UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 1999
Commission File Number 0-25357
TRAVELNOW.COM INC.
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(Exact Name of small business issuer in its charter)
Florida 59-339124
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(State or other jurisdiction of (I.R.S. Employment Identification No.)
incorporation or organization)
318 Park Central East-Suite 316, Springfield, Missouri 65806
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(Address of principal executive offices, including zip code)
Registrant's telephone number including area code: (417) 864-3600
Securities Registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock--No Par Value
SENTRY ACCOUNTING, INC.
321 N. Kentucky Avenue, Suite 1, Lakeland, FL 33801 December 31
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(Former name, former address and former fiscal year,
if changed since last year.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]
The registrant's revenues for the most recent fiscal year is $886,172.
The aggregate market value of the Company's stock held by non-affiliates of
the registrant (5,304,303 shares) was approximately $66,966,825 as of September
20, 1999 based upon the closing sale price on the OTC Bulletin Board reported
for that date which was 12 5/8. Shares of common stock held by each officer and
director and by each person who owns 5% or more of the outstanding common stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
At September 20, 1999, 10,324,304 shares of common stock, no par value (the
registrant's only class of voting stock) were outstanding of which 2,572,502
were unrestricted and freely tradeable and 7,751,802 were restricted.
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Information contained on TravelNow.com's web site does not constitute part of
these government filings.
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. Description of Business 3
ITEM 2. Description of Property 14
ITEM 3. Legal Proceedings 14
ITEM 4. Submission of Matters to a Vote of Security Holders 14
PART II
ITEM 5. Market for Common Equity and Related Stockholder
Matters 14
ITEM 6. Selected Financial Data 18
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 22
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control
Persons Compliance With Section 16(a) of the Exchange Act 23
ITEM 10. Executive Compensation 25
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management 29
ITEM 12. Certain Relationships and Related Transactions 29
ITEM 13. Exhibits and Reports on Form 30
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-KSB, including all documents incorporated by
reference, includes "forward- looking" statements within the meaning of
Section27A of the Securities Act and Section 21E of the Exchange Act and the
Private Securities Litigation Reform Act of 1995, and we desire to take
advantage of the "safe harbor" provisions thereof. Therefore, we are including
this statement forthe express purpose of availing ourselves of the protections
of such safe harborwith respect to all of such forward-looking statements. The
forward-looking statements in this Report reflect our current views with respect
to future events and financial performance. These forward-looking statements are
subject to certain risks and uncertainties, including specifically the (1)
absence of significant revenues, (2) a history of losses, (3) no assurance that
technology can be completed or that its completion will not be delayed, (4)
significant competition, (5) the uncertainty of patent and proprietary rights,
(6) possible adverse effects of future sales of shares on the market, and (7)
those other risks and uncertainties discussed herein, that could cause actual
results to differ materially from historical results or those anticipated. In
this report, the words "anticipates," "believes," "expects," "intends," "future"
and similar expressions identify certain of the forward-looking statements.
Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof. We
undertake no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that may arise after the date hereof. All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by this
section.
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PART I
Item 1. Business
Introduction
TravelNow.com Inc. ("TravelNow" or the "Company") is an Internet-based
travel services company which provides online travel information and
reservations to its customers on a worldwide basis. The Company's Web site
(www.travelnow.com) gives customers real-time access to hotel, car and airline
information regarding schedules, availability and rates and enables the booking
of reservations on an automated basis. In addition to its reservation and
ticketing services, the Company offers discounted and promotional fares, travel
news and destination information such as maps and weather forecasts.
TravelNow initially offered online hotel bookings in May 1995 as the first
unbiased online source of hotel data. The Company has grown into a full service
travel system with access to over 40,000 hotel properties, 60 car rental
companies and 500 airlines. European rail passes are also available. These and
other services, collectively referred to as "travel accommodations," are all
available to customers on the Company's Web site.
In May of 1995 the Company fulfilled, at its Web site, a request by a
customer in Hong Kong for a hotel reservation in Chicago, Illinois. The managers
of the Company believed this international booking over the Internet, and the
fulfillment activity that followed during 1995, was evidence of a substantial
inefficiency in the availability of and access to travel information by
individual and small business travelers. The management of the Company further
determined that an unbiased Web site, i.e, a Web site where availability and
fares were presented giving the customer the maximum number of choices, would
address that market inefficiency.
Success of this business methodology, i.e., presentation of travel
availability and fare information without the intervention of a third party,
would require a user friendly interface permitting quick and easy access to
travel information on an individualized basis which would simultaneously reduce
labor costs when contrasted with a traditional travel service. Management
believed that a web site which provided this service would result in a customer
base that would enable the Company to negotiate favorable contracts with travel
suppliers and providers of travel information, resulting in reduced travel costs
and increased customer traffic.
From that initial hotel reservation booked in 1995, the Company has
witnessed hotel confirmations issued at the Company's Web site increase from
20,348 to 53,368 during the fiscal years ending March 31, 1998 and 1999
respectively and increase from 23,938 to 96,983 during the six month periods
ending September 30, 1998 and September 30, 1999, respectively.
Expansion of the Company's customer base has been primarily achieved by
increasing the number of the Company's affiliates, i.e., those independent web
sites that have contractually agreed to use the Company's proprietary
reservation system. This leveraging of relationships by the sharing of
non-proprietary information has resulted in impressions, that is the number of
pages displayed to those who visit the Company's web site, to grow from
1,879,252 to 6,782,168 for the fiscal years ending March 31, 1998 and 1999 and
from 3,696,702 to 17,720,677during the six month periods ending September 30,
1998 and September 30, 1999, respectively.
The vast majority of travel accommodations are booked and confirmed on
TravelNow's Web site through an automated process. TravelNow has developed in
house its proprietary technology for hotels and rental cars which interfaces
with multiple sources of travel supplier information. A similar software system
was implemented on September 30, 1999 for airline reservations capable of
replacing an outsourced system obtained from another company. In addition to its
automated systems, TravelNow provides online and telephone customer service
support 24 hours per day, seven days per week.
TravelNow's customers are normally not charged directly by the Company for
booking travel accommodations on its Web site. The Company's primary source of
revenue is commission income. Travel suppliers, such as hotel chains and car
rental companies, pay commissions to TravelNow when travel accommodations booked
through the Company are utilized by the Company's customers.
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The Company's principal executive offices are located at 318 Park Central
East, Suite 306, Springfield, Missouri 65806. Its telephone number at that
location is (417) 864-3600.
Corporate History
Merger of TravelNow.com Inc. and Sentry Accounting Inc.
On July 23, 1999, an Agreement and Plan of Reorganization was consummated
between TravelNow.com Inc., a Missouri corporation ("TravelNow of Missouri"),
and Sentry Accounting, Inc., a Florida corporation ("Old Sentry"), wherein Old
Sentry acquired 100% of the issued and outstanding stock of TravelNow of
Missouri for 1,475,533 shares of restricted common stock of Old Sentry. At the
time of the merger, 491,000 shares of Old Sentry common stock were freely
transferable or unrestricted and held by Old Sentry shareholders. The total
shares of TravelNow at that point were 1,966,533. On July 28, 1999, the Company
issued a stock dividend of approximately 4.25 shares for each share outstanding,
increasing the total shares from 1,966,533 to 10,324,304 shares issued and
outstanding. (See "Part II - Shares Eligible for Future Sale.")
Old Sentry was the surviving corporation of the merger, but changed its
name at the time of the filing of the Articles of Merger to TravelNow.com Inc.
(hereinafter the combined companies, i.e., Old Sentry and TravelNow of Missouri,
now known as TravelNow.com Inc., a Florida Corporation, will be referred to as
"TravelNow" or the "Company" as indicated above).
The transaction consummated between TravelNow of Missouri and Old Sentry is
generally known as a reverse merger. A reverse merger is normally the result of
a merger in which the acquiring corporation has less size and substance than the
acquired company. The acquiring corporation survives as a legal entity, but the
shareholders of the acquired company obtain a majority of the voting rights of
the combined entity. The substantive effect of the transaction is thus reversed
from the legal effect.
At the time of the merger of TravelNow of Missouri into Old Sentry, Old
Sentry had no significant operations and only nominal net assets. Since the
former shareholders of TravelNow of Missouri received approximately 75% of the
common shares of the combined entity, TravelNow of Missouri is considered the
"acquiring" corporation for both accounting purposes and for SEC reporting. In
addition, since TravelNow's March 31 fiscal year-end has been adopted for the
combined entity, TravelNow's quarterly reporting cycle will be used for the
combined entity and no transition period report is necessary to meet SEC
reporting requirements.
History of Sentry Accounting, Inc.
Prior to the merger, Old Sentry was engaged in providing accounting
services and related financial and administrative services to small businesses.
The accounting and related financial and administrative services business of Old
Sentry prior to the merger is described in Old Sentry's filing on SEC Form 10-SB
filed on February 5, 1999 which filing was amended on SEC Form 10-SB/A1 on May
4, 1999 and further amended on SEC Form 10- SB/A2 filed on May 18, 1999. As part
of the terms of the merger, Old Sentry's accounting and financial and
administrative business was transferred to a shareholder of Old Sentry in
exchange for 2,000,000 shares of Old Sentry's common stock and a cash payment of
$2,000. The merger was effective on July 27, 1999. Immediately after the merger,
Messrs. Wasson and Noble, directors of TravelNow of Missouri, were appointed
directors of TravelNow. The Board of Directors of the Company has adopted a
resolution which provides that effective as of the date of the approval by the
shareholders of the merger Messrs. Wasson and Noble shall serve as Co-Chief
Executive Officers with Mr. Noble also serving as the Company's Secretary.
Certain of the shareholders of Old Sentry agreed to make a capital
contribution to TravelNow in the amount of $500,000. This capital contribution
was completed in installments on August 6, 1999. See Managements Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources.
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Corporate History of TravelNow of Missouri Prior to the Merger
TravelNow of Missouri was incorporated under the laws of the state of
Missouri as Travel Now Network, Inc. on March 22, 1995. On March 21, 1997,
TravelNow of Missouri merged into Eleven Twelve Corporation, a Missouri company.
Although Eleven Twelve Corporation was the surviving entity, Eleven Twelve
Corporation changed its name to TravelNow Global Reservation Network, Inc. at
the time of the merger. On April 29, 1999 the Company changed its name to
TravelNow.com Inc.
Travel Suppliers
Information regarding the availability of hotel rooms, airline flights and
rental cars and other travel services is generated and provided to the travel
industry by "travel suppliers." Examples of well known travel suppliers include
Holiday Inn and Hyatt hotels, Avis and Hertz automobile rental companies, and
American Airlines and United Airlines. TravelNow has access to travel suppliers
of over (1) 40,000 hotels consisting of millions of hotel rooms throughout the
world, (2) 500 airlines, which on any given day involves thousands of airline
passenger seats moving between specified destinations around the globe, and (3)
fleets of tens of thousands of automobiles located in cities throughout the
world.
Global Distribution Systems
Data as to the availability and pricing of hotel rooms, airline seats and
automobiles is constantly gathered from travel suppliers by electronic global
distribution services ("GDS") such as Sabre Holding Corporation's SABRE system
("SABRE"), Pegasus Systems, Inc.'s Thisco, Worldspan and others. TravelNow has
contracts with two GDS systems: Sabre, and Thisco. Through its relationship with
McDaniel Travel, Inc. it has an indirect relationship with a third GDS system,
Worldspan. (With respect to McDaniel Travel Inc. see the material following Item
12. "Certain Relationships and Related Transactions.") Each of the contracts
with these GDS systems permit the Company to use the Company's proprietary
software to access information regarding the availability of hotel rooms, rental
cars and airlines, including the fares and rates for these travel
accommodations.
Provided that bookings through the Company's Web site remain at specified
contractual levels no payments are due to any of these GDS systems. Further,
McDaniel Travel, Inc. does not charge TravelNow fees of any kind as a result of
the Worldspan contract with McDaniel Travel, Inc. in which Worldspan permits the
Company to have access to its proprietary information. Currently the Company is
maintaining these required levels and no payments are due to Thisco, Sabre or
Worldspan. However there is a dispute between McDaniel Travel and Worldspan in
which Worldspan claims it is owed $15,000 as a result of the Company's failure
to maintain the required booking levels during an earlier period. Management
believes it is improbable that the Company is liable for any amount. Any sums
owed by McDaniel Travel, Inc. to Worldspan will be an obligation of the Company.
The Company does not anticipate that this difference of opinion will lead to a
disruption in the ability of the Company to access the Worldspan proprietary
data base. The availability of travel accommodations and their respective fares
and rates are then presented to TravelNow's leisure and business traveler
customers at the Company's Web site through its proprietary software interface.
By obtaining hotel, airline and auto rental availability and fares from
multiple GDS systems rather than rely upon only one GDS, TravelNow believes that
it is avoiding dependence on any one of these third party providers to continue
to offer and maintain such services. Nevertheless, any discontinuation of these
services by one or more GDS, or any reduction in performance of a GDS that
requires the Company to replace such services, could be disruptive to the
Company's business.
Commission Payments
TravelNow earns commissions on travel accommodations either (1) as a
percentage of the gross dollar value of the travel booking, or (2) as a fixed
dollar amount per booking. The specific percentage or fixed dollar amount is
dependent upon whether the booking involves a (1) vacation package, (2) hotel
room, (3) car rental, (4) airline ticket, (5) Eurail ticket , or (6) hotel rooms
and/or airline tickets through consolidators of such travel accommodations.
Typically, the commissions on hotel rooms and rental cars are a higher
percentage of the gross booking value than on airline tickets. Airline ticket
commissions can also vary among airlines.
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Company's Dependence on Travel Suppliers and Lack of Commission Agreements
The Company is dependent upon information from travel suppliers to offer
its customers access to travel services and products. Travel suppliers could
elect to sell exclusively through other sales and distribution channels or to
restrict the Company's access to their inventory, which could significantly
decrease the amount or breadth of the Company's inventory of available travel
offerings and would have a material adverse effect on the Company's business,
operating results and financial condition. Consistent with industry practices,
travel suppliers without written contractual agreements pay customary commission
rates for bookings made through the Company's Web site but could unilaterally
change this practice at any time with respect to future bookings. Once in 1994
and twice in 1997, the major airlines reduced commissions that would be paid to
travel agencies and online services for airline reservations. Accordingly,
travel suppliers can reduce current industry commission rates or eliminate such
commissions entirely, which would have a materially adverse effect on the
Company's business, operating results and financial condition.
TravelNow currently provides airline reservation services to its customers
through its own proprietary technology and through the systems of another
organization. The Company's proprietary airline software was recently developed
as a strategically important element in serving the needs of its customers and
the requirements of the Company's affiliated Web sites which use TravelNow to
provide travel services to their customers.
Company Growth Through Affiliate Program
A substantial portion of the Company's growth has come from providing its
travel reservation engine to 400 independent operators of Web sites with whom
the Company currently shares its commissions. Generally these Web sites note the
travel service at their site is "powered by TravelNow". An independent Web site
that has contracted for the use of the TravelNow reservation engine is referred
to as an Affiliate.
TravelNow established its Affiliate Program as a cost effective mechanism
to increase the Company's customer base without the expenditure of substantial
sums of capital on direct advertising. The Web site of each Affiliate is
dynamically connected to the TravelNow reservation engine in exchange for the
sharing of commissions with the Affiliates. This program has contributed
substantially to the Company's growth and allowed the Company to benefit from
the advertising, marketing and other activities of its Affiliates to develop
traffic for their respective Web sites.
The activities used by Affiliates to increase traffic to their Web sites
are not controlled or influenced by TravelNow except in so far as the sharing of
commission revenue affects the actions of each Affiliate. The Company believes
that its own ability to grow will depend in large part on, among other things,
its ability to continue to generate sales volume by effectively maintaining its
current relationships with its Affiliates and to continue the expansion of its
Affiliate program.
Set forth in the table below is the cumulative number of leisure and
business travelers that booked travel reservations through the Company's Web
site during the periods indicated:
Number of TravelNow Customers
Fiscal Year Ending Six Months Ending Fiscal Year Ending Six Months Ending
March 31, 1998 September 30, 1998 March 31, 1999 September 30, 1999
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21,914 45,892 76,856 186,152
The Company offers to customers, who affirmatively elect to do so, the
option to receive travel-related information on a regular basis through email
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communications. As of September 30, 1999, 119,694 leisure and business travelers
who have previously booked travel reservation through the TravelNow Web site
were receiving these periodic emails from the Company.
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The following chart shows the number of hotel reservations booked by week
through TravelNow by its customers from the week beginning March 16, 1997
through the week beginning September 26, 1999. During that time period, hotel
reservations booked by the Company have increased from less than 450 per week in
March 1997 to more than 5,300 per week in September 1999.
[GRAPHIC OMITTED]
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Limited Operating History of Online Business
The Company's prospects must be considered in light of the risks, expenses
and difficulties frequently encountered by companies in an early stage of
development, particularly companies engaged in new and rapidly evolving markets
such as online commerce.
There can be no assurance that the Company will continue to be successful
in addressing such risks, and the failure to do so could have a material adverse
effect on the Company's business, operating results and financial condition. The
Company incurred a net operating loss during the fiscal year ending March 31,
1998 of $29,079 and a net operating profit during the quarter ending June 30,
1998 of $55,730. The Company had net operating income during the fiscal year
ending March 31, 1999 of $27,484 and a net operating loss during the quarter
ending June 30, 1999 of $747,151, including a $650,000 non-cash charge for
stock-based compensation. The Company had stockholders' equity of $65,948 as of
June 30, 1999.
Software Development Expenses and Unpredictability of Operating Results
As a result of the Company's limited operating history in online commerce
and the emerging nature of the markets in which the Company competes, the
Company is unable to accurately forecast its revenues.
During the last two fiscal years ending in March 31, 1999, the Company
invested approximately $195,000 developing, maintaining and operating its
proprietary software. The Company is currently incurring expenses developing
second generation proprietary software to gather data from GDS systems and to
present that data to its customers. To this end, the company has entered into a
consulting agreement with a consulting firm and has hired personnel necessary to
complete this endeavor, including a database administrator. The Company has
estimated these development expenses through the time of implementation of this
second generation system at approximately $500,000. To the extent expenses for
the development of this software precede or are not subsequently followed by
increased revenues, the Company's operating results will fluctuate and may
result in losses in a given quarter. If the Company is unable to adjust spending
in a timely manner to compensate for any unexpected expenses or significant
revenue shortfalls, there would be an immediate material adverse effect on the
Company's business, operating results and financial condition.
Seasonal Variation in Income
The Company expects that it will experience seasonality in its business
corresponding to seasonal fluctuations in the travel industry as well as
Internet and commercial online service usage. Historically, the Company has
experienced increases in its business during the January to March time period
related to business travel. Further increases have occurred from April through
August as a result of both business and leisure travel. A seasonal decline has
normally occurred during months of September through December. Seasonality in
the travel industry, Internet and commercial online service usage is expected to
cause future quarterly fluctuations in the Company's operating results and could
have a material adverse effect on the Company's business, operating results and
financial condition.
Other Factors Affecting Income
The Company expects to experience significant fluctuations in its future
quarterly operating results due to a variety of other factors, many of which are
outside the Company's control. Factors that may adversely affect the Company's
quarterly operating results include, but are not limited to, the following:
(a) the announcement or introduction of new or enhanced sites, services
and products by the Company's competitors,
(b) general economic conditions and economic conditions specific to the
Internet, online commerce or the travel industry,
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(c) the level of use of online services and consumer acceptance of the
Internet and commercial online services for the purchase of consumer
products and services offered by the Company,
(d) the Company's ability to upgrade and develop its systems and
infrastructure and to attract new personnel in a timely and effective
manner,
(e) the level of traffic on the Company's online sites,
(f) technical difficulties, system downtime or Internet brownouts,
(g) the amount and timing of operating costs and capital expenditures
relating to expansion of the Company's business, operations and
infrastructure,
(h) governmental regulation and
(i) unforeseen events affecting the travel industry.
Competition
The online travel services market is new, rapidly evolving and intensely
competitive, and the Company expects such competition to intensify in the
future. The Company competes primarily with traditional travel agency and online
travel reservation services. In the online travel services market, the Company
competes with other entities that maintain similar commercial Web sites, such as
Expedia (operated by Microsoft Corporation), Travelocity (operated by Sabre
Holdings Corporation, a majority-owned subsidiary of American Airlines), The
Trip.com, Inc., TravelWeb (operated by Pegasus Systems, Inc.), GetThere.com, and
Preview Travel, among others.
Several traditional travel agencies, including larger travel agencies such
as American Express Travel Related Services Co. Inc., Uniglobe Travel and
Carlson Wagonlit Travel, have established, or may establish in the future,
commercial Web sites offering online travel services. In addition to the
traditional travel agency channel, most travel suppliers also sell their
services directly to customers, typically by telephone. As the market for online
travel services grows, the Company believes that the range of companies involved
in the online travel services industry, including travel suppliers, traditional
travel agencies and travel industry information providers, will increase their
efforts to develop services that compete with the Company's services.
Many airlines and hotels offer travel services directly through their own
Web sites, eliminating the need to pay commissions to third parties such as the
Company. The Company is unable to anticipate which other companies are likely to
offer competitive services in the future. There can be no assurance that the
Company's online operations will compete successfully with any current or future
competitors.
Certain of the Company's competitors may be able to secure services and
products from travel suppliers on more favorable terms, devote greater resources
to marketing and promotional campaigns and devote substantially more resources
to Web site and systems development than the Company. In addition, new
technologies and the expansion of existing technologies may increase competitive
pressures on the Company. In particular, Microsoft Corporation has publicly
announced its intent to invest heavily in the area of travel technology and
services. Increased competition may result in reduced operating margins, as well
as loss of market share and brand recognition. There can be no assurance that
the Company will be able to compete successfully against current or future
competitors, and competitive pressures faced by the Company could have a
material adverse effect on the Company's business, operating results and
financial condition.
The Company's future revenues and any future profits are substantially
dependent upon the widespread acceptance and use of the Internet and commercial
online services as an effective medium of commerce by consumers. For the Company
to be successful, these consumers must accept and utilize novel ways of
conducting business and exchanging information. Convincing consumers to purchase
travel services online may be particularly difficult, as such consumers have
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traditionally relied on travel agents for advice and recommendations as to
destinations and accommodations as well as bookings, and are accustomed to a
high degree of human interaction in purchasing travel services.
Rapid growth in the use of and interest in the Web, the Internet and
commercial online services is a recent phenomenon, and there can be no assurance
that acceptance and use will continue to develop or that a sufficiently broad
base of consumers will adopt, and continue to use, the Internet and commercial
online services as a medium of commerce, particularly for purchases of travel
services. Demand for recently introduced services and products over the Internet
and commercial online services is subject to a high level of uncertainty and
there exist few proven services and products.
The development of the Internet and commercial online services as a viable
commercial marketplace is subject to a number of factors, including continued
growth in the number of users of such services, concerns about transaction
security, continued development of the necessary technological infrastructure
and the development of complementary services and products. If the Internet and
commercial online services do not become a viable commercial marketplace, the
Company's business, operating results and financial condition would be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Management of Potential Growth
The Company has rapidly and significantly expanded its operations, and
anticipates that further significant expansion will be required to address
potential growth in its Customer base and market opportunities. The Company has
also recently added a number of key managerial and technical employees, and the
Company expects to add additional key personnel in the future. This expansion
has placed, and is expected to continue to place, a significant strain on the
Company's management, operational and financial resources. To manage the
expected growth of its operations and personnel, the Company will be required to
improve existing and implement new transaction- processing, operational,
customer service and financial systems, procedures and controls, implement a
formal disaster recovery program and expand, train and manage the Company's
growing employee base. The Company also will be required to expand its finance,
administrative and operations staff.
Further, the Company's management will be required to maintain and expand
its relationships with various travel service suppliers, other Web sites and
other Web service providers, Internet and commercial online service providers
and other third parties necessary to the Company's business. There can be no
assurance that the Company's current and planned personnel, systems, procedures
and controls will be adequate to support the Company's future operations, that
management will be able to hire, train, retain, motivate and manage required
personnel or that Company management will be able to successfully identify,
manage and exploit existing and potential market opportunities. If the Company
is unable to manage growth effectively, its business, operating results and
financial condition could be materially adversely affected.
