangement will have been paid, accrued, or otherwise
adequately reserved in accordance with GAAP as of the Interim Balance Sheet
Date; and all monies withheld from employee paychecks with respect to Company
Plans have been transferred to the appropriate plan within thirty (30) days of
such withholding;
(xi) the Company has not prepaid or prefunded any
Welfare Plan through a trust, reserve, premium stabilization, or similar
account, nor does it provide benefits through a voluntary employee beneficiary
association as defined in Section 501(c)(9) of the Code;
(xii) no statement, either written or oral, has been
made by the Company to any Person with regard to any Company Plan or Company
Benefit Arrangement that was not in accordance with the Company Plan or Company
Benefit Arrangement and that could have an adverse economic consequence to the
Company;
(xiii) the Company has no liability (whether actual,
contingent, with respect to any of its assets or otherwise) with respect to any
Employee Benefit Plan or Benefit Arrangement that is not a Company Benefit
Arrangement or with respect to any Employee Benefit Plan sponsored or maintained
(or which has been or should have been sponsored or maintained) by any ERISA
Affiliate;
(xiv) all group health plans of the Company and its
affiliates, as further described on SCHEDULE 3.25, have been operated in
material compliance with the requirements of Sections 4980B of the Code (and its
predecessor), 5000 of the Code and Part 7 of ERISA, and the Company has
provided, or will have provided before the Closing Date, to individuals entitled
thereto all required notices and coverage pursuant to Section 4980B of the Code
with respect to any "qualifying event" (as defined therein) occurring before or
on the Closing Date; and
(xv) no employee or former employee of the Company or
beneficiary of any such employee or former employee is, by reason of such
employee's or former employee's
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employment, entitled to receive any benefits, including, without limitation,
death or medical benefits (whether or not insured) beyond retirement or other
termination of employment as described in Statement of Financial Accounting
Standards No. 106, other than (i) death or retirement benefits under a Qualified
Plan, (ii) deferred compensation benefits accrued as liabilities on the Closing
Statement or (iii) continuation coverage mandated under Section 4980B of the
Code or other applicable law.
(d) SCHEDULE 3.25 hereto contains the most recent quarterly
listing of workers' compensation claims and a schedule of workers' compensation
claims of the Company for the last three (3) fiscal years.
(e) SCHEDULE 3.25 hereto sets forth an accurate list, as of
the date hereof, of all employees of the Company who may earn more than $75,000
in fiscal 1998, all officers and all directors, and lists all employment
agreements (written or oral) with such employees, officers and directors and the
rate of compensation (and the portions thereof attributable to salary, bonus,
and other compensation respectively) of each such Person as of the Interim
Balance Sheet Date.
(f) The Company has not declared or paid any bonus
compensation in contemplation of the transactions contemplated by this
Agreement.
(g) Except as set forth on SCHEDULE 3.25, there are no
Contingent Deferred Sales Charges ("CDSC's") or similar surrender fees, asset
charges or other penalties that will become payable as a result of the
termination of any Company Plan or Company Benefit Arrangement or the merger of
the assets of such Company Plan or Company Benefit Arrangement into a plan or
benefit arrangement of NII. To the extent that any such CDSC's or similar
charges or penalties are payable upon such event, the Shareholder shall pay such
amounts at Closing or, with the concurrence of NII, NII may pay such amounts and
the Consideration shall be reduced accordingly.
3.26 TAXES.
-----
(a) (i) The Company has timely filed all Tax Returns (as
defined below) due on or before the Closing Date, and such Tax Returns are true,
correct and complete in all respects.
(ii) The Company has paid in full on a timely basis all
Taxes (as defined below) owed by it, whether or not shown on any Tax Return.
(iii) The amount of the Company's liability for unpaid
Taxes as of the Interim Balance Sheet Date did not exceed the amount of the
current liability accruals for Taxes (excluding reserves for deferred Taxes)
shown on the Interim Balance Sheet, and the amount of the Company's liability
for unpaid Taxes for all periods or portions thereof ending on or before the
Closing Date will not exceed the amount of the current liability accruals for
Taxes (excluding reserves for deferred Taxes) as such accruals are reflected on
the books and records of the Company on the Closing Date.
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(iv) The Company has filed all reports and has created
and/or retained all records required under Section 6038 of the Code with respect
to its ownership by and transactions with related parties. Each related foreign
person required to maintain records under Section 6038(A) with respect to
transactions between Company and the related foreign person has maintained such
records. All documents that are required to be created and/or preserved by the
related foreign person with respect to transactions with the Company are either
maintained in the United States, or the Company is exempt from the record
maintenance requirements of Section 6038A of the Code with respect to such
transactions under Section 1.6038-1. The Company is not a party to any recorded
maintenance agreement with the IRS with respect to Section 6038A of the Code.
Each related foreign person that has engaged in transactions with the Company
has authorized the Company to act as its limited agent solely for purposes of
Sections 7602, 7603 and 7604 of the Code with respect to any request by the IRS
to examine records or produce testimony related to any transaction with the
Company, and each such authorization remains in full force and effect.
(v) The Company has a taxable year for each year
ending on the Sunday closest to January 1 of the following year.
(vi) The Company currently utilizes the accrual method
of accounting for income Tax purposes and such method of accounting has not
changed in the past five (5) years. The Company has not agreed to, and is not
and will not be required to, make any adjustments under Section 481(a) of the
Code as a result of a change in accounting methods.
(vii) The Company has withheld and paid over to the
proper governmental authorities all Taxes required to have been withheld and
paid over and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid to any employee, independent contractor, creditor,
or other third party.
(viii) Except as disclosed in SCHEDULE 3.26(A), the Tax
Returns of the Company have never been audited by a government or taxing
authority nor is any such audit in process, pending or threatened (either in
writing or verbally, formally or informally). No deficiencies exist or have been
asserted (either in writing or verbally, formally or informally) or are expected
to be asserted with respect to Taxes of the Company, and the Company has not
received notice (either in writing or verbally, formally or informally) or
expects to receive notice that it has not filed a Tax Return or paid Taxes
required to be filed or paid by it. The Company is not a party to any action or
proceeding for assessment or collection of Taxes, and no such event has been
asserted or threatened (either in writing or verbally, formally or informally)
against the Company or any of its assets. No waiver or extension of any statute
of limitations is in effect with respect to Taxes or Tax Returns of the Company.
The Company has disclosed in its federal income tax returns all positions taken
therein that could give rise to a substantial understatement penalty within the
meaning of Section 6662 of the Code.
(ix) There are (and as of immediately following the
Closing there will be) no Liens on the assets of the Company relating to or
attributable to Taxes.
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(x) To the Company's knowledge, there is no basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of the Company or otherwise
have an adverse effect on the Company or its business.
(xi) None of the Company's assets are treated as "tax
exempt use property" within the meaning of Section 168(h) of the Code.
(xii) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Company that, individually or
collectively, could give rise to the payment of any amount (or portion thereof)
that would not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
(xiii) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(xiv) The Company is not, and has not been at any time, a
party to a tax sharing, tax indemnity or tax allocation agreement, and the
Company has not assumed the tax liability of any other Person under contract.
(xv) The Company is not, and has not been at any time
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
(xvi) The Company's tax basis in its assets for purposes of
determining its future amortization, depreciation and other federal income tax
deductions is accurately reflected on the Company's tax books and records.
(xvii) The Company has not been a member of an affiliated
group filing a consolidated federal income Tax Return and does not have any
liability for the Taxes of another Person under Treas. Reg.ss.1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(xviii) The Company has no net operating losses or other Tax
attributes presently subject to limitation under Sections 382, 383 or 384 of the
Code, or the federal consolidated return regulations.
(b) (i) The Company has, since July 1, 1989, been an S
Corporation within the meaning of Section 1361 of the Code.
(ii) Except as disclosed on SCHEDULE 3.26(B), the Company
does not have a net recognized or a net unrealized built-in gain within the
meaning of Section 1374 of the Code.
(iii) SCHEDULE 3.26(B) contains an accurate and complete
description of Company's current and accumulated earnings and profits.