Dependence on Attraction and Retention of Key Employees
The Company's performance is substantially dependent on the continued
services and on the performance of its senior management and certain other key
personnel. The loss of the services of any of its executive officers or other
key employees could have a material adverse effect on the Company's business,
operating results and financial condition. The Company does have employment
agreements with its Co-Chief Executive Officers, Chief Information Officer and
Chief Financial Officer and has applied for separate term life insurance
policies on three of its executives in the face amount of $5,000,000 each with
the Company the named beneficiary. The Company's future success also depends on
its ability to identify, attract, hire, train, retain and motivate qualified
software developers, other skilled technical, managerial, marketing and customer
service personnel. Competition for such personnel is intense, and there can be
no assurance that the Company will be able to successfully attract, assimilate
or retain sufficiently qualified personnel.
The failure to retain and attract necessary software developers, technical,
managerial, and customer service personnel could have a material adverse effect
on the Company's business, operating results and financial condition. Although
none of the Company's employees is represented by a labor union, there can be no
assurance that the Company's employees will not join or form a labor union or
that the Company will not be required to become a union contract signatory.
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As of September 30, 1999, the Company had 30 full time employees and 6 part
time employees. Of these employees, 5 were involved in sales and marketing, 15
were involved in customer service, 9 were involved in technology and development
and 7 were involved in operations, finance, administration.
Risk of Capacity Constraints; Reliance on Internally Developed Systems; System
Development Risks.
The Company has experienced periodic system interruptions, which it
believes will continue to occur from time to time. The Company's revenues depend
on the number of customers who use its online travel sites to book their travel
reservations. Accordingly, the satisfactory performance, reliability and
availability of the Company's online sites, transaction-processing systems and
network infrastructure are critical to the Company's operating results, as well
as its ability to attract and retain customers and maintain adequate customer
service levels. Any system interruptions that result in downtime on the
Company's Web site or reduced performance of the reservation system reduces the
volume of reservations and the attractiveness of the Company's service
offerings, which could have a material adverse effect on the Company's business,
operating results and financial condition.
There can be no assurance that the Company's transaction-processing systems
and network infrastructure will be able to accommodate increases in traffic in
the future, or that the Company will, in general, be able to accurately project
the rate or timing of such increases or upgrade its systems and infrastructure
to accommodate future traffic levels on its online sites. In addition, there can
be no assurance that the Company will be able in a timely manner to effectively
upgrade and expand its transaction-processing systems or to successfully
integrate any newly developed or purchased modules with its existing systems.
Any inability to do so could have a material adverse effect on the Company's
business, operating results and financial condition.
Risk of System Failure; Single Site.
The Company's success, in particular its ability to successfully receive
and fulfill orders online and provide high-quality customer service, largely
depends on the efficient and uninterrupted operation of its computer and
communications hardware systems. Substantially all of the Company's computer and
communications systems are located at a single facility in Springfield,
Missouri. The Company's systems and operations are vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure,
break-ins, earthquake and similar events.
The Company does not have a redundant system in place to back-up a loss of
electrical power. The Company has relocated its development staff to the Denver,
Colorado area for the purposes of developing the Company's second generation
proprietary software. When completed, which management expects to occur not
later than December 31, 1999, this software will run concurrently at the
Springfield, Missouri and Denver, Colorado locations and a telecommunications
supplier will be added at the Company's Denver area location. This will provide
separate locations for the Company's servers as well as multiple
telecommunications suppliers. Until the completion of the foregoing, or if the
Company is financially unable to complete the foregoing, it will continue to
remain vulnerable to the risks of having only one site for its operations.
The Company has entered into a contractual relationship with a second
telecommunication supplier (it currently has a contract with an international
telecommunication supplier) in the Springfield, Missouri area, effective October
1, 1999 which will provide some redundancy in the event one of its
telecommunications suppliers has a system failure. The company does not carry
business interruption insurance to compensate it for losses that may occur if a
failure of telecommunication services or a power failure disables the Company's
operations.
Despite the implementation of network security measures by the Company, its
servers are vulnerable to computer viruses, physical or electronic break-ins and
similar disruptions, which could lead to interruptions, delays, loss of data or
the inability to accept and confirm customer reservations. The occurrence of any
of the foregoing risks could have a material adverse effect on the Company's
business, operating results and financial condition.
12
<PAGE>
Intellectual Property; Third Party Licenses
The Company has recently filed for U. S. Service Mark protection of
"TravelNow.com." On September 22, 1999 the United States Department of Commerce
Patent and Trademark Office notified the Company that an application filed prior
to the date of the Company's application is a "potentially conflicting pending
application" with the Company's application. The examining attorney representing
the Patent and Trademark Office notes that if the earlier filed application
matures into a registration, the registration of the Company's application may
be refused. The Company has several options at this juncture and has not yet
decided which of these options would be the most appropriate to pursue. Further,
because the name TravelNow has been used in the travel business in a context
apart from the Internet, prior to its use by the Company, it is not clear
whether U. S. Service Mark protection will be granted or even if granted whether
it would protect the Company from use by others on the Internet or elsewhere.
The Company does not believe that its ability or inability to obtain a Service
Mark with respect to the name TravelNow.com will have a material impact on its
business in as much as no other entity will be able to use that URL address. The
Company is in the process of selecting a trademark for which it intends to seek
trademark protection.
The company relies on confidentiality and/or license agreements with the
Company's employees, customers, partners and others to protect its proprietary
rights. The Company has not sought registration of its name or trademark other
than in the United States. The Company has licensed in the past, and expects
that it may license in the future, certain of its proprietary rights to third
parties such as its Affiliates. While the Company attempts to ensure that the
quality of its brand is maintained by such licensees, there can be no assurance
that such licensees will not take actions that might materially adversely affect
the value of the Company's proprietary rights or reputation, which could have a
material adverse effect on the Company's business, operating results and
financial condition.
There can be no assurance that the steps taken by the Company to protect
its proprietary rights will be adequate or that third parties will not infringe
or misappropriate the Company's copyrights, trademarks, trade dress and similar
proprietary rights. In addition, there can be no assurance that other parties
will not assert infringement claims against the Company. The Company may be
subject to legal proceedings and claims from time to time in the ordinary course
of its business, including claims of alleged infringement of the trademarks and
other intellectual property rights of third parties by the Company and its
licensees. Such claims, even if not meritorious, could result in the expenditure
of significant financial and managerial resources.
The Company also intends to strategically license certain content for its
online sites from third parties, including content which is integrated with
internally developed content and used on the Company's online sites to provide
key services. There can be no assurance that these third party content licenses
will be available to the Company on commercially reasonable terms or that the
Company will be able to successfully integrate such third party content.
Governmental Regulation
The Company is subject to regulations applicable to businesses generally.
Although there are currently few laws and regulations directly applicable to the
Internet and commercial online services, it is possible that a number of laws
and regulations may be adopted with respect to the Internet or commercial online
services covering issues such as user privacy, pricing, content, copyrights,
distribution, antitrust and characteristics and quality of products and
services. Furthermore, the growth and development of the market for online
commerce may prompt calls for more stringent consumer protection laws that may
impose additional burdens on those companies conducting business online. The
adoption of any additional laws or regulations may decrease the growth of the
Internet or commercial online services, which could, in turn, decrease the
demand for the Company's products and services and increase the Company's cost
of doing business, or otherwise have a material adverse effect on the Company's
business, operating results and financial condition.
Moreover, the applicability to the Internet and commercial online services
of existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and
may take years to resolve. For example, tax authorities in a number of states
are currently reviewing the appropriate tax treatment of companies engaged in
online commerce, and new state tax regulations may subject the Company to
additional state sales and income taxes. Any such new legislation or regulation,
the application of laws and regulations from jurisdictions whose laws do not
13
<PAGE>
currently apply to the Company's business, or the application of existing laws
and regulations to the Internet and commercial online services could have a
material adverse effect on the Company's business, operating results and
financial condition.
The costs and effects of compliance with environmental laws do not have and
are not anticipated to have a material impact on the Company or its financial
condition.
Item 2. Description of Property
The Company is headquartered in Springfield, Missouri where it leases an
aggregate of approximately 4,787 square feet of space, housing its principal
administrative, sales and marketing, and customer service organizations as well
as its primary computer and communications systems. The Company's lease for its
Springfield, Missouri space, is sufficient as to its condition and size to meet
the current needs of the Company. This lease agreement expires on August 31,
2000 with an option to renew such lease for an additional one year term. The
Company has moved its product development staff to the Denver, Colorado area
where it is currently operating at a temporary location under the supervision of
its Chief Information Officer. The Company is currently seeking office space in
the Denver, Colorado area. The Company anticipates that it will require
additional space within the next 12 months, and believes that such additional
space will be available on commercially reasonable terms.
Item 3. Legal Proceedings
The Company is not currently subject to any legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted for a vote of registrant's security holders since
the filing of registrant's 10-QSB for the period ending June 30, 1999 which
report is incorporated herein and by this reference made a part hereof. The
merger of TravelNow of Missouri and Old Sentry was submitted to a vote of
shareholders of TravelNow of Missouri and was unanimously approved by
TravelNow's shareholders on July 23, 1999.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Price Range of Common Stock
Old Sentry's stock traded under the symbol SNTY on the OTC Bulletin Board
from February 5, 1999, until August 1, 1999. There were approximately 491,000
shares of Old Sentry's common stock issued and outstanding as of July 23, 1999.
The Company has done a search to determine the availablity of high and low bid
information for Old Sentry common stock for the periods indicated below, and has
been unable to locate these historical records if in fact such activities in the
Company's shares occurred prior to the merger of July 27, 1999 referred to
elsewhere in this filing.
High Low
---- ---
Fourth Quarter 1999: February 5 - March 31 Unavailable Unavailable
First Quarter 1999: April 1 - June 30 Unavailable Unavailable
Second quarter 1999: July 1 - August 1 Unavailable Unavailable
The Company's stock has traded under the symbol TNOW on the OTC Bulletin
Board since August 2, 1999. There were 10,324,304 shares of the registrant's
common stock issued and outstanding as of September 20, 1999. The following
table shows the high and low bid information for the Company's common stock as
reported on the OTC Bulletin Board, which reflect inter-dealer prices without
retail mark-up, mark-down or commission, and which may not represent actual
transactions.
14
<PAGE>
1999 High Low
Third Quarter from August 2-September 30 15 1/8 5 1/8
The closing sale price of the Company's Common Stock as reported on the OTC
Bulletin Board on September 20, 1999 was $125/8 per share. As of that date there
were approximately 645 holders of record of the Company's common stock. This
includes the number of persons whose stock is in nominee or "street name"
accounts through brokers.
The market price of the Company's common stock has been and may continue to
be subject to wide fluctuations in response to a number of events and factors,
such as quarterly variations in the Company's operating results, announcements
of technological innovations or new products by the Company or its competitors,
changes in financial estimates and recommendations by securities analysts, the
operating and stock performance of other companies that investors may deem
comparable to the Company, and news reports relating to trends in the Company's
markets. In addition, the stock market in recent years has experienced extreme
price and volume fluctuations that have particularly affected the market prices
of many high technology and Internet-related companies that have often been
unrelated or disproportionate to the operating performance of such companies.
These fluctuations, as well as general economic and market conditions, may
adversely affect the market price for the common stock of TravelNow.
Dividend Policy
The Company has never declared or paid any cash dividends on its capital
stock and has as of the date of this report not issued any other securities. The
Company anticipates that it will retain all of its future earnings for use in
the expansion and operation of its business and does not anticipate paying cash
dividends in the foreseeable future.
Sales of Unregistered Securities-Summary
As of March 31, 1996, the Company had issued 14,600 shares of its unissued
but authorized common stock. Five employees received 9,745 shares in exchange
for services, and 4,855 shares were issued to nine shareholders in exchange for
cash in the amount of $241,125.00. Then, on September 2, 1996, the Company
authorized a three-for- one stock split bringing the total shares of the
Company's common stock outstanding to 43,800 shares. Thereafter on or about
February 19, 1997, the Company issued 38,400 shares of its authorized but
unissued common stock to two shareholders for $1.00 per share bringing the total
shares issued and outstanding to 82,200.
Effective on March 21, 1997, the Company merged with Eleven Twelve
Corporation, a Missouri corporation, and underwent a recapitalization. As a
result of that merger, one shareholder holding 8,100 shares of the Company's
common stock was forced to elect a choice of either appraisal rights or the
stock's valuation of $1.00 per share. That shareholder did not choose to pursue
the statutory right of appraisal but accepted $1.00 per share for each of the
8,100 shares. As a result of the merger and recapitalization on March 21, 1997,
twelve shareholders held 41,100 shares of the Company's issued and outstanding
common stock, and the Company received additional cash capital contributions of
$7,000.00, for a total of $248,125.00 of capital contributions in cash when
added to the previous $241,125.00. In addition to the capital contributions in
cash Company promissory notes and trade receivables in the amount of $47,500.00
were forgiven.
On June 9, 1997, the Company issued 4,000 shares to the Company's counsel
in exchange for legal services. (See the material following the Item 12 "Certain
Relationships and Related Transactions.") On May 18, 1999, the Company issued
13,000 shares of its authorized but unissued common stock to five employees as a
stock bonus. For further details see the table following the caption "Shares
Issued As a Stock Bonus."
Thus, between August 6, 1995, and May 18, 1999, the Company issued a total
of 58,100 shares to eighteen shareholders. The following table reflects the
shares of the Company's stock issued in the foregoing transactions after giving
15
<PAGE>
effect to the stock dividend on May 25, 1999, the merger on July 27, 1999 and
the stock dividend on July 28, 1999. Also included in the table below are 1,800
shares of the Company's Common Stock issued to a former employee on June 2, 1999
in exchange for $180.00 pursuant to an agreement previously entered into between
the Company and the employee for services rendered by that employee which
agreement ended on September 30, 1998.
- --------------------------------------------------------------------------------
Number of Shares issued by the Number of shares issued by the Company
Company between August 6, 1995 between August 6, 1995 and May 25, 1999
and May 25, 1999 adjusted for results of stock dividend
issued on May 25, 1999, Merger effective
July 27, 1999 and stock dividend issued
July 28, 1999
- --------------------------------------------------------------------------------
58,100 7,751,802(1)
- --------------------------------------------------------------------------------
(1) See the material following the caption "Shares Eligible for Future Sale."
These shares were issued pursuant to exemptions from the registration
requirements of the Securities Act of 1933 found in Section 4(2). Each of the
recipients had adequate access to the information necessary to evaluate the
risks attendant to the issuance of those shares and represented that he or she
was acquiring the securities for investment only and not with any intention for
sale in connection with any distribution as reflected by appropriate legends
affixed to the securities issued in each of the foregoing transactions.
Shares Issued As a Stock Bonus
At a special meeting of shareholders of TravelNow held on May 18, 1999 in
which all shareholders were present in person or by proxy, the shareholders of
TravelNow unanimously approved the following stock bonuses.
<TABLE>
<CAPTION>
Employee Number of Shares approved for stock Stock bonuses issued on 05/18/1999
bonuses by Unanimous Vote of adjusted for results of stock dividend
Shareholders 05/18/1999 issued on May 25, 1999, Merger
effective July 27, 1999 and stock
dividend issued July 28, 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Jamie Coppedge 500 66,624
Chris Lynch 500 66,624
Monica Tindal 100 13,325
Jeff Wasson 5,950 792,830
John Christopher Noble 5,950 792,830
------ ---------
Total 13,000 1,732,233
====== =========
</TABLE>
These bonuses were discretionary on the part of the Company and given in
recognition of the dedication of the recipients to their work on the behalf of
the Company. The recipients represented their intentions to hold the securities
for investment only and not with a view to or for sale in connection with any
distribution thereof as reflected by appropriate legends affixed to the
securities issued in connection with the foregoing stock bonuses.
The Company has not issued any other equity securities during the period
covered by this report.
Shares Eligible for Future Sale
Currently the Company has authorized, issued and outstanding 10,324,304
shares of its common stock, no par value. Of these shares, 2,572,502 were
unrestricted and freely tradeable and 7,751,802 were restricted. All of the
7,751,802 restricted shares currently outstanding will become eligible for sale
in the public market beginning on July 26, 2000 pursuant to Rule 144.
16
<PAGE>
In general, under Rule 144 as currently in effect, a person who has
beneficially owned restricted shares for at least one year (including the
holding period of any prior owner except an affiliate) is entitled to sell
within any three-month period a number of shares that does not exceed the
greater of: (1) one percent of the number of total shares of common stock then
outstanding (which will equal 103,243 shares based on the shares outstanding as
of the date of this filing); or (2) the average weekly trading volume of the
common stock on the Nasdaq Bulletin Board during the four calendar weeks
preceding the filing of a notice on Form 144 with respect to such sale. The
average weekly trading volume on the Nasdaq Bulletin Board for the four week
period ending September 20, 1999 was 355,975. Sales under Rule 144 are also
subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about TravelNow.
Description of Capital Stock
The authorized capital stock of the Company consists of 50,000,000 shares
of common stock, no par value, and 25,000,000 shares of preferred stock, no par
value.
Common Stock
As of September 20, 1999, 10,324,304 shares of common stock were
outstanding and held of record by approximately 645 stockholders. The holders of
common stock are entitled to one vote per share on all matters to be voted upon
by the stockholders. Subject to preferences that may be applicable to any
outstanding preferred stock, the holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy."
In the event of a liquidation, dissolution or winding up of the Company,
the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior rights of preferred
stock, if any, then outstanding. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions available to the common stock. All outstanding shares of
common stock are fully paid and non-assessable.
Preferred Stock
The Company is authorized to issue 25,000,000 shares of preferred stock, no
par value. The Board of Directors has the authority to issue the preferred stock
in one or more series and to determine the powers, preferences and rights and
the qualifications, limitations or restrictions granted to or imposed upon any
wholly unissued series of preferred stock and to fix the number of shares
constituting any series and the designation of such series, without any further
vote or action by the stockholders. The issuance of preferred stock may have the
effect of delaying, deferring or preventing a change in control of the Company
without further action by the stockholders and may adversely affect the voting
and other rights of the holders of common stock. At present, the Company has no
plans to issue any shares of preferred stock.
The rest of this page left blank intentionally
17
<PAGE>
Item 6. Selected Financial Data
Selected Consolidated Financial Data
The following selected consolidated financial data for the years ending March
31, 1999, and 1998, and the three months ending June 30, 1999, and 1998
(unaudited) have been derived from the Company's financial statements. This
information should be read in conjunction with the financial statements and Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
Years Ending March 31 Three Months Ending June 30
--------------------- ---------------------------
Statement of Operations Data 1999 1998 1999 1998
- ---------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Revenues $ 886,172 $ 345,677 $ 381,449 $ 155,701
Cost of Revenues 532,050 149,445 284,214 50,427
----------- ----------- ----------- -----------
Gross Profit 354,122 196,232 97,235 105,274
----------- ----------- ----------- -----------
Operating Expenses
Sales and Marketing 86,258 29,953 29,519 6,235
General and Administrative 240,380 187,248 164,867 43,309
Stock-Based Compensation 0 8,110 650,000 0
----------- ----------- ----------- -----------
Total Operating Expenses 326,638 225,311 844,386 49,544
----------- ----------- ----------- -----------
Income/(Loss) Before Taxes 27,484 (29,079) (747,151) 55,730
Provision for Income Taxes 0 0 0 0
----------- ----------- ----------- -----------
Net Income/(Loss) $ 27,484 ($ 29,079) ($ 747,151) $ 55,730
=========== =========== =========== ===========
Net Income/(Loss) Per Share
Basic $ 0.01 ($ 0.01) ($ 0.29) $ 0.02
Diluted $ 0.01 ($ 0.01) ($ 0.29) $ 0.02
As a Percent of Total Revenues
- ------------------------------
Total Revenues 100.0% 100.0% 100.0% 100.0%
Cost of Revenues 60.0% 43.2% 74.5% 32.4%
----------- ----------- ----------- -----------
Gross Profit 40.0% 56.8% 25.5% 67.6%
----------- ----------- ----------- -----------
Operating Expenses
Sales and Marketing 9.8% 8.7% 7.8% 4.0%
General and Administrative 27.1% 54.2% 43.2% 27.8%
Stock-Based Compensation 0.0% 2.3% 170.4% 0.0%
----------- ----------- ----------- -----------
Total Operating Expenses 36.9% 65.2% 221.4% 31.8%
----------- ----------- ----------- -----------
Income/(Loss) Before Taxes 3.1% (8.4%) (195.9%) 35.8%
Provision for Income Taxes 0.0% 0.0% 0.0% 0.0%
----------- ----------- ----------- -----------
Net Income/(Loss) 3.1% (8.4%) (195.9%) 35.8%
=========== =========== =========== ===========
18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet Data 3/31/99 3/31/98 6/30/99 6/60/98
- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash and Cash Equivalents $ 6,227 $ 3,849 $ 51,314 $ 98
Accounts Receivable 106,562 43,692 173,494 64,821
--------- --------- --------- ---------
Current Assets 112,789 47,541 224,808 64,919
Property and Equipment - Net 46,345 37,643 54,281 37,059
--------- --------- --------- ---------
Total Assets $ 159,134 $ 85,184 $ 279,089 $ 101,978
========= ========= ========= =========
Accounts Payable $ 83,066 $ 44,716 $ 100,151 $ 42,726
Accrued Liabilities 44,596 27,180 51,152 10,034
Notes Payable - Current Portion 68,538 69,238 61,838 51,238
--------- --------- --------- ---------
Current Liabilities $ 196,200 $ 141,134 $ 213,141 $ 103,998
Notes Payable Less Current Portion 0 8,600 0 6,800
Stockholders' Equity/(Deficit) (37,066) (64,550) 65,948 (8,820)
--------- --------- --------- ---------
Total Liabilities and Equity $ 159,134 $ 85,184 $ 279,089 $ 101,978
========= ========= ========= =========
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with
the Company's financial statements and the notes to the statements included
below as part of this Form 10-KSB.
Overview
TravelNow's revenues are comprised principally of commissions paid by
travel suppliers related to the online booking of travel reservations for the
Company's customers. Additional revenues are generated from banner advertising
on the Company's Web site, www.travelnow.com. Commission income includes
revenues from hotel, car, airline and rail reservations. Revenues and expenses
related to airline tickets and hotel rooms which are purchased and resold by the
Company are recognized in total rather than on a commission basis.
TravelNow customers connect to the Company's Web site either directly or
through links with affiliated Web sites. Commissions generated from reservations
booked by customers that connect to TravelNow through an affiliated Web site are
shared with that Affiliate.
The cost of revenues on the Company's financial statements is comprised of
expenses directly associated with the provision of travel services to customers.
This includes the cost of maintaining the Company's Web site, expenses related
to providing customer service, commission payments to Affiliates and the
purchase of airline tickets and hotel rooms that are resold to customers.
Results of Operations and Comparison of Operating Results
TravelNow's total revenues for the fiscal year ending March 31, 1999
("FY1999") were $886,172, which represented an increase of $540,495 or more than
156%. Net income for the period was $27,484 compared with a net loss for the
prior year of $29,079. Earnings per share for FY1999 were $0.01 on both a basic
and diluted basis.
During the three months ended June 30, 1999, total revenues of $381,449
increased by 145% from the same quarter of the prior year and exceeded the
$345,677 total for FY1998. The net loss for the quarter was $747,151 verses a
net income of $55,730 in the same quarter of the prior year. The net loss in the
most resent quarter included a $650,000 non-cash charge for stock-based
compensation related to an employee stock bonus paid on May 18, 1999
19
<PAGE>
(see Item 5 - Shares Issued As A Stock Bonus). The net loss per share for the
June 30, 1999 quarter was $0.29 on both a basic and diluted basis.
The net loss during the June 1999 quarter of $97,151 before the stock-based
compensation reflects in part management's decision to structure the Company for
additional rapid growth in the near term and for a substantially higher level of
operations in the long-term. Bookings of travel reservations for the Company's
customers continued to increase through September 1999 and revenues for the
quarter ended September 30, 1999 are expected to substantially exceed revenues
for the June 1999 quarter.
Revenues. The Company's total revenues have been increasing as the direct
result of an expanding customer base and a higher level of confirmed travel
bookings on the TravelNow Web site. The number of confirmed hotel bookings
during the quarter ended June 30, 1998 averaged approximately 1,000 per week.
This average increased to approximately 3,200 per week for the quarter ending
June 30, 1999 and continued to grow during the subsequent quarter. The
introduction of the Company's own car reservations system in January 1999 has
also added to revenues.
Cost of Revenues. The Company's cost of revenues as a percent of total
revenues has increased due to several factors: (1) the rapid growth of bookings
from affiliated Web sites and higher commission payment percentages has shifted
the mix of business and generated higher commission payments to Affiliates, (2)
the personnel and infrastructure costs associated with expanding the capacity
and capabilities of the Company's Web site and customer service organization,
and (3) in some periods, a higher level of airline tickets purchased and resold.