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<PAGE>
(iv) Except as disclosed on SCHEDULE 3.26(B), the Company
will not be liable for any Tax under Section 1374 of the Code in connection with
the deemed sale of Company's assets caused by the Section 338 Election. The
Company has not in the past 10 years, acquired assets from another corporation
in a transaction in which the Company's Tax basis for the acquired assets was
determined, in whole or in part, by reference to the Tax basis of the acquired
assets (or any other property) in the hands of the transferor.
(c) For purposes of this Agreement:
(i) the term "Tax" shall include any tax or similar
governmental charge, impost or levy (including without limitation income taxes,
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts
taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes,
property taxes, withholding taxes, payroll taxes, minimum taxes or windfall
profit taxes) together with any related penalties, fines, additions to tax or
interest imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof; and
(ii) the term "Tax Return" shall mean any return
(including any information return), report, statement, schedule, notice, form,
estimate, or declaration of estimated tax relating to or required to be filed
with any governmental authority in connection with the determination,
assessment, collection or payment of any Tax.
3.27 CONFORMITY WITH LAW; LITIGATION.
-------------------------------
(a) The Company has not violated any law or regulation or any
order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it.
(b) No Shareholder has, at any time: (i) committed any
criminal act (except for minor traffic violations); (ii) engaged in acts of
fraud, dishonesty, gross negligence or moral turpitude; (iii) filed for personal
bankruptcy; or (iv) been an officer, director, manager, trustee or controlling
shareholder of a corporation or other entity that filed for bankruptcy or
Chapter 11 protection.
(c) Except as set forth on SCHEDULE 3.27, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the Company,
threatened against or affecting the Company, at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over it and no
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received. There are no arbitration or mediation proceedings pending or,
to the knowledge of the Company, threatened. There are no judgments, orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration) against the Company or against any of
its properties or business.
3.28 RELATIONS WITH GOVERNMENTS. The Company has not made,
--------------------------
offered or agreed to offer anything of value to any governmental official,
political party or candidate for government
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office, nor has it otherwise taken any action that would cause the Company to be
in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
law of similar effect.
3.29 ABSENCE OF CHANGES. Since January 4, 1998, the Company has
------------------
conducted its business in the ordinary course and, except as contemplated herein
or as set forth on SCHEDULE 3.29, there has not been:
(a) any change, by itself or together with other changes, that
has adversely affected, or is likely to adversely affect, the business,
operations, affairs, prospects, properties, assets, profits or condition
(financial or otherwise) of the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of the Company;
(c) any change in the authorized capital of the Company or in
its outstanding securities or any change in its ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution
in respect of the capital stock, or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company;
(e) any increase in the compensation, bonus, sales commissions
or fee arrangements payable or to become payable by the Company to any of its
officers, directors, shareholders, employees, consultants or agents, except for
ordinary and customary bonuses and salary increases for employees in accordance
with past practice, nor has the Company entered into or amended any Company
Benefit Arrangement, Company Plan, employment, severance or other agreement
relating to compensation or fringe
benefits;
(f) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character, materially adversely
affecting the business or future prospects of the Company;
(g) any sale or transfer, or any agreement to sell or
transfer, any material assets property or rights (including without limitation
any Company Intellectual Property) of the Company to any Person, including
without limitation the Shareholder and his Affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company, including without limitation any
indebtedness or obligation of the Shareholder and his affiliates, provided that
the Company may negotiate and adjust bills in the course of good faith disputes
with customers in a manner consistent with past practice;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
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<PAGE>
(j) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of business of the Company;
(k) any waiver of any material rights or claims of the
Company;
(l) any breach, amendment or termination of any material
contract, agreement, license, permit or other right to which the Company is a
party;
(m) any transaction by the Company outside the ordinary course
of business;
(n) any capital expenditure or commitment by the Company,
either individually or in the aggregate, exceeding $20,000;
(o) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by the Company;
(p) any creation or assumption by the Company of any mortgage,
pledge, security interest or lien or other encumbrance on any asset (other than
liens arising under existing lease financing arrangements which are not material
and liens for Taxes not yet due and payable);
(q) any entry into, amendment of, relinquishment, termination
or non-renewal by the Company of any contract, lease transaction, commitment or
other right or obligation requiring aggregate payments by the Company in excess
of $20,000;
(r) any loan by the Company to any Person or entity, incurring
by the Company, of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others;
(s) the commencement or notice or, to the knowledge of the
Company, threat of commencement, of any lawsuit or proceeding against, or
investigation of, the Company or any of its affairs;
(t) any discharge or satisfaction of any Lien or Encumbrance
or payment of any obligation or liability other than current liabilities in the
ordinary course of business;
(u) any charitable contribution or pledge;
(v) any investment in or steps to incorporate any Subsidiary;
or
(w) negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (v) (other than negotiations with NII and its representatives regarding
the transactions contemplated by this Agreement).
3.30 INVENTORY. Except as set forth in Schedule 3.30 the Company
---------
has no material inventories, except for general office supplies.
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<PAGE>
3.31 Year 2000 Compliance.
--------------------
(a) As used in this Section 3.31, the term "System" refers to
hardware, firmware, software and other equipment, systems and components of such
equipment or system, and the term "Year 2000 Compliant" as it applies to a
System means that the System:
(i) Will function properly and completely as designed before,
during and after January 1, 2000, without changes in operation in connection
with dates after December 31, 1999;
(ii) Will not abnormally end or abort or provide invalid or
incorrect results as a result of date data, specifically including date data
which represents or references dates after December 31, 1999, or dates falling
in different centuries;
(iii) Will respond to two digit date input in a way that resolves
the ambiguity as to century in a disclosed, defined and predetermined manner and
will store and provide output of date information in ways that are unambiguous
as to century; and
(iv) Will correctly recognize and process the date of February
29, and any related data, during leap years, including the leap year occurring
in the year 2000.
(b) SCHEDULE 3.31 describes (i) the steps the Company has
completed to date in order to determine whether or not its Systems are Year 2000
Compliant, (ii) the degree to which its Systems are Year 2000 Compliant and a
list or description of its Systems that are not Year 2000 Compliant, (iii) the
costs incurred to date in order that its Systems will be Year 2000 Compliant,
and (iv) the expected costs that will need to be incurred in the future for its
Systems to be completely Year 2000 Compliant (broken down by hardware and
software).
(c) The parties agree that this Section 3.31 shall not apply to (1)
any CRS System that NII elects to use on an enterprise-wide basis at all its
locations, including the Company, or (2) the Company's Apollo or Sabre/ADSX
Systems if NII actively prevents the Company from making any necessary
replacements or modifications to its CRS Systems to make such Systems Year 2000
Compliant following the Closing.
3.32 DISCLOSURE. The Company has delivered to NII or PTC true and
----------
complete copies of each agreement, contract, commitment or other document (or
summaries thereof) that is referred to in the Schedules or that has been
requested by NII or PTC. All written agreements, lists, schedules, instruments,
exhibits, documents, certificates, reports, statements and other writings
furnished pursuant hereto or in connection with this Agreement or the
transactions contemplated hereby, are and will be complete and accurate in all
material respects. No representation or warranty by the Shareholder or the
Company contained in this Agreement, in the Schedules attached hereto or in any
certificate furnished or to be furnished by the Shareholder or the Company to
NII in connection herewith or pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary in order to make any statement contained herein or therein not
misleading. There is no fact known to the Shareholder that has specific
application to the
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<PAGE>
Shareholder or the Company (other than general economic or industry conditions)
and that materially adversely affects or, as far as the Shareholder can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Company that has not been
set forth in this Agreement or any Schedule hereto.
4. REPRESENTATIONS OF NII AND PTC
To induce the Company and the Shareholder to enter into this Agreement and
consummate the transactions contemplated hereby, NII and PTC represent and
warrant to the Company and the Shareholder as follows:
4.1 DUE ORGANIZATION. NII is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Delaware, and is
duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted. NII is not in
violation of its Certificate of Incorporation or Bylaws, each as amended to date
(the "NII Charter Documents"). PTC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado, and is
duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted. PTC is not in
violation of its Articles of Incorporation or Bylaws, each as amended to date
(the "PTC Charter Documents").
4.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS. The representatives of NII and
--------------------------------------
PTC executing this Agreement have all requisite corporate power and authority to
enter into and bind NII and PTC to the terms of this Agreement, each of NII and
PTC has the full legal right, power, and corporate authority to enter into this
Agreement and the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement by NII and PTC and the performance by them of the
transactions contemplated herein and therein have been duly and validly
authorized by the Board of Directors of NII and PTC, as the case may be, and
this Agreement have been duly and validly authorized by all necessary corporate
action. This Agreement is a legal, valid and binding obligation of NII and PTC
enforceable in accordance with its terms.
4.3 NO CONFLICTS. The execution, delivery and performance of this
------------
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of the NII
Charter Documents or the PTC Charter Documents;
(b) conflict with, or result in a default (or would constitute
a default but for a requirement of notice or lapse of time or both) under any
document, agreement or other instrument to which NII or PTC is a party, or
result in the creation or imposition of any lien, charge or encumbrance on any
of NII's or PTC's properties pursuant to (i) any law or regulation to which
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<PAGE>
either NII, PTC or any of their property is subject, or (ii) any judgment, order
or decree to which NII or PTC is bound or any of their property is subject;
(c) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of NII or
PTC; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which NII or PTC is subject, or by which NII or PTC is bound.
4.4 INVESTMENT INTENT. PTC (a) understands that the shares of Company
-----------------
Capital Stock have not been, and will not be, registered under the Securities
Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering, (b) is acquiring the Company Capital Stock for its own account
for investment purposes, and not with a view to a distribution thereof, (c) is a
sophisticated investor with knowledge and experience in business and financial
matters, (d) has received certain information concerning the Company and has had
the opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Company Capital Stock and (d)
is able to bear the economic risk and lack of liquidity inherent in holding the
Company Capital Stock. The parties acknowledge that this representation is made
solely for the purpose of the Company complying with federal and state
securities and blue sky laws, and for no other purposes.
5. COVENANTS
5.1 TAX MATTERS.
-----------
(a) The following provisions shall govern the allocation of
responsibility as between the Company, on the one hand, and the Shareholder, on
the other, for certain tax matters following the Closing Date:
(i) The Shareholder shall prepare or cause to be prepared and
file or cause to be filed, within the time and in the manner provided by law,
all Tax Returns of the Company for all periods ending on or before the Closing
Date that are due after the Closing Date. The Shareholder shall pay on or before
the due date of such Tax Returns the amount of all Taxes shown as due on such
Tax Returns to the extent that such Taxes are not reflected in the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Company's books and records as of the Closing Date. Notwithstanding the
foregoing, the Company agrees to pay to the Shareholder at Closing $25,000 for
Taxes for the period beginning on August 31, 1998 and ending on the Closing
Date. Such Returns shall be prepared and filed in accordance with applicable law
and in a manner consistent with past practices and shall be subject to review
and approval by NII. To the extent reasonably requested by the Shareholder or
required by law, NII shall participate in the filing of any Tax Returns filed
pursuant to this paragraph.
(ii) If there are Tax Returns that will be required to be filed
for any period which begin before the Closing Date and end after the Closing
Date, the Company shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns for such Tax periods. Except as
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<PAGE>
set forth in Section 5.11, the Shareholder shall pay to the Company within
fifteen (15) days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to the
portion of such taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the current liability accruals for Taxes (excluding
reserves for deferred Taxes) shown on the Company's books and records as of the
Closing Date. For purposes of this Section 5.1, in the case of any Taxes that
are imposed on a periodic basis and are payable for a Taxable period that
includes (but does not end on) the Closing Date, the portion of such Tax which
relates to the portion of such Taxable period ending on the Closing Date shall
(x) in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (y) in the case of any Tax
based upon or related to income or receipts be deemed equal to the amount which
would be payable if the relevant Taxable period ended on the Closing Date. Any
credits relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of the Company.
(iii) NII and the Company on one hand and the Shareholder on the
other hand shall (A) cooperate fully, as reasonably requested, in connection
with the preparation and filing of Tax Returns pursuant to this Section 5.1 and
any audit, litigation or other proceeding with respect to Taxes; (B) make
available to the other, as reasonably requested, all information, records or
documents with respect to Tax matters pertinent to the Company for all periods
ending prior to or including the Closing Date; and (C) preserve information,
records or documents relating to Tax matters pertinent to the Company that is in
their possession or under their control until the expiration of any applicable
statute of limitations or extensions thereof.
(iv) The Shareholder shall timely pay all transfer,
documentary, sales, use, stamp, registration and other Taxes and fees arising
from or relating to the transactions contemplated by this Agreement, and the
Shareholder shall, at his own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration, and other Taxes and fees. If required by applicable law, NII and
the Company will join in the execution of any such Tax Returns and other
documentation.
(b) The Company shall, prior to the Closing, maintain its status as
an S Corporation for federal and state income tax purposes.
5.2 ACCOUNTS RECEIVABLE. In the event that all Accounts Receivable, except
-------------------
as set forth on Schedule 3.13, are not collected in full (net of reserves
specified in Section 3.13) within one hundred and twenty (120) days after the
Closing then, at the request of the Company the Shareholder shall pay (based on
their percentage ownership of Company Capital Stock immediately prior to the
Closing) the Company an amount equal to the Accounts Receivable, (net of
reserves specified Section 3.13) including any interest or other fees incurred
with respect to such Accounts Receivable not so collected, and upon receipt of
such payment the Company shall assign to the Shareholder the
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<PAGE>
uncollected Accounts Receivable and shall also thereafter promptly remit any
payment received by the Company with respect to such assigned Accounts
Receivable. Upon the written request of the Company, the Shareholder shall
provide it with a status report concerning the collection of assigned Accounts
Receivable.
5.3 EMPLOYEE BENEFIT PLANS. If reasonably requested by NII, the Company
----------------------
shall terminate or freeze any Company Plan or Company Benefit Arrangement
substantially contemporaneously with the Closing; provided that (i) any
terminated Company Plan or Company Benefit Arrangement will be replaced with
such plans or arrangements as are generally provided by NII to like-situated
employees and (ii) such termination by itself does not result in any liability
to the Shareholder.
5.4 RELATED PARTY AGREEMENTS. The Company and/or the Shareholder, as the
------------------------
case may be, shall terminate in a commercially reasonable manner and time frame,
at no cost to NII or the Company any agreements with a Related Party which NII
(or Affiliate of NII) requests the Company or the Shareholder to terminate at or
after Closing. Notwithstanding the foregoing, with respect to any Company Plan
or Company Benefit Arrangement that is not terminated or merged into an existing
NII plan or benefit arrangement of NII (or Affiliate of NII) substantially
contemporaneously with the Closing, the Shareholder shall cooperate (and shall
use their reasonable efforts to cause the officers and employees of the Company
that are responsible for administering any such Company Plan or Company Benefit
Arrangement to cooperate) with NII on and after the Closing Date in continuing
to administer and maintain such Company Plan or Company Benefit Arrangement in
accordance with its constituent documents and with all applicable provisions of
the Code, ERISA and other laws, including applicable federal and state
securities laws, until such time as the Company Plan or Company Benefit
Arrangement are terminated or merged into a plan or benefit arrangement of NII
(or Affiliate of NII).
5.5 COOPERATION.
-----------
(a) The Company, the Shareholder, NII and PTC shall each deliver or
cause to be delivered to the other on the Closing Date, and at such other times
and places as shall be reasonably agreed to, such instruments as the other may
reasonably request for the purpose of carrying out this Agreement. In connection
therewith, if required, the president or chief financial officer of the Company
shall execute any documentation reasonably required by NII's independent public
accountants (in connection with such accountant's audit of the Company) or the
Nasdaq National Market.
(b) The Shareholder and the Company shall cooperate and use their
reasonable efforts to have the present officers, directors and employees of the
Company cooperate with NII on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
filing obligations, actions, proceedings, arrangements or disputes of any nature
with respect to matters pertaining to all periods prior to the Closing Date.
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<PAGE>
(c) Each party hereto shall cooperate in obtaining all consents and
approvals required under this Agreement to effect the transactions contemplated
hereby.