The cost of revenues as a percent of revenues increased from 43.2% in the
year ending March 31, 1998 to 60.0% in the year ended March 31, 1999. This
percentage increased further to 74.5% during the quarter ended June 30, 1999 as
the growth of business from affiliates continued and the costs of building Web
site capacity and infrastructure were added faster than the growth in revenue.
The Company anticipates future increases in revenue will offset, at least in
part, the percentage growth in the cost of revenues. If such growth is not
realized, the Company's operating results and financial position could be
adversely affected.
Selling and Marketing Expenses. Sales and marketing expenses include
payroll and other costs associated with developing and managing the Company's
affiliate program as well as direct advertising expenditures. Personnel-related
expenses increased on an absolute basis in FY1999 relative to FY1998, but
declined slightly as a percent of revenues. The overall percentage increase from
8.7% to 9.8% of revenues was due to direct advertising expenses. In FY1999, the
Company traded advertising services with another Internet-based organization.
The value of these advertisements was recognized in the Company's financial
statements as revenues and advertising costs in equal amounts.
General and Administrative Expenses. During FY1999, general and
administrative costs increased from $187,248 in the prior year to $240,380, or
by 28.4%. The principal increases were in salaries, insurance, telephone and
rent. Since total revenues grew much faster, general and administrative expenses
as a percent of revenues declined from 54.2% to 27.1% for the year.
During the three months ended June 30, 1999, general and administrative
expenses increased to 43.2% of sales due to the continued staff and facility
expansion and a higher level of travel and entertainment activity.
Liquidity and Capital Resources
In conjunction with the merger of TravelNow of Missouri and Old Sentry
consummated on July 23, 1999, TravelNow received capital contributions from
certain shareholders of Old Sentry totaling approximately $500,000. Of this
amount, approximately $200,000 was received on or before June 30, 1999 and was
included in the unaudited financial statements for the June 1999 quarter. The
remaining $300,000 of the capital contributions was received in July and August
1999 and therefore is not included in the June 30, 1999 financial statements.
20
<PAGE>
During the fiscal year ended March 31, 1999, net cash provided by operating
activities was $38,500. These funds were applied to the acquisition of property
and equipment ($26,822) and to net repayments of loan and notes payable ($9,300)
which, on balance, resulted in a small increase in the Company's cash position
during the fiscal year.
During the quarter ended June 30, 1999, net cash used by operations was
$135,706. This cash usage included the net loss of $97,151 (before the $650,000
non-cash compensation charge) and a net increase in operating assets of $43,291,
principally due to a $66,932 increase in accounts receivable. Financing
activities for the quarter included the $200,000 capital contribution noted
above. Cash and cash equivalents increased by $45,087.
A factor that affects the Company's liquidity planning is not included in
the Company's financial statements. TravelNow recognizes commission revenues on
confirmed hotel reservations, net of allowances for cancellations, on the date
the hotel stay is scheduled to be completed, i.e., the departure date.
Additional confirmed bookings as of a balance sheet date are not recognized as
revenues or receivables if the departure date is after the balance sheet date.
These confirmed bookings, which have not been recognized for financial statement
purposes, represent a significant anticipated source of cash flow for the
Company.
Subsequent Events and Commitments.
Subsequent to June 30, 1999, the Company received $300,000 in capital
contributions from certain shareholders of Old Sentry. Approximately $150,000 of
this amount was being held as cash and cash equivalents as of October 11, 1999.
The Company entered into a consulting agreement for computer programming
services related to software development. Depending on the ultimate scope of the
project, this contract will range in cost from $200,000 to $350,000. Through
September 1999, the Company has incurred a liability for approximately $100,000
of such services. In addition, outside purchases of application software related
to this project are expected to total $90,000.
The management of TravelNow believes that actual and anticipated levels of
operating revenues are sufficient to meet its near-term cash requirements. If
such levels of operating revenues are not realized, the Company's operating
results and liquidity could be adversely affected. On a longer-term basis, the
Company could determine that additional financing is required to fund its
operations. The Company has no specific plans to raise additional capital at
this time, and there is no assurance that such capital would be available to the
Company in sufficient amounts or on terms acceptable to the Company.
Year 2000
The Year 2000, or "Y2K," issue relates to computer systems which read and
process calendar dates as part of their functionality and might not properly
interpret the year "2000." This problem can occur because historically many
computer programs were designed to use two-digit fields to store and recognize
years. As a result, the date 01/01/00 would be read by such programs as January
1, 1900 instead of January 1, 2000.
TravelNow has undertaken a thorough process to identify, correct and test
potential Y2K problems in the software systems used within the company. The
Company believes that potential Y2K problems in its mission critical systems
which support Web-based travel reservation services have been identified,
corrected and tested. Additional testing and ongoing compliance monitoring is in
progress. Reservations for travel services in the year 2000 are currently being
handled by the Company's systems.
21
<PAGE>
The status of the Company's Y2K process by its principal phases is as
follows: (1) Identification - Complete; (2) Inventory - Complete, (3) Readiness
Projects: (a) Majority of Mission Critical Projects - Complete, (b) Non-Mission
Critical Projects - Complete, and (4) Testing and Monitoring - In Progress.
TravelNow's Year 2000 program costs have not and are not expected to have a
material effect on the Company's operating results or financial condition. The
Company has maintained normal operating conditions of its systems and no
critical software development programs have been deferred due to Year 2000
projects.
The Company's development of a new software platform for its reservation
systems is scheduled for completion by year-end 1999. An independent third party
consulting organization will be involved to test this new platform and verify
Y2K compliance throughout the development process. The implementation of the new
platform will provide the Company with two separate reservation systems as a
contingency plan for Y2K issues.
The Company's internal computer systems interface with the external
computer systems of various travel suppliers and global distribution services.
Several interoperability tests with these external systems have been
successfully conducted. However, all such systems have not been tested for
potential Y2K interface problems with TravelNow's software systems. The Company
does not have the resources to assess all potential problems associated with the
risk of failure by third party suppliers. The Company's contingency plan is to
use as many third party suppliers as possible to limit the risk of one supplier
not being Year 2000 compliant. The failure of any of TravelNow's computer
systems or of the systems with which TravelNow interfaces to properly handle
Year 2000 and related issues could have a materially adverse effect on the
Company's business, its operating results and financial condition.
Item 8. Changes In and Disagreements with Accountant on Accounting and Financial
Disclosure.
During the most recent two fiscal years and any later interim periods, the
principal independent accountant has not resigned, declined to stand for
reelection, or been dismissed as a result of any disagreement on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, and during such periods, the principal accountant's reports
on the financial statements of the Company have not contained an adverse opinion
or disclaimer of opinion and have not been modified as to uncertainty, audit
scope, or accounting principles. However, in anticipation of the preparation of
the audited financial statements contained herein, the Company (TravelNow of
Missouri) appointed Deloitte & Touche LLP as its independent auditors. Upon
consummation of the Merger effective as of July 27, 1999, Deloitte & Touche
became the independent accountants for the Company. This change was noted in the
Company's Current Report on Form 8-K filed on August 6, 1999.
22
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
The following table sets forth certain information with respect to the
executive officers and directors of TravelNow.com Inc., as of the date of this
filing.
Name Age Position with TravelNow.com Inc
- ---- --- -------------------------------
John Christopher Noble 27 Co-Chief Executive Officer & Director
Jeffrey Alan Wasson 26 Co-Chief Executive Officer & Director
Christopher R. Kuhn 32 Chief Information Officer & V.P.
H. Whit Ehrler 58 Chief Financial Officer & V.P.
Craig Alan Dayberry 39 Database Administrator
John Christopher Noble was a founding member of TravelNow in May, 1995. The
first meeting of shareholders of the Company was held on August 6, 1995 at which
time Mr. Noble was elected to the Board of Directors. Currently Mr. Noble serves
as the Company's Co-Chief Executive Officer and Secretary. From January of 1995
until May of 1995 Mr. Noble was a student at Southwest Texas State University in
San Marcos, Texas and from September of 1994 until December of 1994, Mr. Noble
was a student at Austin Community College, Austin Texas.
Jeffrey Alan Wasson was a founding member of TravelNow in May, 1995. The
first meeting of shareholders of the Company was held on August 6, 1995 at which
time Mr. Wasson was elected to the Board of Directors. Currently Mr. Wasson
serves as the Company's Co-Chief Executive Officer. From August 1991 until May
of 1995 Mr. Wasson was a full time student at the University of Missouri,
Columbia, Missouri majoring in Travel and Tourism.
Christopher R. Kuhn joined the Company on July 12, 1999 as Chief
Information Officer. Prior to joining TravelNow Mr. Kuhn was Director of Web
Development for Compaq Computers from August, 1998 until July, 1999, Manager of
Web Service Solutions with Digital Equipment from April, 1998 until August, 1998
and Manager of Web Engineering for MCI Telecommunications from November, 1989
until April, 1998. Mr. Kuhn graduated from the University of Florida in 1989
with a degree in Computer Information Systems.
H. Whit Ehrler joined the Company as Vice President & Chief Financial
Officer on August 23, 1999. Mr. Ehrler was Vice President, Finance &
Administration of Carrollton Graphics, Inc. in Carrollton, Ohio from June 1997
through August 1999. From 1994 through 1997, Mr. Ehrler was with Helson Ehrler
Investment Partners in Stamford, Connecticut. Mr. Ehrler has been a director of
POSdata, Inc. in Gig Harbor, Washington since 1994.
Previously, Mr. Ehrler was with The Chinet Company in Norwalk, Connecticut
for 15 years where he first served as the company's Vice President, Finance &
Administration and later as Executive Vice President, Foodservice Products.
Earlier in his career, Mr. Ehrler held various financial positions at Arcata
Corporation, Ford Aerospace and Ford Motor Company and was a management
consultant with the firm of Cresap, McCormick & Paget. Mr. Ehrler received an
M.B.A. in Finance from the University of California, Berkeley and an A.B. in
Economics from Drury College in Springfield, Missouri
Craig Dayberry joined the Company on September 22, 1999 and has served as
Database Administrator since that date. Prior to joining the Company Mr.
Dayberry worked at MCI Communications from 1992 to April, 1998 as Database
Administrator and from April, 1998 to August, 1999 as a contract Database
Administrator for Digital Equipment and Compaq Computers. Mr. Dayberry received
his Bachelor of Science degree in Information Systems from the University of
Colorado at Colorado Springs, Colorado.
23
<PAGE>
Board of Directors
The bylaws of the Company call for a Board of Directors of not less than
one nor more than seven members. Currently the Board of Directors consists of
two members, Jeff Wasson, its Co-Chief Executive Officer and Chairman of the
Board, and John Christopher Noble, its Co-Chief Executive Officer and Secretary.
The bylaws of the Company provide that its directors are to be elected at the
Company's annual meeting to serve for one year or until their successors are
duly elected and qualified. The bylaws of the Company provide that annual
meetings of shareholders shall be held on the first Tuesday of April of each
year. The next scheduled annual meeting of shareholders of the Company will be
Tuesday, April 4, 2000.
Involvement in Certain Legal Proceedings
On July 23, 1999, Mr. Noble pled guilty to a charge of assault in the third
degree, a Class A misdemeanor, in the Circuit Court of Green County, Missouri.
The Circuit Court ordered Mr. Noble to pay a fine of $10.00, court costs of
$249.50, restitution of $900.00, and to complete 50 hours of community service,
and placed Mr. Noble on probation until August 24, 1999. Mr. Noble has fully
complied with the Circuit Court's order and the probation has been completed.
The following information is provided by the Company, although it is not
specifically required by the line- item disclosure items of Form 10-KSB. In
September of 1992, Mr. John Christopher Noble, who currently is a Director and
Executive Officer of the Company, pled guilty to felony possession of a
controlled substance (marijuana) and was placed on probation until September of
1997. That probation has been completed.
The Rest of This Page Left Blank Intentionally
24
<PAGE>
Item 10. Executive Compensation
Donald R. Mastropietro served as Chief Executive Officer of Old Sentry from
its inception in June 1996 until September 30, 1998. During the fiscal year
ended March 31, 1999, Mr. Mastropietro received compensation of $10,500. Ms.
Teresa B. Crowley served as Chief Executive Officer of Old Sentry from September
30, 1998 until July 23, 1999. During the fiscal year ending March 31, 1999, Ms.
Crowley received compensation of $3,000.
The following table summarizes the annual compensation paid by TravelNow
during the fiscal year ended March 31, 1999 to its current Co-Chief Executive
Officers and the annualized compensation that TravelNow anticipates paying
during the current fiscal year to TravelNow's executive officers whose salary
and bonus is anticipated to exceed $100,000 annually during the current fiscal
year, for services rendered to the Company in all capacities during the periods
indicated.
<TABLE>
<CAPTION>
Annual Summary Compensation Table
- ----------------------------------------------------------------------------------------------------
Other Annual Long-Term Compensation
Name and Principal Position Annual Compensation Compensation Awards
---------------------------- ($) ------------------------
Year Salary Bonus Securities Restricted
Ended ($) ($) Underlying Stock
March 31 Options (#) Awards
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John Christopher Noble, Co-
Chief Executive Officer 1999 36,534 (1) 792,830(6)
Jeff Wasson, Co-Chief Executive
Officer 1999 35,380 (1) 792,830(6)
Christopher R. Kuhn, Chief
Information Officer and Vice (4) $130,000(4) (2) (1) 250,000(5)
President of Development
Whit Ehrler, Chief Financial
Officer and Vice President of (4) $130,000(4) (3) (1) 250,000(5)
Finance
Craig Dayberry, Database (4) $100,000(4) (1) 30,000(5)
Administrator
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents personal benefits such as car expenses if in excess of 10%
of total annual salary. For the period covered by this report no other annual
income had been paid to these Executive Officers.
(2) The Employment Agreement with Mr. Kuhn provides that he will receive a
non-interest bearing loan of $80,000 after the completion of the first full year
of employment which is July 12, 2000. Upon completion of a second full year of
employment, the loan of $80,000 will be forgiven and all state and federal
income taxes related to such forgiveness will be grossed up and paid by the
Company at that time. If Mr. Kuhn voluntarily leaves the Company or is
terminated for cause or if he fails to remain with the Company for the full
two-year period, he is obligated to repay the non-interest bearing loan in
thirty-two equal monthly installments.
(3) The Employment Agreement with Mr. Ehrler provides that he will receive
a non-interest bearing loan of $80,000 after the completion of the first full
year of employment which is August 23, 2000. Upon completion of a second full
year of employment, the loan of $80,000 will be forgiven and all state and
federal income taxes related to such forgiveness will be grossed-up and paid by
the Company at that time. If Mr. Ehrler voluntarily leaves the Company or is
terminated for cause or if he fails to remain with the Company for the full
two-year period, he is obligated to repay the non-interest bearing loan in
thirty-two equal monthly installments.
(4) Mr Kuhn joined the Company on July 12, 1999. Mr. Ehrler joined the
Company on August 23, 1999 and Mr. Dayberry joined the Company on September 22,
1999. The salaries set forth above are the annual amounts called for by their
respective compensation arrangements with the Company.
(5) See the table following the caption "Option Grants as of September 30,
1999.
25
<PAGE>
(6) On May 18, 1999 the date of grant of this stock bonus there was no
established market value for these securities. See Note 8 in the Company's
Financial Statements. For details with respect to this stock bonus see the
material following the caption "Shares Issued As A Stock Bonus."
Option Grants as of September 30, 1999
The following table sets forth information with respect to stock options
granted to each of the named executive officers as of September 15, 1999,
including the potential realizable value over the 5 year term of the options
based on assumed rates of stock appreciation of 5% and 10% compounded annually
with respect to those options. The "Value of Unexercisable In-the-Money-Options"
is based upon a value of $12.63 per share which is the closing price of the
Company's shares on the OTC Bulletin board on September 20, 1999, minus the per
share exercise price, multiplied by the number of shares underlying the option.
No executive officer exercised stock options during the period covered by this
report and none of the stock options granted to the below named executives may
be exercised prior to June 12, 2000. These assumed rates of appreciation comply
with the rules of the Securities and Exchange Commission and do not represent
the Company's estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of the Company's
common stock. The options set forth below were granted pursuant to separate
stock option agreements executed in conjunction with the employment agreements
between the company and the below named executives. The executives listed below
must pay the exercise price by cash or check. The Company has not adopted a
stock option plan.
<TABLE>
<CAPTION>
Option Grants
- -----------------------------------------------------------------------------------------------------------
Individual Grants
- -------------------------------------------------------------------------
Number of
Shares
Underlying Value of Unexercised In-the-Money
Options Options at September 20, 1999(4)
Granted Which ---------------------------------
Were Exercise Price
Name(1) Unexercised On Exercise Date(3) ($/Share)
09/15/99 (2) 5%$ 10%($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Christopher R. 100,000 07/12/2000 $ 1.50 $1,420,501 $1,792,497
Kuhn(5) 50,000 07/12/2002 $15.00
50,000 07/12/2000 $30.00
50,000 07/12/2000 $45.00
H. Whit Ehrler(5) 100,000 09/23/2000 $ 1.50 $1,420,501 $1,792,497
50,000 09/23/2002 $15.00
50,000 09/23/2000 $30.00
50,000 09/23/2000 $45.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition to the option granted to Messrs Kuhn and Ehrler, set forth
in the table above, the Company has granted to Mr. Dayberry its Data Base
Administrator, five separate options to purchase a total of 30,000 shares of the
Company's Common stock, each option for 6,000 shares, which may be exercised (or
will vest) in three equal annual installments commencing with the initial
exercise date. The exercise date of the first option covering the initial
underlying 6,000 shares is September 22, 2000 with exercise dates of the
remaining options being September 22 in each of the following years, 2001, 2002,
2003 and 2004. The option price or strike price for each 6,000 share option on
each of the exercise dates is $5.00 in 2000, $20.00 in 2001, $35.00 in 2002,
$50.00 in 2003 and $65.00 in 2004. All unexercised options will expire on
September 22, 2004 except for the option that may be exercised on September 22,
2004. That option will not expire until December 22, 2004. The initial option ,
with a strike price of $5.00 per share, is considered an unexercisable
in-the-money option as of the date of this filing. The value of this
unexercisable in-the-money-option is based upon a value of $12.63 per share
which is the closing price of the Company's shares on the OTC Bulletin Board on
September 20, 1999 , minus the per share exercise price, multiplied by the
number of shares underlying the option. The potential realizable value of this
unexercisable in the money option assuming an annual rate of appreciation of 5%
and 10% is $58,428 and $73,729 respectively.
(2) All options are considered unqualified options under the Internal
Revenue Code, therefore, upon their exercise, the employee will realize taxable
gain equal to the difference between the fair market value as of the exercise
date and the exercise price.
26
<PAGE>
(3) Options are exercisable in three equal installments (i.e., 33% of the
shares may be purchased per installment). The first installment may be exercised
on the exercise date set forth in the table above with the balance of the
options exercisable in two equal installments on the two succeeding anniversary
dates following the exercise date. Certain of the installments are not
exercisable until the end of Messrs. Kuhn and Ehrler's five year option
agreements. Messrs. Kuhn and Ehrler have an additional ninety days after the end
of the five-year period to exercise the options with respect to those
installments.
(4) The closing price of the Company's shares on the OTC Bulletin Board on
September 20, 1999 was 12 5/8. The first installments of the initial options
granted to Messrs Kuhn, Ehrler and Dayberry are exercisable on July 23, 2000,
August 23, 2000 and September 22, 2000 respectively.
(5) As of the date of this filing the Company has issued stock options
covering 530,000 shares of the Company's common stock no par value. Mr. Kuhn
holds 47% of those options, Mr. Ehrler holds 47% of those options and Mr.
Dayberry holds 6% of those options. At the time of this filing, other than the
foregoing options, the Company has not issued any other options covering its
Common Stock and has not adopted an employee or other stock option plan.
Adjustments in the Event of Recapitalization, Merger of the Company
Under the stock option agreements between the Company and the executives
named above, in the event of a corporate reorganization, the executives named
above will have the right to exercise any unexpired option whether currently
exercisable or not as to any installment.
Compensation of Directors
Directors who are also employees are not separately compensated.
Employment Agreements
Employment Agreement with Jeff Wasson, President and Co-Chief Executive
Officer
The Company's employment agreement with Mr. Wasson provides for, among
other things,
o The term of the agreement is for 5 years from October 1, 1999 until
September 30, 2004.
o In the event of a termination of executive by the Company without
cause, the Company shall make a lump sum payment to Mr. Wasson equal
to his base salary for the remainder of that year. Thereafter, on each
remaining anniversary date for the balance of the term of the
employment agreement, Mr. Wasson will be paid a lump sum equal to his
base salary.
o Participation in all employee benefit programs, and
o An agreement not to directly or indirectly solicit or have contact
with (1) the Company's travel suppliers, (2) GDS systems or (2) the
Company's employees or customers for two years after termination of
employment. The Company cannot give any assurance that these
provisions will be enforceable.
Mr. Wasson's employment agreement calls for a base salary of $65,000 per
year for five years.
Employment Agreement with John Christopher Noble, Co-Chief Executive
Officer
The Agreement with Mr. Noble provides for, among other things the following:
o The term of the agreement is for 5 years from October 1, 1999 until
September 30, 2004.
o In the event of a termination of executive by the Company without
cause, the Company shall make a lump sum payment to Mr. Noble equal to
his base salary for the remainder of that year. Thereafter, on each
remaining anniversary date for the balance of the term of the
employment agreement, Mr. Noble will be paid a lump sum equal to his
base salary.
27
<PAGE>
o Participation in all employee benefit programs, and
o An agreement not to directly or indirectly solicit or have contact
with (1) the Company's travel suppliers, (2) GDS systems or (2) the
Company's employees or customers for two years after termination of
employment. The Company cannot give any assurance that these
provisions will be enforceable.
Mr. Noble's employment agreement calls for a base salary of $65,000 per
year for five years.
Employment Agreement with Christopher R. Kuhn, Chief Information Officer
and Vice President Development
The Agreement with Mr. Kuhn provides for, among other things the following:
o The term of the agreement is for 5 years from July 12, 1999 until July
11, 2004.
o In the event of a termination of executive by the Company without
cause, the Company shall make a lump sum payment to Mr. Kuhn equal to
his base salary for the remainder of that year. Thereafter, on each
remaining anniversary date for the balance of the term of the
employment agreement, Mr. Kuhn will be paid a lump sum equal to his
base salary.
o Participation in all employee benefit programs, and
o An agreement not to directly or indirectly solicit or have contact
with (1) the Company's travel suppliers, (2) GDS systems or (2) the
Company's employees or customers for two years after termination of
employment. The Company cannot give any assurance that these
provisions will be enforceable.
Mr. Kuhn's employment agreement calls for a base salary of $130,000 per
year for five years and that he will receive a non-interest bearing loan of
$80,000 after the completion of the first full year of continuous full-time
employment. Upon completion of a second full year of continuous full-time
employment, the loan of $80,000 will be forgiven and all state and federal
income taxes related to such forgiveness will be grossed-up and paid by the
company at that time. If Mr Kuhn voluntarily leaves the Company, or is
discharged for cause before the completion of the two year period, he is
obligated to repay the non-interest bearing loan in equal monthly installments
over a period of thirty-two months.
Employment Agreement with Whit Ehrler, Chief Financial Officer and Vice
President, Finance
The Agreement with Mr. Ehrler provides for, among other things the
following:
o The term of the agreement is for 5 years from August 23, 1999 until
August 22, 2004.
o In the event of a termination of executive by the Company without
cause, the Company shall make a lump sum payment to Mr. Ehrler equal
to his base salary for the remainder of that year. Thereafter, on each
remaining anniversary date for the balance of the term of the
employment agreement, Mr. Ehrler will be paid a lump sum equal to his
base salary.
o Participation in all employee benefit programs, and
o An agreement not to directly or indirectly solicit or have contact
with (1) the Company's travel suppliers, (2) GDS systems or
telecommunications service providers or (2) the Company's employees or
customers for two years after termination of employment. The Company
cannot give any assurance that these provisions will be enforceable.
Mr. Ehrler's employment agreement calls for a base salary of $130,000 per
year for five years and that he will receive a non-interest bearing loan of
$80,000 after the completion of the first full year of continuous full-time
employment. Upon completion of a second full year of continuous full-time
28
<PAGE>
employment, the loan of $80,000 will be forgiven and all state and federal
income taxes related to such forgiveness will be grossed-up and paid by the
Company at that time. If Mr. Ehrler voluntarily leaves the Company or is
discharged for cause before the completion of the two year period, he is
obligated to repay the non-interest bearing loan in equal monthly installments
over a period of thirty-two months.