5.6 ACCESS TO INFORMATION; CONFIDENTIALITY; PUBLIC DISCLOSURE. NII and
---------------------------------------------------------
PTC agree to abide by the terms of the Confidentiality Agreement dated June 29,
1998 between NII, the Company and the Shareholder (the "Confidentiality
Agreement").
5.7 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the Company
---------------------------
shall have satisfied any requirement for notice of the transactions contemplated
by this Agreement under applicable collective bargaining agreements, if
requested by NII, and shall provide NII with proof that any required notice has
been sent.
5.8 SOFT DOLLARS. All "soft dollars" (whether in the form of free airline
------------
tickets, free airline upgrade certificates, credit cards paid for by airlines or
airline override revenue converted to the Company's "soft dollar" accounts, or
other similar arrangements) available to the Company from airlines and other
vendors of the Company, or that may be awarded to the Company in connection with
the Company's business, shall be used only for the Company's legitimate business
purposes, which shall include free tickets given to employees as a bonus or
perquisite, and not for the personal benefit or use of the Shareholder (or his
family or friends) or any of the Company's other employees.
5.9 TRANSITION. The Shareholder shall not take any action that is designed
----------
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier or other business associate of any of the Company, its Subsidiaries or
NII from maintaining the same business relationships with the Company and its
Subsidiaries after the Closing as it maintained with the Company prior to the
Closing. The Shareholder shall refer all customer inquiries relating to the
business of the Company or NII from and after the Closing.
5.10 [NOT USED]
5.11 338 ELECTION.
------------
(a) At NII's option, the Company and the Shareholder will join with
NII in making an election under Section 338 of the Code (and any corresponding
election under state, local, and foreign tax law) with respect to the purchase
and sale of the stock of the Company hereunder (a "Section 338 Election"). The
Shareholder will include any income, gain, loss deduction, or other tax item
resulting from the Section 338 Election on his Tax Returns to the extent
permitted by applicable law. The Shareholder shall also pay any Tax imposed on
the Company attributable to the making of the Section 338 Election, including
but not limited to, (i) any Tax imposed under Section 1374 of the Code, (ii) any
tax imposed under Section 1.338(h)(10)-1(e)(5) of the Treasury Regulations, or
(iii) any state, local or foreign Tax imposed on Company's gain, and the
Shareholder shall indemnify NII, the Company against any tax or other liability
arising out of any failure to pay any such Taxes. In the event that the Section
338 Election results in additional Tax for the Shareholder, NII shall pay to the
Shareholder the difference between (i) the Tax paid by the Shareholder as a
result of the Section 338 Election and (ii) the Tax that would have been paid by
the Shareholder if the
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<PAGE>
Section 338 Election had not been made by the Shareholder. Prior to filing the
return, at NII's cost, the Shareholder shall have NII's Accountant review the
return to ensure that the Section 338 Election is properly made and executed and
the calculation of the difference is properly calculated. Any payment by NII
hereunder shall be within made ten (10) days following the date of completion of
such review by NII's Accountant.
(b) NII, the Company and the Shareholder agree that the consideration
and the liabilities of the Company (plus other relevant items) will be allocated
to the assets of Company for all purposes (including Tax and financial
accounting) in a manner determined by NII in its sole discretion. NII, the
Company, and the Shareholder will file all Tax Returns (including amended
returns and claims for refund and information reports in a manner consistent
with such values.
(c) Notwithstanding anything to the contrary herein, any liability
arising from the 338 Election will not be considered a liability of the Company
for purposes of determining the Consideration, as such amount may be adjusted
pursuant to the terms of this Agreement, to be paid hereunder, or in determining
the net worth of the Company hereunder.
5.12 PERMITTED DISTRIBUTION. Prior to the Closing, the Company may, in its
----------------------
sole discretion, make a cash distribution (the "Permitted Distribution") to the
Shareholder in an amount equal to (i) the tangible net worth of the Company,
determined in accordance with GAAP but not taking into account any Interim
Period Add-Backs, as of August 30, 1998, minus (ii) *.
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.
5.13 TRAVEL AND ENTERTAINMENT BUDGET. Unless otherwise consented to by NII,
-------------------------------
in the twelve months following Closing, the Company's expenses for travel and
entertainment shall be no more than $55,000, which amount shall exclude costs
and expenses incurred at the request of or required by NII.
5.14 TRANSFER OF ARC NUMBER. Upon the Closing Date, the Company and
----------------------
ValuTravel, Inc. ("ValuTravel") will apply for a change of ownership of the
branch ARC number currently being used by ValuTravel and in the Company's name.
Upon receipt of ARC's approval of the application, the ARC number shall be
promptly transferred to ValuTravel. In addition, upon the Closing, Alaska
WorldTours, Inc. ("AWT") shall begin using such ARC number, and terminate using
the ARC number currently used by AWT.
5.15 FIRST NATIONAL BANK OF ANCHORAGE LOAN. As soon as possible, and no
-------------------------------------
later than ten (10) days, following the Closing, the Company shall be removed as
a co-borrower from the loan in the principal amount of approximately $122,000
with First National Bank of Anchorage that was entered into for the purchase of
real estate owned by the Shareholder.
5.16 SEATTLE LEASE. As soon as practicable after the Closing, the Company
-------------
shall enter into a lease for the Company's location at 1900 West Emerson Place,
Suite 100, Seattle, Washington (the "Seattle Location") which lease shall
include commercially reasonable terms, and, in particular, shall include the
following terms: (i) a base rental of no more than $13.67 per square feet per
month; (ii) lease space of at least 3,468 square feet; and (iii) a term of not
less than three (3) years.
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5.17 GLACIER BREWHOUSE PHONE LEASE. As soon as possible and no later than
-----------------------------
ten (10) days, after the Closing, the Company shall enter into a lease agreement
with Glacier Brewhouse for the lease by Glacier Brewhouse of certain phone lines
of the Company, which lease agreement shall contain commercially reasonable
terms for the Company, and in any event such terms as would be obtained from a
bona fide third party lease of a similar nature.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF NII AND PTC
The obligations of NII and PTC to effect the Acquisition is subject to the
satisfaction or waiver, at or before the Closing Date, of the following
conditions and deliveries:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of the
----------------------------------------------------------
representations and warranties of the Shareholder and the Company contained in
this Agreement shall be true, correct and complete on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date; all of the terms, covenants, agreements and conditions
of this Agreement to be complied with, performed or satisfied by the Company and
the Shareholder on or before the Closing Date shall have been duly complied
with, performed or satisfied; and a certificate to the foregoing effects dated
the Closing Date and signed on behalf of the Company and by the Shareholder
shall have been delivered to NII.
6.2 NO LITIGATION. No temporary restraining order, preliminary or
-------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
PTC's proposed acquisition of the Company, or limiting or restricting NII's or
PTC's conduct or operation of the business of the Company (or its own business)
following the Acquisition shall be in effect, nor shall any proceeding brought
by an administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending.
There shall be no action, suit, claim or proceeding of any nature pending or
threatened against NII, PTC, the Company, their respective properties or any of
their officers or directors, that could materially and adversely affect the
business, assets, liabilities, financial condition, results of operations or
prospects of the Company.
6.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
--------------------------
changes in the business, operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits or condition (financial
or otherwise) of the Company, since January 4, 1998 and NII shall have received
a certificate signed on behalf of the Company and by the Shareholder dated the
Closing Date to such effect.
6.4 CONSENTS AND APPROVALS. Except for any Unobtained Consents, all
----------------------
necessary consents of, and filings with, any governmental authority or agency or
third party, relating to the consummation by the Company and the Shareholder of
the transactions contemplated hereby, shall have been obtained and made.
6.5 OPINION OF COMPANY COUNSEL. NII shall have received an opinion from
--------------------------
counsel to the Company and the Shareholder, dated the Closing Date, in a form
reasonably satisfactory to NII.
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6.6 CHARTER DOCUMENTS. NII shall have received (a) a copy of the Articles
-----------------
of Incorporation of the Company certified by an appropriate authority in the
state of its incorporation and (b) a copy of the Bylaws of the Company certified
by the Secretary of the Company, as the case may be, and such documents shall be
in form and substance reasonably acceptable to NII.
6.7 DUE DILIGENCE REVIEW. The Company shall have made such deliveries as
--------------------
are called for by this Agreement. NII shall be fully satisfied in its sole
discretion with the results of its review of all of the Schedules, whether
delivered before or after the execution hereof, and such deliveries, and its
review of, and other due diligence investigations with respect to, the business,
operations, affairs, prospects, properties, assets, existing and potential
liabilities , obligations, profits and condition (financial or otherwise) of the
Company.
6.8 DELIVERY OF CLOSING FINANCIAL CERTIFICATE. NII shall have received a
-----------------------------------------
certificate (the "Closing Financial Certificate"), dated as of the Closing Date,
signed on behalf of the Company and by the Shareholder, setting forth:
(a) the tangible net worth of the Company as of August 30, 1998,
taking into account the Permitted Distribution (the "Certified Closing Net
Worth");
(b) the revenues of the Company for the fiscal year ended January 4,
1998;
(c) the revenues of the Company for the Trailing Period;
(d) the actual earnings of the Company before interest and taxes
(without any adjustment for Add-Backs) for the fiscal year ended January 4,
1998, in dollars and as a percent of revenues for such period;
(e) the Adjusted EBIT, in dollars and as a percent of revenues for
the Trailing Period (the "Certified Adjusted EBIT"); and
(f) the sum of the Company's total outstanding long-term and short-
term indebtedness to banks, the Shareholder, pension plans, employee benefit
plans and other related plans and other financial institutions and creditors
(including, but not limited to, former shareholders of the Company) as of August
30, 1998 and as of the Closing Date excluding the trade payables, office
equipment leases and other ordinary course accounts payable.
The parties acknowledge and agree that for purposes of determining the
Certified Closing Net Worth and the Certified Adjusted EBIT, without the prior
written consent of NII, the Company shall not take account of any increase in
intangible assets (including without limitation goodwill, franchises and
intellectual property) acquired or accounted for after January 4, 1998.
6.9 FIRPTA COMPLIANCE. The Shareholder shall have delivered to NII a
-----------------
properly executed statement in a form reasonably acceptable to NII for purposes
of satisfying NII's obligations under Treas. Reg.ss.1.1445-2(b).
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<PAGE>
6.10 EMPLOYMENT AGREEMENTS. Each of the Shareholder and Dianne M. Lyles
---------------------
shall have entered into an employment agreement with the Company in
substantially the form attached hereto as Exhibit B and C, respectively (each an
"Employment Agreement").
6.11 ESCROW AGREEMENT. The Escrow Agent and the Shareholder shall have
----------------
executed and delivered the Escrow Agreement.
6.12 ESTOPPEL CERTIFICATES. Except with respect to any Unobtained Consents,
---------------------
the Company shall have delivered to NII such estoppel certificates and similar
documents from the Company's lessors as shall be requested by NII.
6.13 RESIGNATIONS. The Company shall have delivered to NII resignations of
------------
such directors and officers of the Company as shall have been requested by NII.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDER AND THE COMPANY
The obligation of the Shareholder and the Company to effect the Acquisition
are subject to the satisfaction or waiver, at or before the Closing Date, of the
following conditions and deliveries:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of the
----------------------------------------------------------
representations and warranties of NII and PTC contained in this Agreement shall
be true, correct and complete on and as of the Closing Date with the same effect
as though such representations and warranties had been made as of such date; all
of the terms, covenants, agreements and conditions of this Agreement to be
complied with, performed or satisfied by NII and/or PTC on or before the Closing
Date shall have been duly complied with, performed or satisfied; and a
certificate to the foregoing effects dated the Closing Date and signed by the
President or any Vice President of NII and of PTC shall have been delivered to
the Company and the Shareholder.
7.2 NO LITIGATION. No temporary restraining order, preliminary or permanent
-------------
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or provision challenging PTC's proposed
acquisition of the Company, or limiting or restricting NII's or PTC's conduct or
operation of the business of the Company (or its own business) following the
Acquisition shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending.
There shall be no action, suit, claim or proceeding of any nature pending or
threatened against NII or PTC or the Company, their respective properties or any
of their officers or directors that could materially and adversely affect the
business, assets, liabilities, financial condition, results of operations or
prospects of NII and its Subsidiaries taken as a whole.
7.3 CONSENTS AND APPROVALS. All necessary consents of, and filings with,
----------------------
any governmental authority or agency or third party relating to the consummation
by NII and PTC of the transactions contemplated herein, shall have been obtained
and made.
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7.4 EMPLOYMENT AGREEMENT. The Company shall have afforded each of the
--------------------
Shareholder and Dianne M. Lyles an opportunity to enter into the Employment
Agreement.
7.5 ESCROW AGREEMENT. The Escrow Agent and NII shall have executed
----------------
and delivered the Escrow Agreement.
8. INDEMNIFICATION
8.1 GENERAL INDEMNIFICATION BY THE SHAREHOLDER. The Shareholder
------------------------------------------
covenants and agrees to indemnify, defend, protect and hold harmless NII, PTC
and their respective officers, directors, employees, stockholders, assigns,
successors and affiliates (individually, a "Shareholder Indemnified Party" and
collectively, "Shareholder Indemnified Parties") from, against and in respect
of:
(a) all liabilities, losses, claims, damages, punitive damages,
causes of action, lawsuits, administrative proceedings (including informal
proceedings), investigations, audits, demands, assessments, adjustments,
judgments, settlement payments, deficiencies, penalties, fines, interest
(including interest from the date of such damages) and costs and expenses
(including without limitation reasonable attorneys' fees and disbursements of
every kind, nature and description) (collectively, "Damages") suffered,
sustained, incurred or paid by the Indemnified Parties in connection with,
resulting from or arising out of, directly or indirectly:
(i) any breach of any representation or warranty of the
Shareholder or the Company set forth in this Agreement or any schedule or
certificate, delivered by or on behalf of the Shareholder or the Company in
connection herewith; or
(ii) any nonfulfillment of any covenant or agreement by the
Shareholder or, prior to the Closing Date, the Company, under this Agreement; or
(iii) the business, operations or assets of the Company
prior to the Closing Date or the actions or omissions of the Company's
directors, officers, shareholders, employees or agents prior to the Closing
Date, other than Damages arising from matters expressly disclosed in the Company
Financial Statements, this Agreement or the schedules to this Agreement; or
(iv) the matters disclosed on Schedules 3.23 (environmental
matters), 3.25 (employee benefit plans), 3.26 (taxes) (excluding any Damages
triggered by the Section 338(h)(10) Election), and 3.27 (conformity with law;
litigation); or
(v) the business, operations or assets of AWT or
ValuTravel, including the transfer of the Company's interest in such assets and
operations to AWT and ValuTravel, respectively; or
(vi) the failure of the Company to obtain the Unobtained
Consents (except for any consents required under the Company's lease for the
property at 408-410 Marine Way, Kodiak, Alaska, its agreement with ARC, its
agreements for the use of the Apollo and Sabre/ADSX
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<PAGE>
Systems, its loan agreement with 1st National Bank of Anchorage, its loan
agreement with Merrill Lynch Credit Corp., and its contract with the Alaska
Housing Finance Corporation) prior to Closing; or
(vii) the failure of the Shareholder to remove the Company as a
co-borrower from the loan with First National Bank of Anchorage under Section
5.15, and any actions or inactions taken by the Shareholder with respect to such
loan prior to the Closing Date; or
(viii) the inability of the Company to negotiate and enter into
a lease for the Seattle Location with the terms set forth in Section 5.16; or
(ix) the inability of the Company to negotiate and enter into
a lease agreement with Glacier Brewhouse for the use of certain phone lines by
Glacier Brewhouse; or
(x) any claim by any Taxing authority, whether federal, state
or local, with respect to (i) the designation of Nancy Machetti or any other
person as an independent contractor of the Company, or (ii) the provision of
temporary housing to certain employees; or
(xi) the alleged sexual harassment claim disclosed on Schedule
3.24; and
(b) any and all Damages incident to any of the foregoing or to the
enforcement of this Section 8.1.