Item 11. Securities Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial
ownership of the Company's common stock as of August 4, 1999, by the following
individuals or groups: (i) each person or entity who is known by the Company to
own beneficially more than 5% of the Company's outstanding common stock, (ii)
each of the executive officers, (iii) each of the Company's directors and
executive officers as a group. The persons named in the table below have sole
voting and investment power with respect to all shares of common stock held by
them. Applicable percentage ownership in the following table is based on
10,324,304 shares of the Company's common stock outstanding as of September 20,
1999. To the extent that subsequent to the date of this filing any shares are
issued upon exercise of options to acquire the Company's common stock that are
presently outstanding there will be further dilution to the company's current
shareholders.
- --------------------------------------------------------------------------------
Shares Beneficially Owned as of September 20,
1999 (1)
- --------------------------------------------------------------------------------
Name of Beneficial Owner Number Percent
- --------------------------------------------------------------------------------
Jeff Wasson (2)(3) 1,938,767 18.8
John Christopher Noble (2)(3) 1,938,767 18.8
Jerry Rutherford (3) 1,426,769 13.8
H. Whit Ehrler (4)(5)
Christopher R. Kuhn (4)(5)
Craig Dayberry (4)(5)
All directors and executive
officers as a group (4)(4)(6) 3,877,534(6) 37.6(7)
- --------------------------------------------------------------------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting and investment
power with respect to securities.
(2) Messrs. Wasson and Noble have elected to use as their address the
address of the Company, 318 Park Central East, Suite 306, Springfield, Missouri
65806. Mr. Rutherford's address is: 3322 South Campbell Avenue, Suite BB,
Springfield, Missouri 65807.
(3) None of these individuals have any options or other rights to acquire
options or similar rights with respect to the Company's shares as of the date of
this filing. However, the absence of such rights at this time does not mean that
in the future the Board of Directors will not adopt a stock option plan or other
compensation plan that could create such rights in these individuals, or other
executives or employees of the Company.
(4) Currently, Messrs. Ehrler, Kuhn and Dayberry do not beneficially own
any of the outstanding shares of common stock of the Company. As to options
currently held by these individuals, see the table following the caption "Option
Grants as of September 15, 1999."
(5) Messrs. Kuhn, Dayberry and Ehrler have elected to use as their address
the address of the Company, 318 Park Central East, Suite 306, Springfield,
Missouri 65806.
(6) This includes the shares held by Messrs. Noble and Wasson.
(7) This is the number of shares held by Messrs. Noble and Wasson reflected
as a percentage of the total shares outstanding on September 20, 1999.
Item 12. Certain Relationships and Related Transactions.
There were no transactions, or series of transactions, during fiscal 1998
or 1999, nor are there any currently proposed transactions, or series of
transactions, to which the Company is a party, in which the amount exceeds
29
<PAGE>
$60,000, and in which to our knowledge any director, executive officer, nominee,
five percent or greater shareholder, or any member of the immediate family of
any of the foregoing persons, has or will have any direct or indirect material
interest other than that described below.
In 1996 and 1997 the Company issued 3,200 shares of its common stock, which
after adjustment for the merger and stock dividends referred to elsewhere herein
is 426,396 shares, to Marvin McDaniel owner of McDaniel Travel Inc. ("McDaniel
Travel") in exchange for the Company's right to use the "ARC" number (the agency
tracking number issued by Airline Reporting Corporation) and the "IATAN" number,
(the agency tracking number assigned by the International Airline Travel Agent
Network) to McDaniel Travel. Although a travel agency is unable to issue
domestic and international airline tickets without first obtaining ARC and IATAN
numbers, the importance of these numbers with respect to hotel and automobile
reservations is their use in tracking those reservations for commission
collection. Although the Company does not foresee a disruption in the
relationships between McDaniel Travel and the GDS systems which track the ARC
and IATAN numbers for commission collection purposes, if any disruption occurred
there is the possibility that the ability of the Company to track its
reservations or obtain payment could be disrupted. Because the Company believes
the issuance of airline tickets will have a growing and important impact on
revenues, the Company is in the process of obtaining its own ARC and IATAN
numbers.
On June 7, 1997 pursuant to an exemption from the registration requirement
of the Securities Act of 1933 found in Section 4(2) the registrant issued four
thousand (4,000) shares of its Common Stock in exchange for legal services on
June 9, 1997 equal to 532,995 after adjusting for the results of a stock
dividend issued on May 25, 1999, the merger effective July 27, 1999 and stock
dividend issued July 28, 1999. The recipient, the company's counsel, had
adequate access to the information necessary to evaluate the risks attendant to
the issuance of those shares and represented that he was acquiring the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof as reflected by appropriate legends affixed to the
securities issued in such transaction.
Item 13. Exhibits and Reports on Form 8-K
(a) The following is a list and index of Exhibits required by Item 601 of
Regulation S-B along with a statement as to the location of the Exhibit if
incorporated by reference:
Exhibit Index
Exhibit
Number Document Name and Location
------ --------------------------
2.0 Plan of acquisition, reorganization, arrangement, liquidation or
succession
2.1(b) Agreement and Plan of Reorganization by and between Sentry
Accounting, Inc., and TravelNow.com Inc. dated July 23, 1999
incorporated by reference to Exhibit 2.01to form 8-K dated August
11, 1999
3.0 Articles and Bylaws
3.1(a) Articles of Incorporation filed June 27, 1996.
3.2 (a) Articles of Amendment to Articles of Incorporation filed November
25, 1996.
3.3 (b) Articles of Amendment to Articles of Incorporation filed July 27,
1996.
3.4 (a) Bylaws of Registrant as in effect on August 13, 1999.
3.5 Amendment to Bylaws of Registrant on October 4, 1999.
4 Instruments defining the rights of security holders including
indentures
4.1 Form of the Company's common stock certificate
10 Material Contracts
30
<PAGE>
10.1 Employment Agreement between the Company and John Christopher
Noble, approved October 4, 1999 effective July 27, 1999.
10.2 Employment Agreement between the Company and Jeffery Alan Wasson,
approved October 4, 1999 effective July 27, 1999.
10.3 Employment Agreement between the Company and Christopher R. Kuhn
approved October 4, 1999 effective July 12, 1999.
10.4 Employment Agreement between the Company and H.Whit Ehrler
approved October 4, effective August 23, 1999.
10.5 Stock Option Agreement between the Company and Christopher R.
Kuhn approved October 4, 1999 effective
10.6 Stock Option Agreement between the Company and H. Whit Ehrler
approved October 4, 1999 effective August 23, 1999.
10.7 Stock Option Agreement between the Company and Craig Dayberry
approved October 4, 1999 effective September 23, 1999.
10.8 Employment Agreement between a former employee of the Company and
the Company effective March 31, 1998, contract ending on
September 30, 1998.
10.9 Subscription Agreement between SABRE Inc. and the Company.
10.10 Agreement by and between THISCO and the Company.
10.11 Telecommunications Service Agreement between MCI/Worldcom and the
Company.
10.12 Telecommunications Service Agreement between City Utilities of
Springfield, Springfield, Missouri and the Company.
10.13 Office lease between the Company as Lessee and Warren Davis
Properties II, L.L.C., Lessor and Addendum thereto dated.
16 Letter on Change in Certifying Accountants.
16.1(d) Letter regarding change in Certifying Accountant.
27.1 Financial Data Schedule
- ----------
(a) Filed as an exhibit to Report on Form 10-SB/A dated May 18, 1999.
(b) Filed as an exhibit to Report on Form 8-K dated August 6, 1999.
(c) Filed as an exhibit to Report on Form 10-QSB dated August 16, 1999.
(d) Filed as an exhibit to Report on Form 8-K-A dated August 13, 1999.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed by
the undersigned, having first been duly authorized to execute this filing on
behalf of the Company.
TravelNow.com Inc.
/s/ Jeffrey Alan Wasson
-----------------------
Jeffrey Alan Wasson,
Co-Chief Executive Officer, Director
TravelNow.com Inc.
/s/ John Christopher Noble
--------------------------
John Christopher Noble,
Co-Chief Executive Officer, Director
TravelNow.com Inc.
/s/ H. Whit Ehrler
------------------
H. Whit Ehrler,
Chief Financial Officer
Date: October 12, 1999
32
<PAGE>
TRAVELNOW.COM INC.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report ..............................................F-2
Statements of Operations...................................................F-3
Balance Sheets.............................................................F-4
Statements of Stockholders' Equity (Deficit)...............................F-5
Statements of Cash Flows...................................................F-6
Notes to Financial Statements..............................................F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
TravelNow.Com Inc.
We have audited the balance sheets of TravelNow.Com Inc. (the "Company") as of
March 31, 1999 and 1998, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TravelNow.Com Inc. as of March
31, 1999 and 1998, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Little Rock, Arkansas
October 1, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
TRAVELNOW.COM INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998, AND THE THREE MONTH PERIODS
ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
Three Month
Years Ended March 31, Periods Ended June 30,
----------------------------- -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 886,172 $ 345,677 $ 381,449 $ 155,701
COST OF REVENUES 532,050 149,445 284,214 50,427
--------- --------- --------- ---------
GROSS PROFIT 354,122 196,232 97,235 105,274
--------- --------- --------- ---------
OPERATING EXPENSES:
Sales and marketing 86,258 29,953 29,519 6,235
General and administrative 240,380 187,248 164,867 43,309
Stock-based compensation -- 8,110 650,000 --
--------- --------- --------- ----------
Total operating expenses 326,638 225,311 844,386 49,544
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS
BEFORE INCOME TAX 27,484 (29,079) (747,151) 55,730
INCOME TAX EXPENSE (BENEFIT) -- -- -- --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 27,484 $ (29,079) $(747,151) $ 55,730
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE:
Basic and diluted 0.01 (0.01) (0.29) 0.02
========= ========= ========= =========
See notes to the financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRAVELNOW.COM INC.
BALANCE SHEETS
MARCH 31, 1999 AND 1998 AND JUNE 30, 1999 AND 1998 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
March 31, June 30,
------------------------------- ------------------------------
1999 1998 1999 1998
---- ---- ---- ----
ASSETS (unaudited)
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 6,227 $ 3,849 $ 51,314 $ 98
Accounts receivable 106,562 43,692 173,494 64,821
----------- ----------- ----------- -----------
Total current assets 112,789 47,541 224,808 64,919
PROPERTY AND EQUIPMENT, Net 46,345 37,643 54,281 37,059
----------- ----------- ----------- -----------
TOTAL $ 159,134 $ 85,184 $ 279,089 $ 101,978
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 83,066 $ 44,716 $ 100,151 $ 42,726
Accrued liabilities 44,596 27,180 51,152 10,034
Current portion of notes payable 58,538 55,238 55,838 45,238
Notes payable to stockholders 10,000 14,000 6,000 6,000
----------- ----------- ----------- -----------
Total current liabilities 196,200 141,134 213,141 103,998
NOTES PAYABLE,
less current portion -- 8,600 -- 6,800
----------- ----------- ----------- -----------
Total liabilities 196,200 149,734 213,141 110,798
COMMITMENTS AND
CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, par value $0.01, authorized
3,000,000 shares, issued and outstanding
2,255,000 shares at March 31, 1999 and
1998, and June 30, 1998, and 2,906,800
shares at June 30, 1999 22,550 22,550 29,068 22,550
Additional paid-in capital 257,701 257,701 1,101,348 257,701
Accumulated deficit (317,317) (344,801) (1,064,468) (289,071)
----------- ----------- ----------- -----------
Total stockholders' equity (deficit) (37,066) (64,550) 65,948 (8,820)
----------- ----------- ----------- -----------
TOTAL $ 159,134 $ 85,184 $ 279,089 $ 101,978
=========== =========== =========== ===========
See notes to the financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRAVELNOW.COM INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998, AND THE THREE MONTH PERIOD
ENDED JUNE 30, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock Additional
--------------------------- Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity (Deficit)
------ ------ ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1997 2,055,000 $ 20,550 $ 251,591 $ (315,722) $ (43,581)
Net loss -- -- -- (29,079) (29,079)
Stock issued for services 200,000 2,000 6,110 -- 8,110
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1998 2,255,000 22,550 257,701 (344,801) (64,550)
Net income -- -- -- 27,484 27,484
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1999 2,255,000 22,550 257,701 (317,317) (37,066)
Net loss (unaudited) -- -- -- (747,151) (747,151)
Capital contribution (unaudited) -- -- 199,985 -- 199,985
Stock bonus (unaudited) 650,000 6,500 643,500 -- 650,000
Stock issued (unaudited) 1,800 18 162 -- 180
----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 1999
(UNAUDITED) 2,906,800 $ 29,068 $ 1,101,348 $(1,064,468) $ 65,948
=========== =========== =========== =========== ===========
See notes to the financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRAVELNOW.COM INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998, AND THE THREE MONTH PERIODS
ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
Three Month Periods
Years Ended March 31, Ended June 30,
------------------------- ------------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income (loss) $ 27,484 $ (29,079) $(747,151) $ 55,730
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Stock based compensation -- 8,110 650,000 --
Depreciation and amortization 18,120 20,378 4,736 4,530
Loss on disposal of property and equipment -- 9,781 -- --
Changes in operating assets and liabilities:
Increase in accounts receivable (62,870) (27,537) (66,932) (21,129)
Increase (decrease) in accounts payable 38,350 22,849 17,085 (1,990)
Increase (decrease) in accrued liabilities 17,416 (12,102) 6,556 (17,146)
--------- --------- --------- ---------
Net cash provided by (used in) operating activities 38,500 (7,600) (135,706) 19,995
INVESTING ACTIVITIES:
Acquisition of property and equipment (26,822) (18,074) (12,672) (3,946)
--------- --------- --------- ---------
Net cash used in investing activities (26,822) (18,074) (12,672) (3,946)
FINANCING ACTIVITIES:
Proceeds from capital contribution -- -- 199,985 --
Proceeds from sale of stock -- -- 180 --
Proceeds from notes payable to stockholders 4,000 7,000 -- --
Repayments of notes payable to stockholders (8,000) (1,000) (4,000) (8,000)
Proceeds from notes payable 15,500 44,438 -- --
Repayments of notes payable (20,800) (23,188) (2,700) (11,800)
--------- --------- --------- ---------
Net cash provided by (used in) financing activities (9,300) 27,250 193,465 (19,800)
Net increase (decrease) in cash and cash equivalents 2,378 1,576 45,087 (3,751)
CASH AND CASH EQUIVALENTS:
Beginning of period 3,849 2,273 6,227 3,849
--------- --------- --------- ---------
End of period $ 6,227 $ 3,849 $ 51,314 $ 98
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 4,609 $ 1,289 $ 2,897 $ 1,268
========= ========= ========= =========
NONCASH TRANSACTIONS:
Exchange of office space for software $ 800 $ 800 $ -- $ --
========= ========= ========= =========
Exchange of advertising $ 43,500 $ -- $ -- $ --
========= ========= ========= =========
Exchange of common stock for
services performed $ -- $ 8,110 $ -- $ --
========= ========= ========= =========
See notes to the financial statements.
F-6
</TABLE>
<PAGE>
TRAVELNOW.COM INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998, AND THE THREE MONTH PERIODS
ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Description of Business - In April 1995,
TravelNow.com Inc. (the "Company") (formerly known as TravelNow Global
Reservation Network, Inc.) began operations as an Internet-based travel
company located in Springfield, Missouri. The Company's Web site,
www.travelnow.com, allows travelers to make hotel, car, and airline
reservations electronically using the Internet. The Company earns
commissions for each reservation resulting in the traveler using the
services reserved.
On May 25, 1999, the Company authorized a 50:1 stock dividend. Retroactive
recognition has been given to this dividend for all periods presented.
On July 23, 1999, the Company completed a merger with Sentry Accounting,
Inc. ("Sentry"). Under the terms of the merger, the shares of the Company
were exchanged for shares of Sentry on a 1.97:1.0 ratio. The merged company
operates under the name TravelNow.com Inc. ("TravelNow"). The merger
resulted in shareholders of the Company owning approximately 75% of the
outstanding stock of TravelNow. These shares are restricted from trading
for a twelve-month period. Sentry's assets, liabilities, revenues and
expenses are immaterial. The assets and liabilities of the combined Company
and Sentry were recorded in the merger at historical cost.
Certain Risks and Concentrations - The Company has experienced cumulative
operating losses, and its operations are subject to certain risks and
uncertainties including, among others, risks and costs associated with
technology and regulatory trends, evolving industry standards, dependence
on its network infrastructure, key employees and suppliers, growth
management, actual and prospective competition by entities with greater
financial and other resources, the development of the Internet market and
need for additional capital. There can be no assurance that the Company
will be successful in sustaining profitability and positive cash flow in
the future.
The Company is potentially subject to a concentration of credit risk from
its accounts receivable. The Company considers the need for allowances for
potential credit losses and records such allowances if necessary.
Historically, such losses have not been significant.
Commissions and related revenues accounted for 87% and 92% of total net
revenues for the years ended March 31, 1999 and 1998, respectively. The
Company relies on unrelated service entities to accumulate, process, and
remit a significant portion of these revenues. Discontinuance of these
services could result in disruption to the Company's business and
accordingly could have a material adverse effect on the Company's results
of operations, financial position, and cash flows.
Cash and Cash Equivalents - Cash and cash equivalents include all
short-term, highly liquid investments purchased with a maturity date at
acquisition of three months or less. Cash and cash equivalents are stated
at cost, which approximates fair value.
Property and Equipment - Property and equipment are recorded at cost and
depreciated using an accelerated method over their estimated useful lives
ranging from 3-10 years. Expenditures for maintenance and repairs are
expensed when incurred.
Long-Lived Assets - The Company periodically evaluates the recoverability
of its long-lived assets and would recognize impairment of long-lived
assets in the event the net book value of such assets exceeds the future
undiscounted cash flows attributable to such assets. No such impairments
have been identified to date. The Company assesses the impairment of
long-lived assets when events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable.
Revenue Recognition - Commissions earned are recognized on the traveler's
planned departure date as to hotels, planned return date as to rental cars,
and reservation date as to airlines, all net of allowances for
cancellations and credit risk. Banner advertising revenues are derived from
other companies advertising on the Company's Web site and are recognized
upon display of the advertising on the Web site, or over the display period
depending on several factors including the term of the display agreement.
F-7
<PAGE>
Cost of Revenues - Cost of revenues is predominantly comprised of
transaction and personnel costs including software and telecommunications
costs associated with operating the Company's reservation system, traveler
support, outside consultants, and commission sharing with affiliates. The
Company does not allocate the costs of facilities or other indirect expense
items attributable to revenue generation activities to cost of revenues.
Such costs and expenses are included in general and administrative
expenses.
Use of Estimates - Management of the Company has made estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
Common Stock-Based Compensation - The Company accounts for stock-based
compensation arrangements in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees, and complies with the disclosure provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, issued by the Financial Accounting Standards Board ("FASB").
Interim Financial Statements - The balance sheets as of June 30, 1999 and
1998, and the statements of operations, shareholders' equity (deficit) and
cash flows for the three month periods ended June 30, 1999 and 1998, have
been prepared by the Company without audit. In the opinion of management,
all adjustments (which included only normal, recurring adjustments)
necessary to present fairly the financial position at June 30, 1999 and
1998, and the results of operations and cash flows for the three months
ended June 30, 1999 and 1998, have been made. The results of operations for
the three months ended June 30, 1999, are not necessarily indicative of the
results to be expected for the full year.
Income Taxes - Income taxes are accounted for using an asset and liability
approach which requires the recognition of taxes payable or refundable for
the current year and deferred tax liabilities and assets for the temporary
differences between financial statement carrying amounts and related tax
bases of assets and liabilities. The measurement of current and deferred
tax liabilities and assets are based on provisions of the enacted tax law;
the effects of future changes in tax laws or rates are not anticipated. The
measurement of deferred tax assets is reduced by a valuation allowance when
it is more likely than not that a tax benefit will not be realized by the
Company.
F-8
<PAGE>
Recently Issued Accounting Standards - In June 1998, Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities ("SFAS No. 133") was issued. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative
instrument, including certain derivative instruments embedded in other
contracts, be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. SFAS No. 133 as amended by SFAS No. 137,
is effective for fiscal years beginning after June 15, 2000. Management is
in the process of evaluating the effect, if any, SFAS No. 133 will have on
its financial position and results of operations.
The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position, or SOP, No.
98-1, Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use. The provisions of SOP 98-1 are effective for fiscal years
beginning after December 15, 1998, and require that certain direct costs
associated with such development are capitalized and amortized and all
remaining costs must be expensed when incurred. Prior to the effective date
of SOP 98-1, the Company expensed all costs of computer software developed
for internal use. Management is currently evaluating the impact of SOP 98-1
and believes that costs similar in nature to costs expensed prior to the
SOP's effective date will be capitalized. However, management is unable to
determine the amount of costs expensed in periods prior to the effective
date that would have been capitalized had SOP 98-1 been effective during
these periods.
Net Income or Loss Per Share - The Company computes net income or loss per
share in accordance with SFAS No. 128, Earnings Per Share, which requires
dual presentation of basic earnings per share ("EPS") and diluted EPS.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
March 31, June 30,
---------------------------- -----------------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Computer hardware and software $ 73,140 $ 52,630 $ 84,993 $ 55,776
Furniture and office equipment 16,634 10,322 17,453 11,122
--------- --------- --------- ---------
89,774 62,952 102,446 66,898
Less accumulated depreciation (43,429) (25,309) (48,165) (29,839)
--------- --------- --------- ---------
Net property and equipment $ 46,345 $ 37,643 $ 54,281 $ 37,059
========= ========= ========= =========
</TABLE>
Total depreciation expense for the years ended March 31, 1999 and 1998, and
the three month periods ended June 30, 1999 and 1998 (unaudited), was
$18,120, $20,378, $4,736 and $4,530, respectively.
F-9
<PAGE>
3. NOTES PAYABLE
<TABLE>
<CAPTION>
Notes payable consists of the following:
March 31, June 30,
----------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Line of credit bearing interest at 9.5%,
due September 1, 1999, interest due
monthly, collateralized by personal
guaranties of various shareholders $49,938 $44,438 $49,938 $34,438
Note payable, bearing no interest,
due July 1999 8,600 19,400 5,900 17,600
------- ------- ------- -------
58,538 63,838 55,838 52,038
Less portion due within one year 58,538 55,238 55,838 45,238
------- ------- ------- -------
Total notes payable
less current portion $ -- $ 8,600 $ -- $ 6,800
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Notes payable to stockholders consists of the following:
March 31, June 30,
----------------- ----------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Note payable to stockholder, bearing
interest at 8.5%, due on demand,
unsecured $ -- $ 5,000 $ -- $ --
Note payable to stockholder, bearing
interest at 8.5%, due on demand,
unsecured -- 3,000 -- --
Note payable to stockholder, bearing no
interest, due on demand, unsecured 4,000 -- -- --
Note payable to stockholder, bearing
interest at 8.5%, due on demand,
unsecured 2,000 2,000 2,000 2,000
Note payable to stockholder, bearing
interest at 8.38%, due on demand,
unsecured 2,000 2,000 2,000 2,000
Note payable to stockholder, bearing no
interest, due on demand,
unsecured 2,000 2,000 2,000 2,000
------- ------- ------- -------
Total notes payable
to stockholders $10,000 $14,000 $ 6,000 $ 6,000
======= ======= ======= =======
The weighted average rate for notes payable at March 31, 1999 and 1998, and
June 30, 1999 and 1998 (unaudited), were 7.7%, 6.0%, 8.5%, and 6.5%,
respectively.
</TABLE>
4. RELATED PARTY TRANSACTIONS
A stockholder of the Company provides access to travel services for the
Company. The Company reimburses the stockholder on a periodic basis.
Amounts payable to the stockholder as of March 31, 1999 and 1998, and June
30, 1999 and 1998 (unaudited), were $15,378 and $15,357, $9,636, and
$4,564, respectively.
F-10
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
The Company is obligated under various operating leases for property and
equipment as follows as of March 31, 1999:
Years ending March 31:
2000 $ 56,026
2001 32,753
2002 15,818
2003 782
---------
Total $ 105,379
=========
Total rental expense for the years ended March 31, 1999 and 1998, and the
three month periods ended June 30, 1999 and 1998 (unaudited), was
approximately $23,550, $17,710, $13,864 and $2,565, respectively.
6. INCOME TAXES
<TABLE>
<CAPTION>
Years Ended Three Month Periods
March 31, Ended June 30,
---------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Current tax expense $ 21,409 $ -- $ -- $ 11,753
Deferred tax expense (benefit) (15,393) (8,725) (266,652) (10,020)
Benefit of net operating
loss carryforward (21,409) -- -- (11,753)
Change in deferred tax asset
valuation allowance 15,393 8,725 266,652 10,020
</TABLE>
No provision for income taxes has been recorded because the Company has
predominantly incurred net losses since inception and the Company has
received no benefit for such losses. Management believes that, based on a
number of factors, the available objective evidence creates sufficient
uncertainty regarding the realizability of the deferred tax assets such
that a full valuation allowance has been recorded.