8.2 GENERAL INDEMNIFICATION BY NII AND PTC. NII and PTC covenant and
--------------------------------------
agree to indemnify, defend, protect and hold harmless the Shareholder and his
respective heirs, assigns and successors (individually, an "NII Indemnified
Party" and collectively, the "NII Indemnified Parties") from, against and in
respect of:
(a) all Damages suffered, sustained, incurred or paid by the
Shareholder Indemnified Parties in connection with, resulting from or arising
out of, directly or indirectly:
(i) any breach of any representation or warranty of NII
or PTC set forth in this Agreement or any schedule or certificate, delivered by
or on behalf of NII or PTC pursuant hereto; or
(ii) any nonfulfillment of any covenant or agreement by
NII or PTC under this Agreement; or
(iii) the business operations or assets of the Company
after the Closing Date or the actions or omissions of the Company's directors,
officers, shareholders, employees or agents after the Closing Date, other than
Damages arising from matters expressly disclosed in this Agreement;
(iv) as a result of a Section 338 Election; and
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<PAGE>
(b) any and all Damages incident to any of the foregoing or to
the enforcement of this Section 8.2.
8.3 LIMITATION AND EXPIRATION. Notwithstanding the above:
-------------------------
(a) there shall be no liability for indemnification under
Section 8.1 unless and only to the extent that the aggregate amount of Damages
exceeds * (the "Indemnification Threshold"); provided, however, that the
Indemnification Threshold shall not apply to (i) adjustments to the
Consideration as set forth in Sections 1.3 and 1.4; and (ii) Damages arising out
of any breaches of the covenants of the Shareholder set forth in Sections 1, 5,
8, 9 and 10 of this Agreement or representations and warranties made in Sections
3.4 (capital stock of the Company), 3.8 (Company financial conditions), 3.20
(significant customers; material contracts and commitments), 3.23 (environmental
matters), 3.25 (employee benefit plans), 3.26 (taxes) (subject to Sections 5.1
and 5.11) or 3.31 (year 2000 compliance); or Damages described in Section
8.1(a)(iv), (v), (vi), (vii), (viii), (ix), (x) or (xi);
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.
(b) the aggregate amount of the Shareholder's or NII's liability
under this Article 8 shall not exceed the Consideration; provided, however, that
the Shareholder's liability for damages arising out of any breaches of the
representations made in Sections 3.4 (capital stock of the Company), 3.23
(environmental matters), 3.25 (employee benefit plans), 3.26 (taxes) or Section
8.1(a)(ii), (iv), (v), (vii), (viii), (ix), (x) and (xi) shall not be subject to
such limitation and shall not count toward the limitation described in the first
clause of this Section 8.3(b); and
(c) the indemnification obligations of the Shareholder under
this Article 8, or under any certificate or writing furnished in connection
herewith, shall terminate at the date that is the later of the applicable dates
in clause (i) or (ii) of this Section 8.3(c):
(i) (1) except as to representations, warranties, and
covenants specified in clause (i)(2) of this Section 8.3(c), the second
anniversary of the Closing Date; or
(2) with respect to representations and warranties
contained in Sections 3.4 (capital stock of the Company), 3.23 (environmental
matters), 3.25 (employee benefit plans), 3.26 (taxes), and the indemnification
set forth in Sections 8.1(a)(ii), (iv), (v), (vii), (viii), (ix), and (x)on (A)
the date that is six (6) months after the expiration of the longest applicable
federal or state statute of limitation (including extensions thereof), or (B) if
there is no applicable statute of limitation, five (5) years after the Closing
Date; or
(ii) the final resolution of claims or demands pending as of
the relevant dates described in clause (i) of this Section 8.3(c) (such claims
referred to as "Pending Claims").
(iii) notwithstanding anything to the contrary in this
Agreement, the representations and warranties set forth in Section 3.31 (year
2000 compliance) shall survive until December 31, 2000; and
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<PAGE>
(d) the indemnification obligations of NII shall terminate at
the date that is the later of (i) two (2) years from the Closing Date and (ii)
the resolution of all Pending Claims under Section 8.2.
8.4 INDEMNIFICATION PROCEDURES. All claims or demands for
--------------------------
indemnification under this Article 8 ("Claims") shall be asserted and resolved
as follows:
(a) In the event that any Shareholder Indemnified Party or an
NII Indemnified Party (each an "Indemnified Party") has a Claim against any
party obligated to provide indemnification pursuant to Section 8.1 or 8.2 hereof
(an "Indemnifying Party") which does not involve a Claim being asserted against
or sought to be collected by a third party, the Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of such Claim, specifying
the nature of such Claim and the amount or the estimated amount thereof to the
extent then feasible (the "Claim Notice"). If the Indemnifying Party does not
notify the Indemnified Party within twenty-one (21) days after the date of
delivery of the Claim Notice that it disputes such Claim, with a detailed
statement of the basis of such position (the "Dispute Notice"), the amount of
such Claim shall be conclusively deemed a liability of the Indemnifying Party
hereunder.
(b) (i) In the event that any Claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against an
Indemnified Party by a third party (a "Third Party Claim"), the Indemnified
Party shall deliver a Claim Notice to the Indemnifying Party. The Indemnifying
Party shall have twenty-one (21) days from date of delivery of the Claim Notice
to notify the Indemnified Party (A) whether the Indemnifying Party disputes
liability to the Indemnified Party hereunder with respect to the Third Party
Claim, and, if so, the basis for such a dispute, and (B) if such party does not
dispute liability, whether or not the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend against the Third Party
Claim, provided that the Indemnified Party is hereby authorized (but not
obligated) to file any motion, answer or other pleading and to take any other
action which the Indemnified Party shall deem necessary or appropriate to
protect the Indemnified Party's interests.
(ii) In the event that the Indemnifying Party notifies the
Indemnified Party that the Indemnifying Party does not dispute the Indemnifying
Party's obligation to indemnify with respect to the Third Party Claim, the
Indemnifying Party shall defend the Indemnified Party against such Third Party
Claim by appropriate proceedings, provided that, unless the Indemnified Party
otherwise agrees in writing, the Indemnifying Party may not settle any Third
Party Claim (in whole or in part) if such settlement does not include a complete
and unconditional release of the Indemnified Party. If the Indemnified Party
desires to participate in, but not control, any such defense or settlement the
Indemnified Party may do so at its sole cost and expense. If the Indemnifying
Party elects not to defend the Indemnified Party against a Third Party Claim,
whether by failure of such party to give the Indemnified Party timely notice as
provided herein or otherwise, then the Indemnified Party, without waiving any
rights against such party, may settle or defend against such Third Party Claim
in the Indemnified Party's sole discretion and the Indemnified Party shall be
entitled to recover from the Indemnifying Party the amount of any settlement or
judgment
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<PAGE>
and, on an ongoing basis, all indemnifiable costs and expenses of the
Indemnified Party with respect thereto, including interest from the date such
costs and expenses were incurred.
(iii) If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in writing to the Indemnifying
Party, any Third Party Claim seeks material prospective relief which could have
an adverse effect on any Indemnified Party or the Company or any of its
Subsidiaries, the Indemnified Party shall have the right to control or assume
(as the case may be) the defense of any such Third Party Claim and the amount of
any judgment or settlement and the reasonable costs and expenses of defense
shall be included as part of the indemnification obligations of the Indemnifying
Party hereunder. If the Indemnified Party elects to exercise such right, the
Indemnifying Party shall have the right to participate in, but not control, the
defense of such Third Party Claim at the sole cost and expense of the
Indemnifying Party.
(c) Nothing herein shall be deemed to prevent the Indemnified
Party from making a Claim, and an Indemnified Party may make a Claim hereunder,
for potential or contingent Damages provided the Claim Notice sets forth the
specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to believe
that such Claim may be made.
(d) Subject to the provisions of Section 8.3, the Indemnified
Party's failure to give reasonably prompt notice as required by this Section 8.4
of any actual, threatened or possible claim or demand which may give rise to a
right of indemnification hereunder shall not relieve the Indemnifying Party of
any liability which the Indemnifying Party may have to the Indemnified Party
unless the failure to give such notice materially and adversely prejudiced the
Indemnifying Party.
(e) The parties will make appropriate adjustments for any Tax
benefits, Tax detriments or insurance proceeds in determining the amount of any
indemnification obligation under this Article 8, provided that no Indemnified
Party shall be obligated to continue pursuing any payment pursuant to the terms
of any insurance policy.