Net deferred tax assets at March 31, 1999 and 1998, and June 30, 1999 and
1998 (unaudited), are comprised of the following:
<TABLE>
<CAPTION>
March 31, June 30,
---------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Assets:
Net operating loss carryforward $ 103,314 $ 124,723 $ 389,099 $ 112,970
Property and equipment -- 7,428 -- 5,319
Other 10,726 -- -- 114
--------- --------- --------- ---------
Total deferred tax assets 114,040 132,151 389,099 118,403
Liabilities:
Property and equipment 1,009 -- 956 --
Other -- 3,728 8,460 --
--------- --------- --------- ---------
Total deferred tax liabilities 1,009 3,728 9,416 --
--------- --------- --------- ---------
Net deferred tax assets 113,031 128,423 379,683 118,403
Deferred tax asset valuation allowance (113,031) (128,423) (379,683) (118,403)
--------- --------- --------- ---------
$ -- $ -- $ -- $ --
========= ========= ========= =========
</TABLE>
F-11
<PAGE>
The difference between the statutory rate of approximately 38% and the tax
expense (benefit) of zero recorded by the Company is primarily due to the
Company's full valuation allowance against its net deferred tax assets.
At March 31, 1999, the Company had available net operating loss
carryforwards of $270,988. These carryforwards expire from 2015 to 2018.
7. SHAREHOLDERS' EQUITY (DEFICIT)
During the year ended March 31, 1998, the Company issued 200,000 shares of
common stock in exchange for services provided by an outside party. The
shares issued were recorded at the estimated fair value of the services
provided, which was $8,110.
8. STOCK COMPENSATION (UNAUDITED)
On May 18, 1999, the stockholders of the Company unanimously voted to grant
stock bonuses to certain key employees of the Company. The number of shares
granted after giving retroactive effect to the subsequent stock dividend
totaled 650,000 shares. The Company has recognized compensation expense of
$650,000 in the statement of operations for the three month period ended
June 30, 1999 (unaudited), for the stock bonus. The compensation was based
on the stock price in transactions occurring near the date of the stock
grant.
9. EARNINGS PER SHARE
A reconciliation of shares used in calculation of basic and diluted and
unaudited pro forma net earnings per share follows:
<TABLE>
<CAPTION>
March 31, June 30,
------------------------- -------------------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C>
Net income (loss) $ 27,484 $ (29,079) $ (747,151) $ 55,730
=========== =========== =========== ===========
Net income (loss) per common share:
Basic 0.01 (0.01) (0.29) 0.02
Diluted 0.01 (0.01) (0.29) 0.02
Reconciliation of weighted average shares:
Shares used in computing basic net
income (loss) per share 2,255,000 2,255,000 2,580,900 2,255,000
Shares used in computing diluted net income
(loss) per share 2,255,000 2,255,000 2,580,900 2,255,000
</TABLE>
There were no potentially dilutive securities as of March 31, 1999 and
1998, and June 30, 1999 and 1998 (unaudited).
F-12
<PAGE>
10. SUBSEQUENT EVENTS (UNAUDITED)
Certain stockholders of Sentry agreed to make capital contributions of
$500,000 to the Company in contemplation of the merger between the two
companies described in Note 1. The Company's right to keep the
contributions as equity was contingent upon completion of the merger. As of
June 30, 1999 (unaudited), approximately $200,000 of the contributions had
been received. The remaining $300,000 was received in July and August 1999.
Also, subsequent to the merger discussed in Note 1 to the financial
statements, TravelNow granted options on 530,000 shares of TravelNow common
stock to employees. The options have exercise prices ranging from $1.50 per
share to $65.00 per share and exercise dates from July 2000 to September
2002 for 500,000 of the shares and September 2000 to September 2004 for
30,000 shares. Additionally, TravelNow entered into employment agreements
with employees providing for aggregate compensation from annual salaries of
$390,000 for a period of 5 years and debt forgiveness of $160,000 in the
employees' second year of employment.
* * * * * *
F-13
Exhibit 3.5
AMENDMENT TO THE BYLAWS
OF TRAVELNOW.COM, INC.
TravelNow.com, Inc., a Florida corporation (the "Corporation"), hereby
certifies as follows:
1. The Bylaws of the Corporation are hereby amended by deleting the present
form of Article V, Section 1, in its entirety and by substituting, in lieu
thereof, the following:
Article V
Officers
Section 1. Manner of Selection. Authorized Officers. The officers of the
Corporation shall be elected by the board of directors at its meeting
immediately following the Corporation's annual meeting of shareholders, and such
officers shall include co-chief executive officers, a secretary, and a
treasurer. The board of directors may also elect one (1) or more; presidents,
vice presidents, assistant secretaries or assistant treasurers, and such other
officers as it deems necessary to hold offices, to exercise such powers and to
perform such duties as shall be determined from time to time by the board of
directors.
2. The Bylaws of the Corporation are hereby amended by deleting the present
form of Article V, Section 6, Duties, Chairman of the Board of Directors, in its
entirety and by substituting, in lieu thereof, the following:
Section 6. Duties. The officers of the Corporation shall have the following
duties, including, the power of the co-chief executive officers and the
president to bind the Corporation:
Co-Chief Executive Officer
There shall be an office of co-chief executive officers of the Corporation.
Each chief executive officer, individually and jointly, shall have general
executive powers and duties of supervision and management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. One of the co-chief executive officers shall
preside over meetings of shareholders and directors, with alternating
responsibility if not otherwise agreed to. The co-chief executive officers shall
perform such duties and have such powers as the board of directors may from time
to time prescribe and such other duties, powers and authority as may be
prescribed elsewhere in these bylaws.
3. The Bylaws of the Corporation are hereby amended by deleting the present
form of Article V, Section 6, Duties, President, in its entirety and
substituting, in lieu thereof, the following:
President
The President shall perform such duties and have such powers as the board
of directors may from time to time prescribe or which the co-chief executive
officers may from time to time delegate. In the absence of either co-chief
executive officer, or in the event of their inability or refusal to act, the
President shall have all of the power and authority granted by these by-laws to
the co-chief executive officers.
NUMBER TravelNow.com Inc. SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
AUTHORIZED: 50,000,000 COMMON SHARES, NO PAR VALUE
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 89490A 10 7
This Certifies that
is the owner of
Fully Paid and Non-assessable Shares of Common Stock, no par value of
TravelNow.com Inc.
transferable on the books of the Corporation in person or by attorney upon
surrender of this Certificate properly endorsed or assigned. This Certificate is
not valid until countersigned by the Transfer Agent.
In Witness Whereof, the Corporation has caused this Certificate to be signed by
the facsimile signatures of its duly authorized officers and to be sealed with
the facsimile seal of the Corporation.
DATED:
/s/ Chris Noble [SEAL] /s/ Jeff Wasson
- --------------- ------ -----------------------
Chris Noble, Secretary Jeff Wasson, President
Countersigned:
Florida Atlantic Stock Transfer, Inc.
7130 Nob Hill Rd., Tamarac, FL 33321
By:
- ----------------------------
Transfer Agent
<PAGE>
TravelNow.com Inc.
Florida Atlantic Stock Transfer, Inc.
Transfer Fee: As Required
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______Custodian for____
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act of_______________________
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
For value received________________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________
Please print or type name and address of assignee
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
______________________________________________________ Shares
of the Common Stock represented by the within Certificate and
do hereby irrevocable constitute and appoint_________________
______________________________________________________________
Attorney to transfer the said stock on the books of the within
-named Corporation, with full power of substitution in the
premises.
Dated _________________ 19__
SIGNATURE GUARANTEED: X_____________________
X_____________________
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER. tHE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan
Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM.
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (Agreement) by and between TravelNow.com Inc., a
Florida corporation with principal offices at 318 Park Central Square-Suite 306,
Springfield, Missouri 65806(the Company),and John Christopher Noble, whose
address is 318 Park Central West-Apt 205 Springfield, Missouri 65804 (Executive)
shall be effective on October 1, 1999.
RECITALS
A. The Company desires to be assured of the association and services of
Executive for the Company.
B. Executive is willing and desires to be employed by the Company, and the
Company is willing to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. Employment. The Company hereby employs Executive as its Co/Chief
Executive Officer (CEO), subject to the supervision and direction of the
Company's Board of Directors.
2. Term. The term of this Agreement shall be for a period of five (5) years
commencing on the effective date of this Agreement, unless terminated earlier
pursuant to Section 8. below; provided, however, that Executive's obligations in
Section 7. below shall continue in effect after such termination.
3. Compensation; Reimbursement.
3.1. Base Salary. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of Sixty-Five Thousand
Dollars ($65,000) per annum, payable bi-weekly in equal installments (the "Base
Salary"). The amount of the Base Salary may be increased at any time and from
time to time by the Board of Directors of the Company, and shall be adjusted
annually to reflect changes in the Consumer Price Index for the statistical area
in which the residence of Executive is located. No such change shall in any way
abrogate, alter, terminate or otherwise affect the other terms of this
Agreement.
3.3. Additional Benefits. In addition to the Base Salary Executive shall be
entitled to all other benefits of employment provided to other employees of the
Company including hospitalization, sick leave and paid vacation and holidays.
3.4. Reimbursement. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business entertainment
incurred in connection with the performance of Executive's duties under this
Agreement (1) so long as such expenses constitute business deductions from
taxable income for the Company and are excludable from taxable income to the
Executive under the governing laws and regulations of the Internal Revenue Code
[provided, however, that Executive shall be entitled to full reimbursement in
any case where the Internal Revenue Service may, under Section 274(n) of the
Internal Revenue Code, disallow to the Company 20% of meals and entertainment
expenses]; and, (2) to the extent such expenses do not exceed the amounts
allocable for such expenses in budgets that are approved from time to time by
the Company. All reimbursed expenses will be review by the Company's audit
committee are its designee no less frequently than Quarterly.
4. Scope of Duties.
4.1. Assignment of Duties. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's Board of Directors
commensurate with his experience and responsibilities in the position for which
he is employed pursuant to Section 1. above and these duties shall be exercised
by Executive subject to the control and supervision of the Board of Directors of
the Company.
<PAGE>
4.2. General Specification of Duties. Executive's duties shall include, but
not be limited to, the duties, functions and responsibilities generally
associated with the Chief Executive Officer of a Company, including: (1)
executing on behalf of the Company, in his capacity as Co/CEO all documents as
requested by the Company; (2) establishing procedures for implementing the
policies established by the Company' Board of Directors; (3) preparation of a
Strategic Annual Plan; and (4) employing and discharging all employees for which
Executive is responsible.
The foregoing specifications are not intended as a complete itemization of
the duties which Executive shall perform and undertake on behalf of the Company
in satisfaction of Executive's employment obligations under this Agreement.
4.3. Strategic Annual Plan.
(1) Executive shall submit to the Company's Board of Directors for
their approval, not later than (30) days after the end of the Company's
fiscal year the Strategic Annual Plan for the Company (the "Annual Plan").
The Annual Plan shall be revised by Executive and submitted to the
Company's Board of Directors for their review and approval from time to
time during each year of the term of this Agreement to reflect changes in
the Strategic Annual Plan because of operations or otherwise.
(2) During each year Executive, in the performance of Executive's
duties under this Agreement, shall use Executive's best efforts to comply
or cause compliance with the matters set forth in the Strategic Annual Plan
and shall not (except for emergency expenditures or special circumstances
requiring an unanticipated expenditure) deviate materially from any budget
category set forth in the Strategic Annual Plan, incur any material
additional expense or change materially any aspect of the Strategic Annual
Plan without the approval of the Board of Directors of the Company.
4.4. Executive's Devotion of Time. Executive agrees to devote Executive's
full time, abilities and energy to the faithful performance of the duties
assigned to Executive and to the promotion and forwarding of the business
affairs of the Company, and not to divert any business opportunities from the
Company to Executive or to any other person or business entity.
4.5. Conflicting Activities.
(1) Executive shall not, during the term of this Agreement, be engaged
in any other business activity without the prior consent of the Board of
Directors of the Company; provided, however, that this restriction shall
not be construed as preventing Executive from investing his personal assets
in investments in business entities which are not in competition with the
Company or its affiliates, or from pursuing business opportunities as
permitted by Section 4.5.(2).
(2) Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best
interests of the Company and with Executive's duties under this Agreement.
Should Executive discover a business opportunity that relates to the
current or anticipated future business of the Company, he shall first offer
such opportunity to the Company. Should the Board of Directors of the
Company not exercise its right to pursue this business opportunity within a
reasonable period of time, not to exceed sixty (60) days, then Executive
may develop the business opportunity for Executive; provided, however, that
such development may in no way conflict or interfere with the duties owed
by Executive to the Company under this Agreement. Further, Executive may
develop such business opportunities only on Executive's own time, and
Executive may not use any service, personnel, equipment, supplies,
facility, or trade secrets of the Company in the development of those
business opportunities. As used herein, the term "business opportunity"
shall not include business opportunities involving investment in publicly
traded stocks, bonds or other securities, or other investments of a
personal nature.
<PAGE>
5. Key Man Insurance. Executive agrees that the Company at its election may
secure an appropriate life insurance policy on Executive's life with the Company
as the named beneficiary and Executive will submit to the medical exam required
by the insurer to secure such life insurance policy.
6. Benefits. So long as this Agreement is in effect, Executive shall at all
times be entitled to benefits equal to those provided to other chief operating
officers of the Company's operating divisions or subsidiaries. These benefits
shall include, without limitation, the Company's maintenance at its cost of a
life insurance policy and disability policy on Executive payable to Executive
and/or Executive's legal representative or heirs as applicable, in amounts
reasonably agreed to by Executive and the Company.
7. Confidentiality of Trade Secrets and Other Materials.
7.1. Trade Secrets. Other than in the performance of Executive's duties
hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by the Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company. Any
technique, method, process or technology used by the Company shall be considered
a "trade secret" for the purposes of this Agreement.
7.2. Ownership of Trade Secrets; Assignment of Rights. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by Executive in the
course of Executive's employment or by the Company are the property of the
Company and shall not be used by Executive in any way adverse to the Company's
interests. Executive shall not deliver, reproduce or in any way allow such
documents or things to be delivered or used by any third party without specific
direction or written consent of the Board of Directors of the Company. Executive
hereby assigns to the Company any rights which Executive may have in any such
trade secret or proprietary information.
7.3 Agreement Not To Compete. Executive agrees not to directly or
indirectly solicit or have any contact with any; (1) of the Company's travel
suppliers, (2) GDS systems or (3) of the Company's employees, affiliates or
customers, for two years after termination of employment.
8. Termination.
8.1. Basis for Termination.
(1) Executive's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(2) "Permanent Incapacity" means mental or physical incapacity, or
both, which renders Executive unable to substantially perform the material
duties owed by Executive to the Company as provided in this Agreement and
that such Incapacity will continue for six (6) months. If in the judgment
of the Board of Directors of the Company Executive is permanently
incapacitated, the Board of Directors shall give Notice of Permanent
Incapacity to the Executive or Executive's representative stating that in
the Board of Director's judgment the Executive is permanently
incapacitated. If Executive fails to rebut the Notice of Permanent
Incapacity within fifteen (15) days by providing a certification issued by
the Executive's personal physician that the Executive is not permanently
incapacitated, the judgment of the Board of Directors is deemed final, and
Executive's employment shall be terminated effective the date of the Notice
of Permanent Incapacity. If in response to the Board of Directors Notice of
Permanent Incapacity Executive's personal physician issues a written
certification that Executive is not permanently incapacitated, Executive
agrees to submit to a medical examination by a physician selected by the
Board of Directors. If the physician selected by the Board of Directors
certifies that Executive is not permanently incapacitated, then Executive
shall not be terminated under this Section 8.1(2). If the physician
selected by the Board of Directors certifies that Executive is permanently
incapacitated, then Executive's employment shall be terminated effective as
of the date of the Notice of Permanent Incapacity.
(3) Executive's employment may be terminated by the Company "with
cause," effective upon delivery of written notice to Executive given at any
time (without any necessity for prior notice) if any of the following shall
occur:
<PAGE>
(a) any action by Executive which would be grounds for
termination under any applicable state or federal law which law covers
any willful breach of duty or habitual neglect of duty;
(b) any material acts or events constituting (i) a felony
criminal conviction; (ii) any other criminal conviction involving
Executive's lack of honesty or moral turpitude; (iii) drug or alcohol
abuse; or, (iv) acts of dishonesty, gross carelessness or gross
misconduct.
(4) Executive's employment may be terminated by the Company "without
cause" (for any reason or no reason at all) at any time by giving Executive
sixty (60) days prior written notice of termination, which termination
shall be effective on the sixtieth (60th) day following such notice.
(a) For purposes of this section 8.1(4), a Material Diminishment
in connection with Executive's (i) title, job duties or
responsibilities, or (ii) overall compensation and benefits package,
or (iii) a requirement that Executive must move from Springfield,
Missouri as a condition of future employment, or (iv) the sale of all
or substantially all of the Company's assets, or (v) any sale, merger
or consolidation of the Company following which a majority of the
voting equity securities of the Company or any surviving entity is
controlled by another person, group or legal entity, shall be deemed
to be a termination by the Company without cause hereunder.
(b) A Material Diminishment of Executive's obligations owed to
the Company by Executive in this Agreement shall be deemed a
termination of the Executive's employment without cause. In the event
of a Material Diminishment of Executive's obligations under Section
8.1(4)(a)(i), (ii) or (iii) of this Agreement, Executive shall give
sixty (60) days notice of such fact to the Company which notice shall
include Executive's "Statement of Correction." Executive's Statement
of Correction shall include the duties which upon restoration by the
Company will cure the Material Diminishment of Executive's obligation.
If the Company fails to make appropriate restoration of any of the
rights or duties enunciated in Section 8.1(4)(a)(i), (ii) or (iii) of
this Agreement as set forth in Executive's Statement of Correction,
Executive and the Company shall submit the issue of Material
Diminishment for arbitration in accordance with the rules of the
American Arbitration Association which are appropriate to determine
whether there has or has not been a Material Diminishment. There shall
be a panel of three arbitrators. Each arbitrator shall be a member in
good standing of the American Arbitration Association. The Company
shall select an arbitrator, and the Executive shall select an
arbitrator; and, the two arbitrators selected shall select a third
neutral arbitrator. If the arbitrators make a finding of fact that
there was a Material Diminishment, then the Executive shall be deemed
to have been terminated without cause as provided in Section 8.1(4) of
this Agreement. Accordingly, the Company shall bear all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration. If the arbitrators make a finding of
fact that there was not a Material Diminishment, all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration shall be borne by Executive.
(c) If Executive's employment under this Agreement is so
terminated, the Company shall (a) make a lump sum cash payment to
Executive within ten (10) days after termination of an amount equal to
(i) Executive's Base Salary for the balance of the year in which
termination occurs, (ii) any un-reimbursed expenses accruing to the
date of termination; and, (b) make a lump sum cash payment equal to
Executive's annual Base Salary, as increased pursuant to Section 3.1.,
on each Anniversary Date of this Agreement for the balance of the term
specified in Section 2. For purposes of this provision, Executive's
annual Base Salary and the remaining portion of the term of the
Agreement shall be calculated as of the termination date. After the
Company's termination of Executive under this provision, the Company
shall not be obligated to provide the benefits to Executive described
in Section 3.4. (except as may be required by law).
<PAGE>
(5) Executive may terminate Executive's employment hereunder by giving
the Company thirty (30) days prior written notice, which termination shall
be effective on the (30th) day following such notice.
8.2. Payment Upon Termination. Upon termination under Sections 8.1.(1),
(2), (3), or (5), the Company shall pay to Executive within ten (10) days after
termination an amount equal to the sum of (1) Executive's Base Salary accrued to
the date of termination; and, (2) un-reimbursed expenses accrued to the date of
termination. After any such termination, the Company shall not be obligated to
compensate Executive, Executive's estate or representatives except for the
foregoing compensation then due and owing, nor provide the benefits to Executive
described in Section 3.4. (except as provided by law).
8.3. Dismissal from Premises. At the Company's option, Executive shall
immediately leave the Company's premises on the date notice of termination is
given by either Executive or the Company.
9. Injunctive Relief. The Company and Executive hereby acknowledge and
agree that any default under Section 7. above will cause damage to the Company
in an amount difficult to ascertain. Accordingly, in addition to any other
relief to which the Company may be entitled, the Company shall be entitled to
such injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Section 7. above and without the proof of actual damages.
10. Miscellaneous.
10.1. Transfer and Assignment. This Agreement is personal as to Executive
and Executive's rights herein shall not be assigned or transferred by Executive
without the prior written consent of the Company, subject to provisions in
section 8.1(4). None of Executives's duties herein may be delegated. This
Agreement shall be binding upon and inure to the benefit of all of the parties
hereto and their respective permitted heirs, personal representatives,
successors and assigns.
10.2. Severability. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
10.3. Controversy. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of Missouri applicable to contracts made and performed in Missouri.
10.4. Counterparts. This Agreement may be executed in several counter parts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
10.5. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements and understandings
with respect thereto. No representation, promise, inducement, statement or
intention has been made by any party hereto that is not embodied herein, and no
party shall be bound by or liable for any alleged representation, promise,
inducement or statement not so set forth herein.
10.6. Modification. This Agreement may be modified, amended, superseded or
canceled; and, any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation or waiver.
<PAGE>
10.7. Construction and Interpretation. In construing this Agreement, none
of the parties hereto shall have any term or provision construed against such
party solely by reason of such party having drafted the same.
10.8. Waiver. The waiver by either of the parties, express or implied, of
any right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
10.9. Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise of
any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
10.10. Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
10.11. Notices. Any notice under this Agreement must be in writing and then
telecopied (e.g., by facsimile), sent by express 24-hour guaranteed courier or
hand-delivery or served by depositing the same in the United States mail,
addressed to the party to be notified, postage-prepaid and registered or
certified with a return receipt requested. The addresses of the parties for the
receipt of notice shall be as follows:
If to the Company:
TravelNow.com Inc.
318 Park Central East, Suite 418
Springfield, Missouri 65806
ATTN: Jeff Wasson
If to Executive:
John Christopher Noble
318 Park Central West-Apt 205
Springfield, Missouri 65806
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery. Each party may change its address for notice by giving
notice in the manner provided above.
10.12. Survival. Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement and be binding on Executive and the
Company.
10.13. Right of Set-Off. Upon termination or expiration of this Agreement,
the Company shall have the right to set-off against the amounts due Executive
hereunder the amount of any outstanding Bonus/Loan or advance from the Company
to Executive.
10.14. Effective Date. This Agreement shall be effective as of the date set
forth on page 1 when signed by Executive and the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement and agree that it will be effective as provided in Section 10.14 of
this Agreement.
EXECUTIVE
---------------------------
John Christopher Noble
TRAVELNOW.COM INC.
---------------------------
Jeff Wasson,
Co-Chief Executive Officer
Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (Agreement) by and between TravelNow.com Inc., a
Florida corporation with principal offices at 318 Park Central Square-Suite 306,
Springfield, Missouri 65806(the Company),and Jeff Wasson, whose address is 1530
South Belcrest, Springfield, Missouri 65804 (Executive) shall be effective on
October 1, 1999.
RECITALS
A. The Company desires to be assured of the association and services of
Executive for the Company.
B. Executive is willing and desires to be employed by the Company, and the
Company is willing to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. Employment. The Company hereby employs Executive as its Co/Chief
Executive Officer (CEO), subject to the supervision and direction of the
Company's Board of Directors.
2. Term. The term of this Agreement shall be for a period of five (5) years
commencing on the effective date of this Agreement, unless terminated earlier
pursuant to Section 8. below; provided, however, that Executive's obligations in
Section 7. below shall continue in effect after such termination.
3. Compensation; Reimbursement.
3.1. Base Salary. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of Sixty-Five Thousand
Dollars ($65,000.00) per annum, payable bi-weekly in equal installments (the
"Base Salary"). The amount of the Base Salary may be increased at any time and
from time to time by the Board of Directors of the Company, and shall be
adjusted annually to reflect changes in the Consumer Price Index for the
statistical area in which the residence of Executive is located. No such change
shall in any way abrogate, alter, terminate or otherwise affect the other terms
of this Agreement.
3.3. Additional Benefits. In addition to the Base Salary Executive
shall be entitled to all other benefits of employment provided to other
employees of the Company including hospitalization, sick leave and paid vacation
and holidays.