(f) The parties agree that an Indemnified Party and the Company
shall use all reasonable commercial efforts to recover any Damages from a third
party that would likely be deemed responsible for such Damages to the extent
that the Indemnified Party and the Company has the right to make such Claim
against such third party.
8.5 SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS. All
----------------------------------------------------
representations, warranties and covenants made by the Company, the Shareholder,
NII and PTC in or pursuant to this Agreement or in any document delivered
pursuant hereto shall be deemed to have been made on the date of this Agreement
(except as otherwise provided herein) and, if a Closing occurs, as of the
Closing Date. The representations of the Company and the Shareholder will
survive the Closing and will remain in effect until, and will expire upon, the
termination of the indemnification obligations as provided in Section 8.3. The
representations of NII will survive the Closing and will remain in effect until,
and will expire upon, the termination of the indemnification obligations as
provided in Section 8.3.
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<PAGE>
8.6 REMEDIES CUMULATIVE. The remedies set forth in this Article 8 are
-------------------
cumulative and shall not be construed to restrict or otherwise affect any other
remedies that may be available to the Indemnified Parties under any other
agreement or pursuant to statutory or common law.
8.7 RIGHT TO SET OFF. NII shall have the right, but not the
----------------
obligation, in its sole discretion to set off, in whole or in part, against the
Escrow Fund any amounts finally determined under Section 8.3 to be owed to an
Indemnified Party by the Shareholder under Section 8.1 hereof. If under Section
8.3, a Shareholder Indemnified Party does not receive a Dispute Notice within
the time period specified in Section 8.3, NII and PTC may exercise its right of
offset against the Escrow Fund. Notwithstanding anything to the contrary set
forth herein, NII shall first set off amounts finally determined under Section
8.3 to be owed to NII by the Shareholder under Section 8.1 hereof against the
Escrow Fund prior to making claims against any other assets of the Shareholder.
9. NONCOMPETITION
9.1 PROHIBITED ACTIVITIES. The Shareholder will not, for a period of
---------------------
four (4) years following the Closing Date, for any reason whatsoever, directly
or indirectly, for himself or on behalf of or in conjunction with any other
Person or business of whatever nature, unless otherwise consented to by NII in
writing:
(a) engage, as an officer, director, shareholder, owner,
partner, member, joint venturer, whether as an employee, independent contractor,
consultant or adviser, or as a sales representative, in any business selling any
products or services in direct competition with the Company's (including its
Subsidiaries') or NII's business, including the development, manufacturing,
marketing and transfer, whether by sale or license, of software for travel
businesses (the "Business"), within one hundred (100) miles of anywhere where
the Company or NII conducts the Business, as of the Closing Date (the
"Territory");
(b) call upon any Person who is, at that time, within the
Territory, an employee of the Business for the purpose or with the intent of
enticing such employee away from or out of the employ of the Business, except
that this provision shall not apply to Dianne M. Lyles;
(c) call upon any Person who is, at that time, or that has been,
within one year prior to that time, a customer of the Business within the
Territory for the purpose of soliciting or selling products or services in
competition with the Business within the Territory; or
(d) call upon any prospective acquisition candidate that was, to
the knowledge of the Shareholder, either called upon by NII as a prospective
acquisition candidate for the Business or was the subject of an acquisition
analysis conducted by NII for the Business. The Shareholder, to the extent
lacking the knowledge described in the preceding sentence, shall immediately
cease all contact with such prospective acquisition candidate upon being
informed that NII had called upon such candidate or made an acquisition analysis
thereof.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit the Shareholder from acquiring as an investment of not more than one
percent (1%) of the capital stock
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<PAGE>
of a competing business whose stock is traded on a national securities exchange
or over- the-counter. For purposes of this Article 9, the references to "NII"
shall mean Navigant International, Inc., together with its Subsidiaries and
Affiliates. For purposes of this Article 9, the Business shall not include the
Shareholder's involvement with AWT, ValuTravel or World Express Tours, Inc.; nor
shall the Shareholder's relationship with such entities be deemed a breach or
violation of this Article 9.
9.2 CONFIDENTIALITY. The Shareholder recognizes that by reason of his
---------------
ownership of the Company and his employment by the Company, he has acquired
confidential information and trade secrets concerning the operation of the
Company, the use or disclosure of which could cause the Company or its
Affiliates or Subsidiaries substantial loss and damages that could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the Shareholder covenants and agrees with the Company and NII that
he will not at any time, except in performance of the Shareholder's obligations
to the Company or with the prior written consent of the Company pursuant to
authority granted by a resolution of the board or director of the Company (the
"Board"), directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his ownership of the
Company or his employment by the Company, or any of its Subsidiaries and
Affiliates, or use any such information in a manner detrimental to the interests
of the Company or NII, unless (i) such information becomes known to the public
generally through no fault of any Shareholder, (ii) disclosure is required by
law or the order of any governmental authority under color of law, or (iii) the
Shareholder reasonably believes that such disclosure is required in connection
with the defense of a lawsuit against the Shareholder, provided that prior to
disclosing any information pursuant to clause (i), (ii) or (iii) above, the
Shareholder (as applicable) shall give prior written notice thereof to NII and
provide NII with the opportunity to contest such disclosure and shall cooperate
with efforts to prevent such disclosure. The term "confidential information"
includes, without limitation, information not previously disclosed to the public
or to the trade by the Company's or NII's management with respect to the
Company's or NII's, or any of their Affiliates' or Subsidiaries', products,
facilities, and methods, trade secrets and other intellectual property,
software, source code, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs, or profits associated with any of the Company's products),
business plans, prospects, or opportunities but shall exclude any information
already in the public domain.
9.3 DAMAGES. Because of the difficulty of measuring economic losses
-------
to NII as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to NII for which it would
have no other adequate remedy, each Shareholder agrees that the foregoing
covenant may be enforced by NII in the event of breach by the Shareholder, by
injunctions and restraining orders.
9.4 REASONABLE RESTRAINT. The parties agree that the foregoing
--------------------
covenants in this Article 9 impose a reasonable restraint on the Shareholder in
light of the activities and business of NII on the date of the execution of this
Agreement, assuming the completion of the transactions contemplated hereby, and
the current plans of NII; but it is also the intent of NII and the Shareholder
that such covenants be construed and enforced in accordance with the changing
activities and
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<PAGE>
business of NII throughout the term of this covenant. The parties further agree
that so long as the Shareholder is not an employee of the Company, in the event
he shall enter into a business or pursue other activities not in competition
with NII or similar activities or business in locations the operation of which,
under such circumstances, does not violate Section 9.1(a) or the terms of any
employment agreement with NII, the Shareholder shall not be chargeable with a
violation of this Article 9 if NII shall thereafter enter the same, similar or a
competitive (a) business, (b) course of activities or (c) location, as
applicable.
9.5 SEVERABILITY; REFORMATION. The covenants in this Article 9 are
-------------------------
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
9.6 INDEPENDENT COVENANT. All of the covenants in this Article 9
--------------------
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the Shareholder
against NII, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by NII of such covenants. The parties
expressly acknowledge that the terms and conditions of this Article 9 are
independent of the terms and conditions of any other agreements including, but
not limited to, any employment agreements entered into in connection with this
Agreement. It is specifically agreed that the period of four (4) years stated at
the beginning of this Article 9 during which the agreements and covenants of the
Shareholder made in this Article 9 shall be effective, shall be computed by
excluding from such computation any time during which the Shareholder is found
by a court of competent jurisdiction to have been in violation of any provision
of this Article 9. The covenants contained in Article 9 shall not be affected by
any breach of any other provision hereof by any party hereto and shall have no
effect if the transactions contemplated by this Agreement are not consummated.
Notwithstanding anything to the contrary contained herein, if NII is in breach
of its obligations to release the Escrow Fund, as provided the Escrow Agreement,
the Shareholder shall be released from his obligations under this Article 9.
9.7 MATERIALITY. The Company and the Shareholder hereby agree that
-----------
the covenants set forth in this Article 9 are a material and substantial part of
the transactions contemplated by this Agreement, supported by adequate
consideration.