3.4. Reimbursement. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business entertainment
incurred in connection with the performance of Executive's duties under this
Agreement (1) so long as such expenses constitute business deductions from
taxable income for the Company and are excludable from taxable income to the
Executive under the governing laws and regulations of the Internal Revenue Code
[provided, however, that Executive shall be entitled to full reimbursement in
any case where the Internal Revenue Service may, under Section 274(n) of the
Internal Revenue Code, disallow to the Company 20% of meals and entertainment
expenses]; and, (2) to the extent such expenses do not exceed the amounts
allocable for such expenses in budgets that are approved from time to time by
the Company. All reimbursed expenses will be review by the Company's audit
committee are its designee no less frequently than Quarterly.
4. Scope of Duties.
4.1. Assignment of Duties. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's Board of Directors
commensurate with his experience and responsibilities in the position for which
he is employed pursuant to Section 1. above and these duties shall be exercised
by Executive subject to the control and supervision of the Board of Directors of
the Company.
<PAGE>
4.2. General Specification of Duties. Executive's duties shall include, but
not be limited to, the duties, functions and responsibilities generally
associated with the Chief Executive Officer of a Company, including: (1)
executing on behalf of the Company, in his capacity as Co/CEO all documents as
requested by the Company; (2) establishing procedures for implementing the
policies established by the Company' Board of Directors; (3) preparation of a
Strategic Annual Plan; and (4) employing and discharging all employees for which
Executive is responsible.
The foregoing specifications are not intended as a complete itemization of
the duties which Executive shall perform and undertake on behalf of the Company
in satisfaction of Executive's employment obligations under this Agreement.
4.3. Strategic Annual Plan.
(1) Executive shall submit to the Company's Board of Directors for
their approval, not later than (30) days after the end of the Company's
fiscal year the Strategic Annual Plan for the Company (the "Annual Plan").
The Annual Plan shall be revised by Executive and submitted to the
Company's Board of Directors for their review and approval from time to
time during each year of the term of this Agreement to reflect changes in
the Strategic Annual Plan because of operations or otherwise.
(2) During each year Executive, in the performance of Executive's
duties under this Agreement, shall use Executive's best efforts to comply
or cause compliance with the matters set forth in the Strategic Annual Plan
and shall not (except for emergency expenditures or special circumstances
requiring an unanticipated expenditure) deviate materially from any budget
category set forth in the Strategic Annual Plan, incur any material
additional expense or change materially any aspect of the Strategic Annual
Plan without the approval of the Board of Directors of the Company.
4.4. Executive's Devotion of Time. Executive agrees to devote Executive's
full time, abilities and energy to the faithful performance of the duties
assigned to Executive and to the promotion and forwarding of the business
affairs of the Company, and not to divert any business opportunities from the
Company to Executive or to any other person or business entity.
4.5. Conflicting Activities.
(1) Executive shall not, during the term of this Agreement, be engaged
in any other business activity without the prior consent of the Board of
Directors of the Company; provided, however, that this restriction shall
not be construed as preventing Executive from investing his personal assets
in investments in business entities which are not in competition with the
Company or its affiliates, or from pursuing business opportunities as
permitted by Section 4.5.(2).
(2) Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best
interests of the Company and with Executive's duties under this Agreement.
Should Executive discover a business opportunity that relates to the
current or anticipated future business of the Company, he shall first offer
such opportunity to the Company. Should the Board of Directors of the
Company not exercise its right to pursue this business opportunity within a
reasonable period of time, not to exceed sixty (60) days, then Executive
may develop the business opportunity for Executive; provided, however, that
such development may in no way conflict or interfere with the duties owed
by Executive to the Company under this Agreement. Further, Executive may
develop such business opportunities only on Executive's own time, and
Executive may not use any service, personnel, equipment, supplies,
facility, or trade secrets of the Company in the development of those
business opportunities. As used herein, the term "business opportunity"
shall not include business opportunities involving investment in publicly
traded stocks, bonds or other securities, or other investments of a
personal nature.
<PAGE>
5. Key Man Insurance. Executive agrees that the Company at its election may
secure an appropriate life insurance policy on Executive's life with the Company
as the named beneficiary and Executive will submit to the medical exam required
by the insurer to secure such life insurance policy.
6. Benefits. So long as this Agreement is in effect, Executive shall at all
times be entitled to benefits equal to those provided to other chief operating
officers of the Company's operating divisions or subsidiaries. These benefits
shall include, without limitation, the Company's maintenance at its cost of a
life insurance policy and disability policy on Executive payable to Executive
and/or Executive's legal representative or heirs as applicable, in amounts
reasonably agreed to by Executive and the Company.
7. Confidentiality of Trade Secrets and Other Materials.
7.1. Trade Secrets. Other than in the performance of Executive's duties
hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by the Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company. Any
technique, method, process or technology used by the Company shall be considered
a "trade secret" for the purposes of this Agreement.
7.2. Ownership of Trade Secrets; Assignment of Rights. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by Executive in the
course of Executive's employment or by the Company are the property of the
Company and shall not be used by Executive in any way adverse to the Company's
interests. Executive shall not deliver, reproduce or in any way allow such
documents or things to be delivered or used by any third party without specific
direction or written consent of the Board of Directors of the Company. Executive
hereby assigns to the Company any rights which Executive may have in any such
trade secret or proprietary information.
7.3 Agreement Not To Compete. Executive agrees not to directly or
indirectly solicit or have any contact with any; (1) of the Company's travel
suppliers, (2) GDS systems or (3) of the Company's employees, affiliates or
customers, for two years after termination of employment.
8. Termination.
8.1. Basis for Termination.
(1) Executive's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(2) "Permanent Incapacity" means mental or physical incapacity, or
both, which renders Executive unable to substantially perform the material
duties owed by Executive to the Company as provided in this Agreement and
that such Incapacity will continue for six (6) months. If in the judgment
of the Board of Directors of the Company Executive is permanently
incapacitated, the Board of Directors shall give Notice of Permanent
Incapacity to the Executive or Executive's representative stating that in
the Board of Director's judgment the Executive is permanently
incapacitated. If Executive fails to rebut the Notice of Permanent
Incapacity within fifteen (15) days by providing a certification issued by
the Executive's personal physician that the Executive is not permanently
incapacitated, the judgment of the Board of Directors is deemed final, and
Executive's employment shall be terminated effective the date of the Notice
of Permanent Incapacity. If in response to the Board of Directors Notice of
Permanent Incapacity Executive's personal physician issues a written
certification that Executive is not permanently incapacitated, Executive
agrees to submit to a medical examination by a physician selected by the
Board of Directors. If the physician selected by the Board of Directors
certifies that Executive is not permanently incapacitated, then Executive
shall not be terminated under this Section 8.1(2). If the physician
selected by the Board of Directors certifies that Executive is permanently
incapacitated, then Executive's employment shall be terminated effective as
of the date of the Notice of Permanent Incapacity.
(3) Executive's employment may be terminated by the Company "with
cause," effective upon delivery of written notice to Executive given at any
time (without any necessity for prior notice) if any of the following shall
occur:
<PAGE>
(a) any action by Executive which would be grounds for
termination under any applicable state or federal law which law covers
any willful breach of duty or habitual neglect of duty;
(b) any material acts or events constituting (i) a felony
criminal conviction; (ii) any other criminal conviction involving
Executive's lack of honesty or moral turpitude; (iii) drug or alcohol
abuse; or, (iv) acts of dishonesty, gross carelessness or gross
misconduct.
(4) Executive's employment may be terminated by the Company "without
cause" (for any reason or no reason at all) at any time by giving Executive
sixty (60) days prior written notice of termination, which termination
shall be effective on the sixtieth (60th) day following such notice.
(a) For purposes of this section 8.1(4), a Material Diminishment
in connection with Executive's (i) title, job duties or
responsibilities, or (ii) overall compensation and benefits package,
or (iii) a requirement that Executive must move from Springfield,
Missouri as a condition of future employment, or (iv) the sale of all
or substantially all of the Company's assets, or (v) any sale, merger
or consolidation of the Company following which a majority of the
voting equity securities of the Company or any surviving entity is
controlled by another person, group or legal entity, shall be deemed
to be a termination by the Company without cause hereunder.
(b) A Material Diminishment of Executive's obligations owed to
the Company by Executive in this Agreement shall be deemed a
termination of the Executive's employment without cause. In the event
of a Material Diminishment of Executive's obligations under Section
8.1(4)(a)(i), (ii) or (iii) of this Agreement, Executive shall give
sixty (60) days notice of such fact to the Company which notice shall
include Executive's "Statement of Correction." Executive's Statement
of Correction shall include the duties which upon restoration by the
Company will cure the Material Diminishment of Executive's obligation.
If the Company fails to make appropriate restoration of any of the
rights or duties enunciated in Section 8.1(4)(a)(i), (ii) or (iii) of
this Agreement as set forth in Executive's Statement of Correction,
Executive and the Company shall submit the issue of Material
Diminishment for arbitration in accordance with the rules of the
American Arbitration Association which are appropriate to determine
whether there has or has not been a Material Diminishment. There shall
be a panel of three arbitrators. Each arbitrator shall be a member in
good standing of the American Arbitration Association. The Company
shall select an arbitrator, and the Executive shall select an
arbitrator; and, the two arbitrators selected shall select a third
neutral arbitrator. If the arbitrators make a finding of fact that
there was a Material Diminishment, then the Executive shall be deemed
to have been terminated without cause as provided in Section 8.1(4) of
this Agreement. Accordingly, the Company shall bear all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration. If the arbitrators make a finding of
fact that there was not a Material Diminishment, all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration shall be borne by Executive.
(c) If Executive's employment under this Agreement is so
terminated, the Company shall (a) make a lump sum cash payment to
Executive within ten (10) days after termination of an amount equal to
(i) Executive's Base Salary for the balance of the year in which
termination occurs, (ii) any un-reimbursed expenses accruing to the
date of termination; and, (b) make a lump sum cash payment equal to
Executive's annual Base Salary, as increased pursuant to Section 3.1.,
on each Anniversary Date of this Agreement for the balance of the term
specified in Section 2. For purposes of this provision, Executive's
annual Base Salary and the remaining portion of the term of the
Agreement shall be calculated as of the termination date. After the
Company's termination of Executive under this provision, the Company
shall not be obligated to provide the benefits to Executive described
in Section 3.4. (except as may be required by law).
<PAGE>
(5) Executive may terminate Executive's employment hereunder by giving
the Company thirty (30) days prior written notice, which termination shall
be effective on the (30th) day following such notice.
8.2. Payment Upon Termination. Upon termination under Sections 8.1.(1),
(2), (3), or (5), the Company shall pay to Executive within ten (10) days after
termination an amount equal to the sum of (1) Executive's Base Salary accrued to
the date of termination; and, (2) un-reimbursed expenses accrued to the date of
termination. After any such termination, the Company shall not be obligated to
compensate Executive, Executive's estate or representatives except for the
foregoing compensation then due and owing, nor provide the benefits to Executive
described in Section 3.4. (except as provided by law).
8.3. Dismissal from Premises. At the Company's option, Executive shall
immediately leave the Company's premises on the date notice of termination is
given by either Executive or the Company.
9. Injunctive Relief. The Company and Executive hereby acknowledge and
agree that any default under Section 7. above will cause damage to the Company
in an amount difficult to ascertain. Accordingly, in addition to any other
relief to which the Company may be entitled, the Company shall be entitled to
such injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Section 7. above and without the proof of actual damages.
10. Miscellaneous.
10.1. Transfer and Assignment. This Agreement is personal as to Executive
and Executive's rights herein shall not be assigned or transferred by Executive
without the prior written consent of the Company, subject to provisions in
section 8.1(4). None of Executives's duties herein may be delegated. This
Agreement shall be binding upon and inure to the benefit of all of the parties
hereto and their respective permitted heirs, personal representatives,
successors and assigns.
10.2. Severability. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
10.3. Controversy. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of Missouri applicable to contracts made and performed in Missouri.
10.4. Counterparts. This Agreement may be executed in several counter parts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
10.5. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements and understandings
with respect thereto. No representation, promise, inducement, statement or
intention has been made by any party hereto that is not embodied herein, and no
party shall be bound by or liable for any alleged representation, promise,
inducement or statement not so set forth herein.
10.6. Modification. This Agreement may be modified, amended, superseded or
canceled; and, any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation or waiver.
<PAGE>
10.7. Construction and Interpretation. In construing this Agreement, none
of the parties hereto shall have any term or provision construed against such
party solely by reason of such party having drafted the same.
10.8. Waiver. The waiver by either of the parties, express or implied, of
any right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
10.9. Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise of
any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
10.10. Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
10.11. Notices. Any notice under this Agreement must be in writing and then
telecopied (e.g., by facsimile), sent by express 24-hour guaranteed courier or
hand-delivery or served by depositing the same in the United States mail,
addressed to the party to be notified, postage-prepaid and registered or
certified with a return receipt requested. The addresses of the parties for the
receipt of notice shall be as follows:
If to the Company:
TravelNow.com Inc.
318 Park Central East, Suite 418
Springfield, Missouri 65806
ATTN: Jonathan Christopher Noble
If to Executive:
Jeff Wasson
1530 South Belcrest
Springfield, Missouri 65804
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery. Each party may change its address for notice by giving
notice in the manner provided above.
10.12. Survival. Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement and be binding on Executive and the
Company.
10.13. Right of Set-Off. Upon termination or expiration of this Agreement,
the Company shall have the right to set-off against the amounts due Executive
hereunder the amount of any outstanding Bonus/Loan or advance from the Company
to Executive.
10.14. Effective Date. This Agreement shall be effective as of the date set
forth on page 1 when signed by Executive and the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement and agree that it will be effective as provided in Section 10.14 of
this Agreement.
EXECUTIVE
----------------------------
Jeff Wasson
TRAVELNOW.COM INC.
----------------------------
Jonathan Christopher Noble,
Co-Chief Executive Officer
Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (Agreement) by and between TravelNow.com Inc., a
Florida corporation with principal offices at 318 Park Central Square-Suite 306,
Springfield, Missouri 65806(the Company),and Chris Kuhn, 425 Wolverine Way,
Monument, Colorado 80132 (Executive) shall be effective on July 12, 1999.
RECITALS
A. The Company desires to be assured of the association and services of
Executive for the Company.
B. Executive is willing and desires to be employed by the Company, and the
Company is willing to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. Employment. The Company hereby employs Executive as its Chief
Information Officer (CIO), subject to the supervision and direction of its
President and Company's Board of Directors.
2. Term. The term of this Agreement shall be for a period of five (5) years
commencing on the effective date of this Agreement, unless terminated earlier
pursuant to Section 8. below; provided, however, that Executive's obligations in
Section 7. below shall continue in effect after such termination.
3. Compensation; Reimbursement.
3.1. Base Salary. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of One Hundred Thirty
Thousand Dollars ($130,000.00) per annum, payable bi-weekly in equal
installments (the "Base Salary"). The amount of the Base Salary may be increased
at any time and from time to time by the Board of Directors of the Company, and
shall be adjusted annually to reflect changes in the Consumer Price Index for
the statistical area in which the residence of Executive is located. No such
change shall in any way abrogate, alter, terminate or otherwise affect the other
terms of this Agreement.
3.2. Bonus/Loan. The Company will extend to Executive a non-interest
bearing loan ("Bonus/Loan") of Eighty Thousand Dollars ($80,000.00) on the first
Anniversary Date ("Anniversary Date") of this Agreement (provided Executive has
remained in the continuous full-time employment of the Company from the date of
this Agreement until the first Anniversary Date of this Agreement). The
Anniversary Date of this Agreement shall be July 12 of each year following the
year of this Agreement, e.g., July 12 is the First Anniversary Date. Executive
agrees to execute a written instrument evidencing this indebtedness at the time
the Bonus/Loan is made in the form of the Promissory Note ("Note") which is
attached hereto and labeled Exhibit A. Provided that Employee remains in the
continuous full-time employment of the Company from the date of this Agreement
until the Second Anniversary Date of this Agreement, the Bonus/Loan of Eighty
Thousand Dollars ($80,000.00) will be forgiven, marked paid in full by the
Company and returned to the Employee. At the time of the forgiveness of the
indebtedness or such other time as the Company's accounting firm deems
advisable, the Company will pay, i.e., gross-up, on behalf of Employee all
withholding and other state and federal income taxes (but not federal or state
gift or estate taxes as those would be the sole responsibility of Executive's
estate) as required by applicable federal and state law. In the event Executive
is terminated for cause or voluntarily leaves the employment of the Company
prior to the Second Anniversary Date of this Agreement, the Bonus/Loan amount of
Eighty Thousand Dollars ($80,000.00) will be repaid to the Company in accordance
with the terms of the Note. In the event Executive (1) dies or becomes
permanently incapacitated as provided in Section 8.1(2) of this Agreement or (2)
is terminated for reasons other than cause, then in either of those events, the
Bonus/Loan will be forgiven at the time of the issuance of the permanent
incapacity certification or at the time of termination. Executive agrees that
the Company at its election may secure an appropriate life insurance policy on
Executive's life with the Company as the named beneficiary and Executive will
submit to the medical exam required by the insurer to secure such life insurance
policy.
<PAGE>
3.3. Additional Benefits. In addition to the Base Salary and the
Bonus/Loan, Executive shall be entitled to all other benefits of employment
provided to other employees of the Company including hospitalization, sick leave
and paid vacation and holidays.
3.4. Reimbursement. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business entertainment
incurred in connection with the performance of Executive's duties under this
Agreement (1) so long as such expenses constitute business deductions from
taxable income for the Company and are excludable from taxable income to the
Executive under the governing laws and regulations of the Internal Revenue Code
[provided, however, that Executive shall be entitled to full reimbursement in
any case where the Internal Revenue Service may, under Section 274(n) of the
Internal Revenue Code, disallow to the Company 20% of meals and entertainment
expenses]; and, (2) to the extent such expenses do not exceed the amounts
allocable for such expenses in budgets that are approved from time to time by
the Company. The reimbursement of Executive's business expenses shall be upon
monthly presentation to and approval by the President of the Company of valid
receipts and other appropriate documentation for such expenses.
4. Scope of Duties.
4.1. Assignment of Duties. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's President or the
Company's Board of Directors commensurate with Executive's experience and
responsibilities in the position for which Executive is employed pursuant to
Section 1. above and these duties shall be exercised by Executive subject to the
control and supervision of the President and the Board of Directors of the
Company.
4.2. General Specification of Duties. Executive's duties shall include, but
not be limited to, the duties, functions and responsibilities generally
associated with the head of an operating division or subsidiary, including: (1)
executing on behalf of the Company, in his capacity as CIO all documents as
requested by the Company; (2) employing and discharging all employees for which
Executive is responsible; (3) establishing procedures for implementing the
policies established by the Company; (4) ensuring the areas of Executive's
responsibility are operated in compliance with all legal requirements as a fully
reporting public company under the Securities Exchange Act of 1934; and, (5)
preparation of all reports which the Company bases the preparation of its
affiliate reports, financial statements, tax returns and other similar items
whether such reports are in written, electronic or other media format.
The foregoing specifications are not intended as a complete itemization of
the duties which Executive shall perform and undertake on behalf of the Company
in satisfaction of Executive's employment obligations under this Agreement.
4.3. Annual Plan.
(1) Executive shall submit to the Company for its approval, not later
than (30) days after the end of the Company's fiscal year an annual
business plan for the area of Executive's responsibility (the "Annual
Plan"). The Annual Plan shall be revised by Executive and submitted to the
Company for its review and approval from time to time during each year to
reflect changes in the Annual Plan because of operations or otherwise.
(2) During each year Executive, in the performance of Executive's
duties under this Agreement, shall use Executive's best efforts to comply
or cause compliance with the matters set forth in the Annual Plan and shall
not (except for emergency expenditures or special circumstances requiring
an unanticipated expenditure) deviate materially from any budget category
set forth in the Annual Plan, incur any material additional expense or
change materially any aspect of the Annual Plan without the approval of the
President of the Company.
<PAGE>
4.4. Executive's Devotion of Time. Executive agrees to devote Executive's
full time, abilities and energy to the faithful performance of the duties
assigned to Executive and to the promotion and forwarding of the business
affairs of the Company, and not to divert any business opportunities from the
Company to Executive or to any other person or business entity.
4.5. Conflicting Activities.
(1) Executive shall not, during the term of this Agreement, be engaged
in any other business activity without the prior consent of the Board of
Directors of the Company; provided, however, that this restriction shall
not be construed as preventing Executive from investing his personal assets
in investments in business entities which are not in competition with the
Company or its affiliates, or from pursuing business opportunities as
permitted by Section 4.5.(2).
(2) Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best
interests of the Company and with Executive's duties under this Agreement.
Should Executive discover a business opportunity that relates to the
current or anticipated future business of the Company, he shall first offer
such opportunity to the Company. Should the Board of Directors of the
Company not exercise its right to pursue this business opportunity within a
reasonable period of time, not to exceed sixty (60) days, then Executive
may develop the business opportunity for Executive; provided, however, that
such development may in no way conflict or interfere with the duties owed
by Executive to the Company under this Agreement. Further, Executive may
develop such business opportunities only on Executive's own time, and
Executive may not use any service, personnel, equipment, supplies,
facility, or trade secrets of the Company in the development of those
business opportunities. As used herein, the term "business opportunity"
shall not include business opportunities involving investment in publicly
traded stocks, bonds or other securities, or other investments of a
personal nature.
5. Stock Option. The Board of Directors has authorized the granting to
Executive of a non-statutory stock option ("Option") to purchase shares of
common stock of the Company ("Stock") upon the terms and conditions set forth in
a written Stock Option Agreement (a form of said agreement is attached to this
Agreement as Exhibit B) pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act").
6. Benefits. So long as this Agreement is in effect, Executive shall at all
times be entitled to benefits equal to those provided to other chief operating
officers of the Company's operating divisions or subsidiaries. These benefits
shall include, without limitation, the Company's maintenance at its cost of a
life insurance policy and disability policy on Executive payable to Executive
and/or Executive's legal representative or heirs as applicable, in amounts
reasonably agreed to by Executive and the Company.
7. Confidentiality of Trade Secrets and Other Materials.
7.1. Trade Secrets. Other than in the performance of Executive's duties
hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by the Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company. Any
technique, method, process or technology used by the Company shall be considered
a "trade secret" for the purposes of this Agreement.
7.2. Ownership of Trade Secrets; Assignment of Rights. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by Executive in the
course of Executive's employment or by the Company are the property of the
Company and shall not be used by Executive in any way adverse to the Company's
interests. Executive shall not deliver, reproduce or in any way allow such
documents or things to be delivered or used by any third party without specific
direction or written consent of the President of the Company. Executive hereby
assigns to the Company any rights which Executive may have in any such trade
secret or proprietary information.
<PAGE>
7.3 Agreement Not To Compete. Executive agrees not to directly or
indirectly solicit or have any contact with any, (1) of the Company's travel
suppliers, (2) GDS systems or (3) of the Company's employees, affiliates or
customers, for two years after termination of employment.
8. Termination.
8.1. Basis for Termination.
(1) Executive's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(2) "Permanent Incapacity" means mental or physical incapacity, or
both, which renders Executive unable to substantially perform the material
duties owed by Executive to the Company as provided in this Agreement and
that such Incapacity will continue for six (6) months. If in the judgment
of the Board of Directors of the Company Executive is permanently
incapacitated, the Board of Directors shall give Notice of Permanent
Incapacity to the Executive or Executive's representative stating that in
the Board of Director's judgment the Executive is permanently
incapacitated. If Executive fails to rebut the Notice of Permanent
Incapacity within fifteen (15) days by providing a certification issued by
the Executive's personal physician that the Executive is not permanently
incapacitated, the judgment of the Board of Directors is deemed final, and
Executive's employment shall be terminated effective the date of the Notice
of Permanent Incapacity. If in response to the Board of Directors Notice of
Permanent Incapacity Executive's personal physician issues a written
certification that Executive is not permanently incapacitated, Executive
agrees to submit to a medical examination by a physician selected by the
Board of Directors. If the physician selected by the Board of Directors
certifies that Executive is not permanently incapacitated, then Executive
shall not be terminated under this Section 8.1(2). If the physician
selected by the Board of Directors certifies that Executive is permanently
incapacitated, then Executive's employment shall be terminated effective as
of the date of the Notice of Permanent Incapacity.
(3) Executive's employment may be terminated by the Company "with
cause," effective upon delivery of written notice to Executive given at any
time (without any necessity for prior notice) if any of the following shall
occur:
(a) any action by Executive which would be grounds for
termination under any applicable state or federal law which law covers
any willful breach of duty or habitual neglect of duty;
(b) any material acts or events constituting (i) a felony
criminal conviction; (ii) any other criminal conviction involving
Executive's lack of honesty or moral turpitude; (iii) drug or alcohol
abuse; or, (iv) acts of dishonesty, gross carelessness or gross
misconduct.
(4) Executive's employment may be terminated by the Company "without
cause" (for any reason or no reason at all) at any time by giving Executive
sixty (60) days prior written notice of termination, which termination
shall be effective on the sixtieth (60th) day following such notice.
(a) For purposes of this section 8.1(4), a Material Diminishment
in connection with Executive's (i) title, job duties or
responsibilities, or (ii) overall compensation and benefits package,
or (iii) a requirement that Executive must move from Monument,
Colorado as a condition of future employment, or (iv) the sale of all
or substantially all of the Company's assets, or (v) any sale, merger
or consolidation of the Company following which a majority of the
voting equity securities of the Company or any surviving entity is
controlled by another person, group or legal entity, shall be deemed
to be a termination by the Company without cause hereunder.
(b) A Material Diminishment of Executive's obligations owed to
the Company by Executive in this Agreement shall be deemed a
termination of the Executive's employment without cause. In the event
of a Material Diminishment of Executive's obligations under Section
8.1(4)(a)(i), (ii) or (iii) of this Agreement, Executive shall give
<PAGE>
sixty (60) days notice of such fact to the Company which notice shall
include Executive's "Statement of Correction." Executive's Statement
of Correction shall include the duties which upon restoration by the
Company will cure the Material Diminishment of Executive's obligation.
If the Company fails to make appropriate restoration of any of the
rights or duties enunciated in Section 8.1(4)(a)(i), (ii) or (iii) of
this Agreement as set forth in Executive's Statement of Correction,
Executive and the Company shall submit the issue of Material
Diminishment for arbitration in accordance with the rules of the
American Arbitration Association which are appropriate to determine
whether there has or has not been a Material Diminishment. There shall
be a panel of three arbitrators. Each arbitrator shall be a member in
good standing of the American Arbitration Association. The Company
shall select an arbitrator, and the Executive shall select an
arbitrator; and, the two arbitrators selected shall select a third
neutral arbitrator. If the arbitrators make a finding of fact that
there was a Material Diminishment, then the Executive shall be deemed
to have been terminated without cause as provided in Section 8.1(4) of
this Agreement. Accordingly, the Company shall bear all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration. If the arbitrators make a finding of
fact that there was not a Material Diminishment, all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration shall be borne by Executive.
(c) If Executive's employment under this Agreement is so
terminated, the Company shall (a) make a lump sum cash payment to
Executive within ten (10) days after termination of an amount equal to
(i) Executive's Base Salary for the balance of the year in which
termination occurs, (ii) any un-reimbursed expenses accruing to the
date of termination; and, (b) make a lump sum cash payment equal to
Executive's annual Base Salary, as increased pursuant to Section 3.1.,
on each Anniversary Date of this Agreement for the balance of the term
specified in Section 2. For purposes of this provision, Executive's
annual Base Salary and the remaining portion of the term of the
Agreement shall be calculated as of the termination date. After the
Company's termination of Executive under this provision, the Company
shall not be obligated to provide the benefits to Executive described
in Section 3.4. (except as may be required by law).
(5) Executive may terminate Executive's employment hereunder by giving
the Company thirty (30) days prior written notice, which termination shall
be effective on the (30th) day following such notice.
8.2. Payment Upon Termination. Upon termination under Sections 8.1.(1),
(2), (3), or (5), the Company shall pay to Executive within ten (10) days after
termination an amount equal to the sum of (1) Executive's Base Salary accrued to
the date of termination; and, (2) un-reimbursed expenses accrued to the date of
termination. After any such termination, the Company shall not be obligated to
compensate Executive, Executive's estate or representatives except for the
foregoing compensation then due and owing, nor provide the benefits to Executive
described in Section 3.4. (except as provided by law).
8.3. Dismissal from Premises. At the Company's option, Executive shall
immediately leave the Company's premises on the date notice of termination is
given by either Executive or the Company.
9. Injunctive Relief. The Company and Executive hereby acknowledge and
agree that any default under Section 7. above will cause damage to the Company
in an amount difficult to ascertain. Accordingly, in addition to any other
relief to which the Company may be entitled, the Company shall be entitled to
such injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Section 7. above and without the proof of actual damages.
10. Miscellaneous.
10.1. Transfer and Assignment. This Agreement is personal as to Executive
and Executive's rights herein shall not be assigned or transferred by Executive
without the prior written consent of the Company, subject to provisions in
section 8.1(4). None of Executives's duties herein may be delegated. This
Agreement shall be binding upon and inure to the benefit of all of the parties
hereto and their respective permitted heirs, personal representatives,
successors and assigns.
<PAGE>
10.2. Severability. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
10.3. Controversy. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that (1)if
the action is initiated by the Company, venue of the proceeding will be in
Denver, Colorado and the state or federal court in which the action is brought
will have exclusive jurisdiction over the parties and this Agreement will be
governed by and construed in accordance with the laws of the State of Missouri
applicable to contracts made and performed in Missouri without regard to
conflict of law principles; (2)if the action is initiated by Executive, venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of the State of Colorado applicable to contracts made and performed in Colorado
without regard to conflict of law principles.
10.4. Counterparts. This Agreement may be executed in several counter parts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
10.5. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements and understandings
with respect thereto. No representation, promise, inducement, statement or
intention has been made by any party hereto that is not embodied herein, and no
party shall be bound by or liable for any alleged representation, promise,
inducement or statement not so set forth herein.
10.6. Modification. This Agreement may be modified, amended, superseded or
canceled; and, any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation or waiver.
10.7. Construction and Interpretation. In construing this Agreement, none
of the parties hereto shall have any term or provision construed against such
party solely by reason of such party having drafted the same.
10.8. Waiver. The waiver by either of the parties, express or implied, of
any right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
10.9. Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise of
any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
10.10. Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
10.11. Notices. Any notice under this Agreement must be in writing and then
telecopied (e.g., by facsimile), sent by express 24-hour guaranteed courier or
hand-delivery or served by depositing the same in the United States mail,
addressed to the party to be notified, postage-prepaid and registered or
certified with a return receipt requested. The addresses of the parties for the
receipt of notice shall be as follows:
<PAGE>
If to the Company:
TravelNow.com Inc.
318 Park Central East, Suite 418
Springfield, Missouri 65806
ATTN: Jeff Wasson, President
If to Executive:
Chris Kuhn
425 Wolverine Way
Monument, Colorado 80132
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery. Each party may change its address for notice by giving
notice in the manner provided above.
10.12. Survival. Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement and be binding on Executive and the
Company.
10.13. Right of Set-Off. Upon termination or expiration of this Agreement,
the Company shall have the right to set-off against the amounts due Executive
hereunder the amount of any outstanding Bonus/Loan or advance from the Company
to Executive.
10.14. Effective Date. This Agreement shall be effective as of the date set
forth on page 1 when signed by Executive and the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement and agree that it will be effective as provided in Section 10.14 of
this Agreement.
Executive
Chris Kuhn
TravelNow.com Inc.
Jeff Wasson,
Co-Chief Executive Officer
Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (Agreement) by and between TravelNow.com Inc., a
Florida corporation with principal offices at 318 Park Central Square-Suite 306,
Springfield, Missouri 65806(the Company),and Whit Ehrler, whose address is 3347
South Linden Court, Springfield, Missouri 65804 (Executive) shall be effective
on August 23, 1999.
RECITALS
A. The Company desires to be assured of the association and services of
Executive for the Company.
B. Executive is willing and desires to be employed by the Company, and the
Company is willing to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. Employment. The Company hereby employs Executive as its Chief Financial
Officer (CFO), subject to the supervision and direction of its President and
Company's Board of Directors.
2. Term. The term of this Agreement shall be for a period of five (5) years
commencing on the effective date of this Agreement, unless terminated earlier
pursuant to Section 8. below; provided, however, that Executive's obligations in
Section 7. below shall continue in effect after such termination.
3. Compensation; Reimbursement.
3.1. Base Salary. For all services rendered by Executive under this
Agreement, the Company shall pay Executive a base salary of One Hundred Thirty
Thousand Dollars ($130,000.00) per annum, payable bi-weekly in equal
installments (the "Base Salary"). The amount of the Base Salary may be increased
at any time and from time to time by the Board of Directors of the Company, and
shall be adjusted annually to reflect changes in the Consumer Price Index for
the statistical area in which the residence of Executive is located. No such
change shall in any way abrogate, alter, terminate or otherwise affect the other
terms of this Agreement.
3.2. Bonus/Loan. The Company will extend to Executive a non-interest
bearing loan ("Bonus/Loan") of Eighty Thousand Dollars ($80,000.00) on the first
Anniversary Date ("Anniversary Date") of this Agreement (provided Executive has
remained in the continuous full-time employment of the Company from the date of
this Agreement until the first Anniversary Date of this Agreement). The
Anniversary Date of this Agreement shall be August 23 of each year following the
year of this Agreement, e.g., August 23, 2000 is the First Anniversary Date.
Executive agrees to execute a written instrument evidencing this indebtedness at
the time the Bonus/Loan is made in the form of the Promissory Note ("Note")
which is attached hereto and labeled Exhibit A. Provided that Employee remains
in the continuous full-time employment of the Company from the date of this
Agreement until the Second Anniversary Date of this Agreement, the Bonus/Loan of
Eighty Thousand Dollars ($80,000.00) will be forgiven, marked paid in full by
the Company and returned to the Employee. At the time of the forgiveness of the
indebtedness or such other time as the Company's accounting firm deems
advisable, the Company will pay, i.e., gross-up, on behalf of Employee all
withholding and other state and federal income taxes (but not federal or state
gift or estate taxes as those would be the sole responsibility of Executive's
estate) as required by applicable federal and state law. In the event Executive
is terminated for cause or voluntarily leaves the employment of the Company
prior to the Second Anniversary Date of this Agreement, the Bonus/Loan amount of
Eighty Thousand Dollars ($80,000.00) will be repaid to the Company in accordance
with the terms of the Note. In the event Executive (1) dies or becomes
permanently incapacitated as provided in Section 8.1(2) of this Agreement or (2)
is terminated for reasons other than cause, then in either of those events, the
Bonus/Loan will be forgiven at the time of the issuance of the permanent
incapacity certification or at the time of termination. Executive agrees that
<PAGE>
the Company at its election may secure an appropriate life insurance policy on
Executive's life with the Company as the named beneficiary and Executive will
submit to the medical exam required by the insurer to secure such life insurance
policy.
3.3. Additional Benefits. In addition to the Base Salary and the
Bonus/Loan, Executive shall be entitled to all other benefits of employment
provided to other employees of the Company including hospitalization, sick leave
and paid vacation and holidays.
3.4. Reimbursement. Executive shall be reimbursed for all reasonable
"out-of-pocket" business expenses for business travel and business entertainment
incurred in connection with the performance of Executive's duties under this
Agreement (1) so long as such expenses constitute business deductions from
taxable income for the Company and are excludable from taxable income to the
Executive under the governing laws and regulations of the Internal Revenue Code
[provided, however, that Executive shall be entitled to full reimbursement in
any case where the Internal Revenue Service may, under Section 274(n) of the
Internal Revenue Code, disallow to the Company 20% of meals and entertainment
expenses]; and, (2) to the extent such expenses do not exceed the amounts
allocable for such expenses in budgets that are approved from time to time by
the Company. The reimbursement of Executive's business expenses shall be upon
monthly presentation to and approval by the President of the Company of valid
receipts and other appropriate documentation for such expenses.
4. Scope of Duties.
4.1. Assignment of Duties. Executive shall have such duties as may be
assigned to Executive from time to time by the Company's President or the
Company's Board of Directors commensurate with Executive's experience and
responsibilities in the position for which Executive is employed pursuant to
Section 1. above and these duties shall be exercised by Executive subject to the
control and supervision of the President and the Board of Directors of the
Company.
4.2. General Specification of Duties. Executive's duties shall include, but
not be limited to, the duties, functions and responsibilities generally
associated with the head of an operating division or subsidiary, including: (1)
executing on behalf of the Company, in his capacity as CFO all documents as
requested by the Company; (2) employing and discharging all employees for which
Executive is responsible; (3) establishing procedures for implementing the
policies established by the Company; (4) ensuring the areas of Executive's
responsibility are operated in compliance with all legal requirements as a fully
reporting public company under the Securities Exchange Act of 1934; and, (5)
preparation of all reports which the Company bases the preparation of its
affiliate reports, financial statements, tax returns and other similar items
whether such reports are in written, electronic or other media format.
The foregoing specifications are not intended as a complete itemization of
the duties which Executive shall perform and undertake on behalf of the Company
in satisfaction of Executive's employment obligations under this Agreement.
4.3. Annual Plan.
(1) Executive shall submit to the Company for its approval, not later
than (30) days after the end of the Company's fiscal year an annual
business plan for the area of Executive's responsibility (the "Annual
Plan"). The Annual Plan shall be revised by Executive and submitted to the
Company for its review and approval from time to time during each year to
reflect changes in the Annual Plan because of operations or otherwise.
(2) During each year Executive, in the performance of Executive's
duties under this Agreement, shall use Executive's best efforts to comply
or cause compliance with the matters set forth in the Annual Plan and shall
not (except for emergency expenditures or special circumstances requiring
an unanticipated expenditure) deviate materially from any budget category
set forth in the Annual Plan, incur any material additional expense or
change materially any aspect of the Annual Plan without the approval of the
President of the Company.
<PAGE>
4.4. Executive's Devotion of Time. Executive agrees to devote Executive's
full time, abilities and energy to the faithful performance of the duties
assigned to Executive and to the promotion and forwarding of the business
affairs of the Company, and not to divert any business opportunities from the
Company to Executive or to any other person or business entity.
4.5. Conflicting Activities.
(1) Executive shall not, during the term of this Agreement, be engaged
in any other business activity without the prior consent of the Board of
Directors of the Company; provided, however, that this restriction shall
not be construed as preventing Executive from investing his personal assets
in investments in business entities which are not in competition with the
Company or its affiliates, or from pursuing business opportunities as
permitted by Section 4.5.(2).
(2) Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best
interests of the Company and with Executive's duties under this Agreement.
Should Executive discover a business opportunity that relates to the
current or anticipated future business of the Company, he shall first offer
such opportunity to the Company. Should the Board of Directors of the
Company not exercise its right to pursue this business opportunity within a
reasonable period of time, not to exceed sixty (60) days, then Executive
may develop the business opportunity for Executive; provided, however, that
such development may in no way conflict or interfere with the duties owed
by Executive to the Company under this Agreement. Further, Executive may
develop such business opportunities only on Executive's own time, and
Executive may not use any service, personnel, equipment, supplies,
facility, or trade secrets of the Company in the development of those
business opportunities. As used herein, the term "business opportunity"
shall not include business opportunities involving investment in publicly
traded stocks, bonds or other securities, or other investments of a
personal nature.
5. Stock Option. The Board of Directors has authorized the granting to
Executive of a non-statutory stock option ("Option") to purchase shares of
common stock of the Company ("Stock") upon the terms and conditions set forth in
a written Stock Option Agreement (a form of said agreement is attached to this
Agreement as Exhibit B) pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act").
6. Benefits. So long as this Agreement is in effect, Executive shall at all
times be entitled to benefits equal to those provided to other chief operating
officers of the Company's operating divisions or subsidiaries. These benefits
shall include, without limitation, the Company's maintenance at its cost of a
life insurance policy and disability policy on Executive payable to Executive
and/or Executive's legal representative or heirs as applicable, in amounts
reasonably agreed to by Executive and the Company.
7. Confidentiality of Trade Secrets and Other Materials.
7.1. Trade Secrets. Other than in the performance of Executive's duties
hereunder, Executive agrees not to disclose, either during the term of
Executive's employment by the Company or at any time thereafter, to any person,
firm or corporation any information concerning the business affairs, the trade
secrets or the customer lists or similar information of the Company. Any
technique, method, process or technology used by the Company shall be considered
a "trade secret" for the purposes of this Agreement.
7.2. Ownership of Trade Secrets; Assignment of Rights. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by Executive in the
course of Executive's employment or by the Company are the property of the
Company and shall not be used by Executive in any way adverse to the Company's
interests. Executive shall not deliver, reproduce or in any way allow such
documents or things to be delivered or used by any third party without specific
direction or written consent of the President of the Company. Executive hereby
assigns to the Company any rights which Executive may have in any such trade
secret or proprietary information.
<PAGE>
7.3 Agreement Not To Compete. Executive agrees not to directly or
indirectly solicit or have any contact with any, (1) of the Company's travel
suppliers, (2) GDS systems or (2) of the Company's employees, affiliates or
customers, for two years after termination of employment.
8. Termination.
8.1. Basis for Termination.
(1) Executive's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(2) "Permanent Incapacity" means mental or physical incapacity, or
both, which renders Executive unable to substantially perform the material
duties owed by Executive to the Company as provided in this Agreement and
that such Incapacity will continue for six (6) months. If in the judgment
of the Board of Directors of the Company Executive is permanently
incapacitated, the Board of Directors shall give Notice of Permanent
Incapacity to the Executive or Executive's representative stating that in
the Board of Director's judgment the Executive is permanently
incapacitated. If Executive fails to rebut the Notice of Permanent
Incapacity within fifteen (15) days by providing a certification issued by
the Executive's personal physician that the Executive is not permanently
incapacitated, the judgment of the Board of Directors is deemed final, and
Executive's employment shall be terminated effective the date of the Notice
of Permanent Incapacity. If in response to the Board of Directors Notice of
Permanent Incapacity Executive's personal physician issues a written
certification that Executive is not permanently incapacitated, Executive
agrees to submit to a medical examination by a physician selected by the
Board of Directors. If the physician selected by the Board of Directors
certifies that Executive is not permanently incapacitated, then Executive
shall not be terminated under this Section 8.1(2). If the physician
selected by the Board of Directors certifies that Executive is permanently
incapacitated, then Executive's employment shall be terminated effective as
of the date of the Notice of Permanent Incapacity.
(3) Executive's employment may be terminated by the Company "with
cause," effective upon delivery of written notice to Executive given at any
time (without any necessity for prior notice) if any of the following shall
occur:
(a) any action by Executive which would be grounds for
termination under any applicable state or federal law which law covers
any willful breach of duty or habitual neglect of duty;
(b) any material acts or events constituting (i) a felony
criminal conviction; (ii) any other criminal conviction involving
Executive's lack of honesty or moral turpitude; (iii) drug or alcohol
abuse; or, (iv) acts of dishonesty, gross carelessness or gross
misconduct.
(4) Executive's employment may be terminated by the Company "without
cause" (for any reason or no reason at all) at any time by giving Executive
sixty (60) days prior written notice of termination, which termination
shall be effective on the sixtieth (60th) day following such notice.
(a) For purposes of this section 8.1(4), a Material Diminishment
in connection with Executive's (i) title, job duties or
responsibilities, or (ii) overall compensation and benefits package,
or (iii) a requirement that Executive must move from Springfield,
Missouri as a condition of future employment, or (iv) the sale of all
or substantially all of the Company's assets, or (v) any sale, merger
or consolidation of the Company following which a majority of the
voting equity securities of the Company or any surviving entity is
controlled by another person, group or legal entity, shall be deemed
to be a termination by the Company without cause hereunder.
(b) A Material Diminishment of Executive's obligations owed to
the Company by Executive in this Agreement shall be deemed a
termination of the Executive's employment without cause. In the event
of a Material Diminishment of Executive's obligations under Section
<PAGE>
8.1(4)(a)(i), (ii) or (iii) of this Agreement, Executive shall give
sixty (60) days notice of such fact to the Company which notice shall
include Executive's "Statement of Correction." Executive's Statement
of Correction shall include the duties which upon restoration by the
Company will cure the Material Diminishment of Executive's obligation.
If the Company fails to make appropriate restoration of any of the
rights or duties enunciated in Section 8.1(4)(a)(i), (ii) or (iii) of
this Agreement as set forth in Executive's Statement of Correction,
Executive and the Company shall submit the issue of Material
Diminishment for arbitration in accordance with the rules of the
American Arbitration Association which are appropriate to determine
whether there has or has not been a Material Diminishment. There shall
be a panel of three arbitrators. Each arbitrator shall be a member in
good standing of the American Arbitration Association. The Company
shall select an arbitrator, and the Executive shall select an
arbitrator; and, the two arbitrators selected shall select a third
neutral arbitrator. If the arbitrators make a finding of fact that
there was a Material Diminishment, then the Executive shall be deemed
to have been terminated without cause as provided in Section 8.1(4) of
this Agreement. Accordingly, the Company shall bear all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration. If the arbitrators make a finding of
fact that there was not a Material Diminishment, all reasonable and
necessary costs and fees (including attorney fees) incurred in
connection with the arbitration shall be borne by Executive.
(c) If Executive's employment under this Agreement is so
terminated, the Company shall (a) make a lump sum cash payment to
Executive within ten (10) days after termination of an amount equal to
(i) Executive's Base Salary for the balance of the year in which
termination occurs, (ii) any un-reimbursed expenses accruing to the
date of termination; and, (b) make a lump sum cash payment equal to
Executive's annual Base Salary, as increased pursuant to Section 3.1.,
on each Anniversary Date of this Agreement for the balance of the term
specified in Section 2. For purposes of this provision, Executive's
annual Base Salary and the remaining portion of the term of the
Agreement shall be calculated as of the termination date. After the
Company's termination of Executive under this provision, the Company
shall not be obligated to provide the benefits to Executive described
in Section 3.4. (except as may be required by law).
(5) Executive may terminate Executive's employment hereunder by giving
the Company thirty (30) days prior written notice, which termination shall
be effective on the (30th) day following such notice.
8.2. Payment Upon Termination. Upon termination under Sections 8.1.(1),
(2), (3), or (5), the Company shall pay to Executive within ten (10) days after
termination an amount equal to the sum of (1) Executive's Base Salary accrued to
the date of termination; and, (2) un-reimbursed expenses accrued to the date of
termination. After any such termination, the Company shall not be obligated to
compensate Executive, Executive's estate or representatives except for the
foregoing compensation then due and owing, nor provide the benefits to Executive
described in Section 3.4. (except as provided by law).
8.3. Dismissal from Premises. At the Company's option, Executive shall
immediately leave the Company's premises on the date notice of termination is
given by either Executive or the Company.
9. Injunctive Relief. The Company and Executive hereby acknowledge and
agree that any default under Section 7. above will cause damage to the Company
in an amount difficult to ascertain. Accordingly, in addition to any other
relief to which the Company may be entitled, the Company shall be entitled to
such injunctive relief as may be ordered by any court of competent jurisdiction
including, but not limited to, an injunction restraining any violation of
Section 7. above and without the proof of actual damages.
10. Miscellaneous.
10.1. Transfer and Assignment. This Agreement is personal as to Executive
and Executive's rights herein shall not be assigned or transferred by Executive
without the prior written consent of the Company, subject to provisions in
section 8.1(4). None of Executives's duties herein may be delegated. This
Agreement shall be binding upon and inure to the benefit of all of the parties
hereto and their respective permitted heirs, personal representatives,
successors and assigns.
<PAGE>
10.2. Severability. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation or other pronouncement having the force of law, the latter shall
prevail, but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
10.3. Controversy. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of Missouri applicable to contracts made and performed in Missouri.
10.4. Counterparts. This Agreement may be executed in several counter parts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
10.5. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements and understandings
with respect thereto. No representation, promise, inducement, statement or
intention has been made by any party hereto that is not embodied herein, and no
party shall be bound by or liable for any alleged representation, promise,
inducement or statement not so set forth herein.
10.6. Modification. This Agreement may be modified, amended, superseded or
canceled; and, any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
party or parties to be bound by any such modification, amendment, supersession,
cancellation or waiver.
10.7. Construction and Interpretation. In construing this Agreement, none
of the parties hereto shall have any term or provision construed against such
party solely by reason of such party having drafted the same.
10.8. Waiver. The waiver by either of the parties, express or implied, of
any right under this Agreement or any failure to perform under this Agreement by
the other party, shall not constitute or be deemed as a waiver of any other
right under this Agreement or of any other failure to perform under this
Agreement by the other party, whether of a similar or dissimilar nature.
10.9. Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise of
any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
10.10. Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
10.11. Notices. Any notice under this Agreement must be in writing and then
telecopied (e.g., by facsimile), sent by express 24-hour guaranteed courier or
hand-delivery or served by depositing the same in the United States mail,
addressed to the party to be notified, postage-prepaid and registered or
certified with a return receipt requested. The addresses of the parties for the
receipt of notice shall be as follows:
<PAGE>
If to the Company:
TravelNow.com Inc.