10. GENERAL
10.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
----------------------
parties hereunder may not be assigned (except by operation of law or to a
Subsidiary of NII or PTC) and shall be binding upon and shall inure to the
benefit of the parties hereto, the successors of NII, and the heirs and legal
representatives of the Shareholder.
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10.2 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement and the
-----------------------------------
Confidentiality Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. Each of the
Schedules to this Agreement is incorporated herein by this reference and
expressly made a part hereof. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement. This Agreement shall not be
amended or modified except by a written instrument duly executed by each of the
parties hereto or in accordance with Section 9.5. Any extension or waiver by any
party of any provision hereto shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
10.3 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and any party hereto may execute any such counterpart, which
counterparts may be sent by telefax (with originals to follow), each of which
when executed and delivered shall be deemed to be an original, and all of which
counterparts taken together shall constitute but one and the same instrument.
10.4 BROKERS AND AGENTS. The Company and the Shareholder (as a group)
------------------
and NII and PTC (as a group) each represents and warrants to the other that it
has not employed any broker or agent in connection with the transactions
contemplated by this Agreement and agrees to indemnify the other against all
losses, damages or expenses relating to or arising out of claims for fees or
commission of any broker or agent employed or alleged to have been employed by
such party.
10.5 EXPENSES. NII has and will pay the fees, expenses and
---------
disbursements of NII and their agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. The
Shareholder (and not the Company) have and will pay the fees, expenses and
disbursements of the Shareholder, the Company and their agents, representatives,
financial advisers, accountants and counsel incurred in connection with the
subject matter of this Agreement.
10.6 SPECIFIC PERFORMANCE; REMEDIES. Each party hereto acknowledges
------------------------------
that the other parties will be irreparably harmed and that there will be no
adequate remedy at law for any violation by any of them of any of the covenants
or agreements contained in this Agreement, including without limitation, the
confidentiality obligations set forth in Section 5.6 and the noncompetition
provisions set forth in Article 9. It is accordingly agreed that, in addition to
any other remedies which may be available upon the breach of any such covenants
or agreements, each party hereto shall have the right to obtain injunctive
relief to restrain a breach or threatened breach of, or otherwise to obtain
specific performance of, the other parties, covenants and agreements contained
in this Agreement.
10.7 NOTICES. Any notice, request, claim, demand, waiver, consent,
-------
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
telefax (with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
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<PAGE>
If to NII or PTC to:
Navigant International, Inc.
84 Inverness Circle East
Englewood, Colorado 80112
Attn: Edward A. Adams, Chief Executive Officer
Attn: Eugene Over, Jr., General Counsel
(Telefax: (303) 706-0678)
with a required copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: John V. Roos
(Telefax: (650) 493-6811)
If to the Shareholder to:
Robert B. Acree
c/o World Express Travel, Inc.
206 W. 34th Avenue
Anchorage, Alaska 99503
and to:
P.O. Box 241826
Anchorage, Alaska 99524-1826
with a required copy to:
Burr Pease & Kurtz, P.C.
810 N. Street
Anchorage, Alaska 99501
Attn: Ralph Duerre
(Telefax: (907) 258-2530)
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
10.8 GOVERNING LAW. This Agreement shall be governed by and construed,
-------------
interpreted and enforced in accordance with the laws of Colorado.
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<PAGE>
10.9 SEVERABILITY. If any provision of this Agreement or the
------------
application thereof to any Person or circumstances is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such Person or circumstances in any other jurisdiction, shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable. The preceding sentence is in addition to and not in place of the
severability provisions in Section 9.5.
10.10 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision of this
-----------------------------------------
Agreement is intended, nor will any provision be interpreted, to provide or to
create any third party beneficiary rights or any other rights of any kind in any
client, customer, Affiliate, shareholder, employee or partner of any party
hereto or any other Person or entity.
10.11 MUTUAL DRAFTING. This Agreement is the mutual product of the
----------------
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
10.12 FURTHER REPRESENTATIONS. Each party to this Agreement
------------------------
acknowledges and represents that it has been represented by its own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its legal rights from such counsel. Each
party further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
10.13 DEFINITIONS. For purposes of this Agreement, the following terms
------------
have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person.
"Lien" means any mortgage, security interest, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge, preference, priority or other security agreement, option, warrant,
attachment, right of first refusal, preemptive, conversion, put, call or other
claim or right, restriction on transfer (other than restrictions imposed by
federal and state securities laws), or preferential arrangement of any kind or
nature whatsoever (including any restriction on the transfer of any assets, any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means any corporation, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
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<PAGE>
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of partnership, association or other business
entity gains or losses or shall be or control the managing director or general
partner of such partnership, association or other business entity.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PROFESSIONAL TRAVEL CORPORATION
By: /s/ Robert C. Griffith
----------------------------------
Robert C. Griffith, Vice
President, Treasurer and Secretary
NAVIGANT INTERNATIONAL, INC.
By:/s/ Edward S. Adams
----------------------------------
Edward S. Adams, Chief Executive
Officer
WORLD EXPRESS TRAVEL, INC.
By: /s/ Robert B. Acree
----------------------------------
Robert B. Acree, President
SHAREHOLDER
/s/ Robert B. Acree
----------------------------------
Robert B. Acree
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<PAGE>
EXHIBIT 99.1
CONTACT:
AT NAVIGANT INTERNATIONAL: AT FINANCIAL RELATIONS BOARD:
Robert C. Griffith Don Markley (general information)
Chief Financial Officer Tara Cameron (analysts)
(303) 706-0778 (415) 986-1591
FOR IMMEDIATE RELEASE
NAVIGANT INTERNATIONAL COMPLETES THE ACQUISITION OF
WORLD EXPRESS TRAVEL, INC.
Acquisition Expands Position in Northwest
DENVER, CO; SEPTEMBER 22, 1998 -- Navigant International, Inc. (Nasdaq: FLYR),
one of the largest suppliers of corporate travel services in the U.S., today
announced it has completed the acquisition of World Express Travel, Inc., based
in Anchorage, Alaska. World Express Travel reported revenues of approximately
$7.3 million from air sales of approximately $57 million during the most recent
twelve month period. The acquisition was accounted for as a purchase, and the
terms of the all cash deal were not disclosed.
Founded in 1984, World Express Travel is one of the premier travel management
consultants to companies in Alaska and the Pacific Northwest. "World Express
Travel is an exciting and important acquisition for us," said Edward Adams,
Chief Executive Officer of Navigant. "By adding World Express to our existing
operations in the region - - Mutual Travel in Seattle, and Atlas Travel Services
in Vancouver, B.C. - - we have strengthened our position in an area with a very
large and growing economy. In addition, World Express Travel is a recognized
leader in providing travel services to the commercial fishing industry. As a
result, their October through January period is one of their strongest in air
sales, which is counter-cyclical with Navigant's operations."
World Express Travel's President and founder, Bob Acree, said, "Given the
changing landscape in the travel industry, setting a winning strategy for World
Express Travel's customers and employees was paramount. Continuing to grow the
agency and meet our customers' needs requires expanding our capabilities and
services. Navigant's size creates product and technology options for our
customers that are only available at a national level. Navigant's culture and
its commitment to the entrepreneurial spirit fits with the personality of World
Express Travel. We are proud to join the Navigant team of companies."
Navigant is one of the five largest providers of corporate travel management
services in the United States based on airline ticket sales. The Company
currently has approximately 415 regional travel offices and on-site customer
travel operations, including offices in 17 of the 25 largest U.S. business
travel markets. World Express is the fourth travel management company added to
the Navigant family in fiscal 1999. TravelCorp. of Minneapolis was acquired in
May
<PAGE>
and Arrington Travel of Chicago and Atlas Travel of Houston were acquired in
July. The Company's shares are traded on the NASDAQ National Market System under
the symbol "FLYR."
This news release contains forward-looking statements, including statements
about the Company's growth strategies, the integration of prior or potential
future acquisitions, the timing of new acquisitions, the impact of competition,
and general industry or business trends or events. Investors are cautioned that
any such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties. Actual events or results may differ materially
from those discussed in the forward-looking statements as a result of various
factors, including, without limitation, the risk factors detailed from time to
time in the Company's SEC reports, including the reports on Form 10-K.
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