318 Park Central East, Suite 418
Springfield, Missouri 65806
ATTN: Jeff Wasson, President
If to Executive:
Whit Ehrler
3347 South Linden Court
Springfield, Missouri 65804
Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery. Each party may change its address for notice by giving
notice in the manner provided above.
10.12. Survival. Any provision of this Agreement which imposes an
obligation after termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement and be binding on Executive and the
Company.
10.13. Right of Set-Off. Upon termination or expiration of this Agreement,
the Company shall have the right to set-off against the amounts due Executive
hereunder the amount of any outstanding Bonus/Loan or advance from the Company
to Executive.
10.14. Effective Date. This Agreement shall be effective as of the date set
forth on page 1 when signed by Executive and the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement and agree that it will be effective as provided in Section 10.14 of
this Agreement.
Executive
Whit Ehrler
TravelNow.com Inc.
Jeff Wasson,
Co-Chief Executive Officer
Exhibit 10.5
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Option Agreement")by and between
TravelNow.com Inc., a Florida corporation, located at 318 Park Central Square,
Suite 306, Springfield, Missouri 65806 (the "Company"), and Chris Kuhn, 425
Wolverine Way, Monument, Colorado 80132 (Executive) effective on July 12, 1999.
RECITALS
I. Executive as the Chief Information Officer (CIO) is an employee of the
Company that owns less than ten percent (10%) of the outstanding stock of the
Company and is not a Director of the Company.
II. The Board of Directors has authorized the granting to Executive the
right but not the obligation ("Option") to purchase shares of the Company's
Common Stock, no par value ("Stock"), upon the terms and conditions hereinafter
stated and pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").
III. The parties to this Agreement acknowledge that on or about July 27,
1999, the Company merged into a Florida corporation, Sentry Accounting, Inc.
("Sentry"), a fully reporting public company under the Securities Exchange Act
of 1934 ("Exchange Act") requiring the filing of various reports on Securities
Exchange Commission forms. Sentry is the surviving entity with fifty million
(50,000,000) shares of common stock, no par value, and twenty-five million
shares of preferred stock, no par value, authorized by its Articles of
Incorporation. Sentry changed its name to TravelNow.com Inc. and ten million
three hundred twenty-four thousand three hundred four (10,324,304) shares of
common stock, no par value, are issued and outstanding. Two million five hundred
seventy-two thousand five hundred two (2,572,502) shares are registered and
freely tradeable and seven million seven hundred fifty-one thousand eight
hundred two (7,751,802) are restricted.
IV. The parties to this Option Agreement acknowledge the need to remain at
all times in full compliance with the requirements of the Exchange Act and the
Internal Revenue Code ("Code").
V. The Employee is being granted five (5) separate options to purchase
fifty thousand (50,000) shares of the Company's restricted Common Stock, no par
value ("Shares"), each having a distinct option price ("Exercise Price") and
exercise date ("Exercise Date").
AGREEMENT
1. Shares/Price. Company hereby grants to Executive the right to purchase,
upon and subject to the terms and conditions stated in this Option Agreement,
the number of shares of Stock referred to in subparagraphs 3(a) through 3(e)
below for cash at the price per Share set forth in subparagraphs 3(a) through
3(e) titled Option One, Option Two, Option Three, Option Four and Option Five.
2. Term of Options; Continuation of Service. The termination date of this
Option Agreement ("Expiration Date")shall be the earlier of the following: (1)
the date of termination upon the occurrence of an event under paragraph 6 or 7,
or (2) the Fifth Anniversary date of this Option Agreement provided that the
termination date for any installment exercisable on the Fifth Anniversary Date
of this Option Agreement shall be the ninetieth day after the Fifth Anniversary
date of this Option Agreement. Nothing contained herein shall confer upon
Executive the right to the continuation of Executive's employment by the Company
or to interfere with the right of the Company to terminate such employment or to
increase or decrease the compensation of Executive from the rate in existence at
the date hereof.
3. Option Information. Options One through Five referred to in
subparagraphs 3.(a) through 3.(e)may sometimes collectively be referred to as
("Options").
<PAGE>
(a) Option One
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: One Dollar and 50/100 ($1.50) per share
(b) Option Two
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: One Dollar and 50/100 ($1.50) per share
(c) Option Three
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: Fifteen Dollars ($15.00) per share
(d) Option Four
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: Thirty Dollars ($30.00) per share
(e) Option Five
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: Forty-Five Dollars ($45.00) per share
4. Exercise of Options One through Five.
4.1. Subject to the provisions of paragraphs 6 and 7 of this Option
Agreement, Options One through Five may be exercised as set forth in
subparagraphs 4(a) and 4(b).
(a) Options One, Two, Four and Five may each be exercised by Executive
during the term of Executive's employment by the Company in three (3) equal
installments. The first installment may be exercised on the First
Anniversary Date of this Option Agreement, the second and third
installments may be exercised on the Second and Third Anniversary Dates of
this Option Agreement.
(b) Option Three may be exercised by Executive during the term of
Executive's employment by the Company in three (3) equal installments. The
first installment may be exercised on the Third Anniversary Date of this
Option Agreement, the second and third installments may be exercised on the
Fourth and Fifth Anniversary Dates of this Option Agreement.
4.2. Cumulative Installments. The installments shall be cumulative,
i.e.,Options One, Two, Three, Four and Five may be exercised, as to any or all
shares covered by an installment with respect to that Option, at any time or
times after an installment becomes exercisable and until expiration or
termination as provided in paragraph 2 of this Option Agreement.
5. Mechanics of Exercise of Option. Each Option shall be exercised by
delivery to the Company of (a) written notice of exercise ("Notice of Exercise")
stating the number of Shares being purchased (in whole shares only) and such
other information set forth on the form of Notice of Exercise attached hereto as
Appendix A, (b) a check or cash in the amount of the Exercise Price of the
Shares covered by the Notice (or such other consideration as has been approved
by the Board of Directors) and (c) a written investment representation as
provided for in paragraph 12 hereof. This Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
shall be exercisable only by Executive during his lifetime, except as provided
in paragraph 7 hereof.
<PAGE>
6. Termination of Employment; Termination of Option.
6.1. Cessation of Employment. If Executive ceases to be employed by the
Company for any reason, whether voluntarily or involuntarily, other than by his
death, Executive (or if the Executive dies after such termination, but prior to
such exercise date, Executive's personal representative or the person entitled
to succeed to each Option) shall have the right at any time within three (3)
months following such termination of employment or the remaining term of this
Option Agreement, whichever is the lesser, to exercise in whole or in part the
Option referred to in Section 4 of this Option Agreement to the extent, but only
to the extent that these Options are exercisable as of the date of termination
of employment and have not previously been exercised; provided, however: (a) if
Executive is permanently disabled (within the meaning of Section 22(e)(3) of the
Code) at the time of termination or if the Executive is terminated without
cause, the foregoing three (3) month period shall be extended to six (6) months;
or (b) if Executive is terminated "for cause" as that term is defined in
Executive's Employment Agreement between the Executive and the Company, these
Options shall automatically terminate as to all Shares covered by this Option
Agreement not exercised prior to termination; or (c) if Executive is terminated
without cause as provided in Section 8.1(4)(a)(i),(ii) or (iii) of Executive's
Employment Agreement between the Executive and the Company Executive shall have
the right to exercise any unexpired Option or Options without regard to the
installment provisions of paragraph 4 within three months of the termination
date.
6.2. Termination of Option Agreement. Unless earlier terminated, all rights
under this Option Agreement shall terminate in any event on the Expiration Date
of this Option Agreement as provided in paragraph 2 hereof.
7. Death of Executive. If the Executive shall die while in the employ of
the Company, Executive's personal representative or the person entitled to
Executive's rights hereunder may at any time within six (6) months after the
date of Executive's death, or during the remaining term of this Option
Agreement, whichever is the lesser, exercise any of these Options and purchase
Shares to the extent, but only to the extent, that Executive could have
exercised any of these Options as of the date of Executive's death.
8. No Rights as Shareholder. Executive shall have no rights as a
shareholder with respect to the Shares covered by any installment of these
Options until the effective date of issuance of the Shares following exercise of
any of these Options, and no adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock certificate or
certificates are issued except as provided in paragraph 9 hereof.
9. Recapitalization.
9.1. Adjustments due to Recapitalization. Subject to any required action by
the shareholders of the Company, the number of Shares covered by each Option,
and its Exercise Price, shall be proportionately adjusted for any increase or
decrease in the number of issued shares resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed having been "effected
without receipt of consideration by the Company."
9.2. Termination or Extension of Option Agreement under Reorganization. In
the event of a proposed (1) dissolution or liquidation of the Company, (2) a
merger or consolidation in which the Company is not the surviving entity, or (3)
a sale of all or substantially all of the assets or capital stock of the Company
(collectively, (1), (2) and (3) shall be referred to as a "Reorganization"),
this Option Agreement shall terminate immediately prior to the Effective Date of
the Reorganization set by the Board of Directors, which date shall be no later
than the consummation of such Reorganization (referred to as the "Event Date").
In such event, Executive shall have the right for a period commencing thirty
(30) days prior to the Event Date or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without
regard to the installment provisions of paragraph 4; provided, however, that
such exercise shall be subject to the consummation of such Reorganization.
9.3. Reasonable Conversion of Option under Recapitalization. Subject to any
required action by the shareholders of the Company, if the Company shall be the
surviving entity in any merger or consolidation, this Option Agreement
thereafter shall pertain to and apply to the securities to which a holder of
Shares equal to the Shares subject to this Option Agreement would have been
entitled by reason of such merger or consolidation, and the installment
provisions of paragraph 4 shall continue to apply.
<PAGE>
9.4. Par Value Status under Recapitalization. In the event of a change in
the shares of the Company as presently constituted, which is limited to a change
of all of its authorized Stock without par value into the same number of shares
of Stock with a par value, the shares resulting from any such change shall be
deemed to be the Shares within the meaning of this Option Agreement.
9.5. Class of Stock under Recapitalization. To the extent that the
foregoing adjustments relate to shares or securities of the Company, such
adjustments shall be made by the Board of Directors, whose determination in that
respect shall be final, binding and conclusive. Except as herein before
expressly provided in this paragraph 9, Executive shall have no rights by reason
of any subdivision or consolidation of shares of Stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number and price of Shares subject to this
Option Agreement shall not be affected by, and no adjustments shall be made by
reason of, any dissolution, liquidation, merger, consolidation or sale of assets
or capital stock, or any issue by the Company of shares of stock of any class or
securities convertible into shares of stock of any class.
9.6. Right of Recapitalization or Change. The grant of these Options shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.
10. Taxation upon Exercise of Options. Executive understands that, upon
exercise of these Options, Executive will recognize income, for Federal and
state income tax purposes, in an amount equal to the amount by which the fair
market value of the Shares, determined as of the Exercise Date, exceeds the
Exercise Price. The acceptance of the Shares by Executive shall constitute an
agreement by Executive to report such income in accordance with then applicable
law and to cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Executive's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Executive to make a cash payment to cover such liability as a
condition of the exercise of any of these Options.
11. Modification, Extension and Renewal of Options. The Board of Directors
may modify, extend or renew this Option Agreement or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option agreement in substitution therefore (to the extent not theretofore
exercised), subject at all times, to the Code and the corporate securities rules
of Florida and Missouri. Notwithstanding the foregoing provisions of this
paragraph 11, no modification, without the consent of the Executive, shall alter
to the Executive's detriment or impair any rights of Executive hereunder.
12. Investment Intent; Restrictions on Transfer.
(a) Investment Intention. Executive represents and agrees that if
Executive exercises any of these Options in whole or in part, Executive
will in each case acquire the Shares upon such exercise for the purpose of
investment and not with a view to, or for resale in connection with, any
distribution thereof; and that upon such exercise of any of these Options
in whole or in part, Executive (or any person or persons entitled to
exercise the Options under the provisions of paragraphs 6 and 7 hereof)
shall furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. If the Shares
represented by this Option Agreement are registered under the Securities
Act, either before or after the exercise of these Options in whole or in
part, the Executive shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the
Company with the foregoing written statement.
(b) Full Disclosure. Executive further represents that Executive has
had access to the financial statements or books and records of the Company,
has had the opportunity to ask questions of the Company concerning its
business, operations and financial condition, and to obtain additional
information reasonably necessary to verify the accuracy of such
information.
<PAGE>
(c) Legend. Unless and until the Shares represented by this Option
Agreement are registered under the Securities Act, all certificates
representing the Shares and any certificates subsequently issued in
substitution therefor and any certificate for any securities issued
pursuant to any stock split, share reclassification, stock dividend or
other similar capital event shall bear legends in substantially the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE
QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES
ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY
STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY
BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO
EXEMPTIONS THEREFROM.
and/or such other legend or legends as the Company and its counsel deem
necessary or appropriate. Appropriate stock transfer instructions with respect
to the Shares have been placed with the Company's transfer agent.
13. Stand-off Agreement. Executive agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Executive will not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) during any period that any of the foregoing
activities, with respect to the Shares, would violate the Securities Act of 1933
or any rules or regulations promulgated thereunder.
14. Notices. Any notice required to be given pursuant to this Option
Agreement shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Company, five (5) days after deposit in the
U.S. mail, postage prepaid, addressed to Executive at the address last provided
by Executive for his employee records.
15. Applicable Law. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that (1)if
the action is initiated by the Company, venue of the proceeding will be in
Denver, Colorado and the state or federal court in which the action is brought
will have exclusive jurisdiction over the parties and this Agreement will be
governed by and construed in accordance with the laws of the State of Missouri
applicable to contracts made and performed in Missouri without regard to
conflict of law principles; (2)if the action is initiated by Executive, venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of the State of Colorado applicable to contracts made and performed in Colorado
without regard to conflict of law principles. In the event the application of
applicable corporate law of the state of Florida or any state or federal
securities law would render any section or part of this Option Agreement
inoperable or ineffective or void as a violation of law, the parties agree to
modify or amend this Option Agreement with the good faith intention to bring
this Option Agreement into full compliance with those laws.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the date first above written.
TravelNow.com Inc.
By:
Jeff Wasson,
Co-Chief Executive
Executive
Chris Kuhn
By his or her signature, the spouse of Executive hereby agrees to be bound by
the provisions of the foregoing STOCK OPTION AGREEMENT
Spouse of Chris Kuhn
<PAGE>
Appendix A
NOTICE OF EXERCISE
TravelNow.com Inc.
318 Park Central East, Suite306
Springfield, Missouri 65804
Re: Stock Option
Notice is hereby given pursuant to Paragraph 4 of my Stock Option Agreement
that I elect to purchase the number of shares set forth below at the exercise
price set forth in my Option Agreement:
Stock Option Agreement dated:
Number of shares being purchased:
Exercise Price:
A check in the amount of the aggregate price of the shares being purchased
is attached.
I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my
Shares in violation of the Securities Act of 1933, as amended, or any applicable
federal or state securities laws.
I understand that the certificate representing the Option Shares will bear
a restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.
Further, I understand that, as a result of this exercise of rights, I will
recognize income in an amount equal to the amount by which the fair market value
of the Shares exceeds the exercise price. I agree to report such income in
accordance with then applicable law and to cooperate with Company in
establishing the withholding and corresponding deduction to the Company for its
income tax purposes.
Chris Kuhn
Exhibit 10.6
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Option Agreement")by and between
TravelNow.com Inc., a Florida corporation, located at 318 Park Central Square,
Suite 306, Springfield, Missouri 65806 (the "Company"), and Whit Ehrler, whose
address is 3347 South Linden Court, Springfield, Missouri
65804("Executive")effective on August 23, 1999.
RECITALS
I. Executive as the Chief Financial Officer (CFO) is an employee of the
Company that owns less than ten percent (10%) of the outstanding stock of the
Company and is not a Director of the Company.
II. The Board of Directors has authorized the granting to Executive the
right but not the obligation ("Option") to purchase shares of the Company's
Common Stock, no par value ("Stock"), upon the terms and conditions hereinafter
stated and pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").
III. The parties to this Agreement acknowledge that on or about July 27,
1999, the Company merged into a Florida corporation, Sentry Accounting, Inc.
("Sentry"), a fully reporting public company under the Securities Exchange Act
of 1934 ("Exchange Act") requiring the filing of various reports on Securities
Exchange Commission forms. Sentry is the surviving entity with fifty million
(50,000,000) shares of common stock, no par value, and twenty-five million
shares of preferred stock, no par value, authorized by its Articles of
Incorporation. Sentry changed its name to TravelNow.com Inc. and ten million
three hundred twenty-four thousand three hundred four (10,324,304) shares of
common stock, no par value, are issued and outstanding. Two million five hundred
seventy-two thousand five hundred two (2,572,502) shares are registered and
freely tradeable and seven million seven hundred fifty-one thousand eight
hundred two (7,751,802) are restricted.
IV. The parties to this Option Agreement acknowledge the need to remain at
all times in full compliance with the requirements of the Exchange Act and the
Internal Revenue Code ("Code").
V. The Employee is being granted five (5) separate options to purchase
fifty thousand (50,000) shares of the Company's restricted Common Stock, no par
value ("Shares"), each having a distinct option price ("Exercise Price") and
exercise date ("Exercise Date").
AGREEMENT
1. Shares/Price. Company hereby grants to Executive the right to purchase,
upon and subject to the terms and conditions stated in this Option Agreement,
the number of shares of Stock referred to in subparagraphs 3(a) through 3(e)
below for cash at the price per Share set forth in subparagraphs 3(a) through
3(e) titled Option One, Option Two, Option Three, Option Four and Option Five.
2. Term of Options; Continuation of Service. The termination date of this
Option Agreement ("Expiration Date")shall be the earlier of the following: (1)
the date of termination upon the occurrence of an event under paragraph 6 or 7,
or (2) the Fifth Anniversary date of this Option Agreement provided that the
termination date for any installment exercisable on the Fifth Anniversary Date
of this Option Agreement shall be the ninetieth day after the Fifth Anniversary
date of this Option Agreement. Nothing contained herein shall confer upon
Executive the right to the continuation of Executive's employment by the Company
or to interfere with the right of the Company to terminate such employment or to
increase or decrease the compensation of Executive from the rate in existence at
the date hereof.
3. Option Information. Options One through Five referred to in
subparagraphs 3.(a) through 3.(e)may sometimes collectively be referred to as
("Options").
<PAGE>
(a) Option One
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: One Dollar and 50/100 ($1.50) per share
(b) Option Two
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: One Dollar and 50/100 ($1.50) per share
(c) Option Three
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: Fifteen Dollars ($15.00) per share
(d) Option Four
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: Thirty Dollars ($30.00) per share
(e) Option Five
(1) Date of Grant: August 23, 1999
(2) Number of Shares: Fifty Thousand (50,000)
(3) Exercise Price: Forty-Five Dollars ($45.00) per share
4. Exercise of Options One through Five.
4.1. Subject to the provisions of paragraphs 6 and 7 of this Option
Agreement, Options One through Five may be exercised as set forth in
subparagraphs 4(a) and 4(b).
(a) Options One, Two, Four and Five may each be exercised by Executive
during the term of Executive's employment by the Company in three (3) equal
installments. The first installment may be exercised on the First
Anniversary Date of this Option Agreement, the second and third
installments may be exercised on the Second and Third Anniversary Dates of
this Option Agreement.
(b) Option Three may be exercised by Executive during the term of
Executive's employment by the Company in three (3) equal installments. The
first installment may be exercised on the Third Anniversary Date of this
Option Agreement, the second and third installments may be exercised on the
Fourth and Fifth Anniversary Dates of this Option Agreement.
4.2. Cumulative Installments. The installments shall be cumulative,
i.e.,Options One, Two, Three, Four and Five may be exercised, as to any or all
shares covered by an installment with respect to that Option, at any time or
times after an installment becomes exercisable and until expiration or
termination as provided in paragraph 2 of this Option Agreement.
5. Mechanics of Exercise of Option. Each Option shall be exercised by
delivery to the Company of (a) written notice of exercise ("Notice of Exercise")
stating the number of Shares being purchased (in whole shares only) and such
other information set forth on the form of Notice of Exercise attached hereto as
Appendix A, (b) a check or cash in the amount of the Exercise Price of the
Shares covered by the Notice (or such other consideration as has been approved
by the Board of Directors) and (c) a written investment representation as
provided for in paragraph 12 hereof. This Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
shall be exercisable only by Executive during his lifetime, except as provided
in paragraph 7 hereof.
<PAGE>
6. Termination of Employment; Termination of Option.
6.1. Cessation of Employment. If Executive ceases to be employed by the
Company for any reason, whether voluntarily or involuntarily, other than by his
death, Executive (or if the Executive dies after such termination, but prior to
such exercise date, Executive's personal representative or the person entitled
to succeed to each Option) shall have the right at any time within three (3)
months following such termination of employment or the remaining term of this
Option Agreement, whichever is the lesser, to exercise in whole or in part the
Option referred to in Section 4 of this Option Agreement to the extent, but only
to the extent that these Options are exercisable as of the date of termination
of employment and have not previously been exercised; provided, however: (a) if
Executive is permanently disabled (within the meaning of Section 22(e)(3) of the
Code) at the time of termination or if the Executive is terminated without
cause, the foregoing three (3) month period shall be extended to six (6) months;
or (b) if Executive is terminated "for cause" as that term is defined in
Executive's Employment Agreement between the Executive and the Company, these
Options shall automatically terminate as to all Shares covered by this Option
Agreement not exercised prior to termination; or (c) if Executive is terminated
without cause as provided in Section 8.1(4)(a)(i),(ii) or (iii) of Executive's
Employment Agreement between the Executive and the Company Executive shall have
the right to exercise any unexpired Option or Options without regard to the
installment provisions of paragraph 4 within three months of the termination
date.
6.2. Termination of Option Agreement. Unless earlier terminated, all rights
under this Option Agreement shall terminate in any event on the Expiration Date
of this Option Agreement as provided in paragraph 2 hereof.
7. Death of Executive. If the Executive shall die while in the employ of
the Company, Executive's personal representative or the person entitled to
Executive's rights hereunder may at any time within six (6) months after the
date of Executive's death, or during the remaining term of this Option
Agreement, whichever is the lesser, exercise any of these Options and purchase
Shares to the extent, but only to the extent, that Executive could have
exercised any of these Options as of the date of Executive's death.
8. No Rights as Shareholder. Executive shall have no rights as a
shareholder with respect to the Shares covered by any installment of these
Options until the effective date of issuance of the Shares following exercise of
any of these Options, and no adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock certificate or
certificates are issued except as provided in paragraph 9 hereof.
9. Recapitalization.
9.1. Adjustments due to Recapitalization. Subject to any required action by
the shareholders of the Company, the number of Shares covered by each Option,
and its Exercise Price, shall be proportionately adjusted for any increase or
decrease in the number of issued shares resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed having been "effected
without receipt of consideration by the Company."
9.2. Termination or Extension of Option Agreement under Reorganization. In
the event of a proposed (1) dissolution or liquidation of the Company, (2) a
merger or consolidation in which the Company is not the surviving entity, or (3)
a sale of all or substantially all of the assets or capital stock of the Company
(collectively, (1), (2) and (3) shall be referred to as a "Reorganization"),
this Option Agreement shall terminate immediately prior to the Effective Date of
the Reorganization set by the Board of Directors, which date shall be no later
than the consummation of such Reorganization (referred to as the "Event Date").
In such event, Executive shall have the right for a period commencing thirty
(30) days prior to the Event Date or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without
regard to the installment provisions of paragraph 4; provided, however, that
such exercise shall be subject to the consummation of such Reorganization.
9.3. Reasonable Conversion of Option under Recapitalization. Subject to any
required action by the shareholders of the Company, if the Company shall be the
surviving entity in any merger or consolidation, this Option Agreement
thereafter shall pertain to and apply to the securities to which a holder of
Shares equal to the Shares subject to this Option Agreement would have been
entitled by reason of such merger or consolidation, and the installment
provisions of paragraph 4 shall continue to apply.
<PAGE>
9.4. Par Value Status under Recapitalization. In the event of a change in
the shares of the Company as presently constituted, which is limited to a change
of all of its authorized Stock without par value into the same number of shares
of Stock with a par value, the shares resulting from any such change shall be
deemed to be the Shares within the meaning of this Option Agreement.
9.5. Class of Stock under Recapitalization. To the extent that the
foregoing adjustments relate to shares or securities of the Company, such
adjustments shall be made by the Board of Directors, whose determination in that
respect shall be final, binding and conclusive. Except as herein before
expressly provided in this paragraph 9, Executive shall have no rights by reason
of any subdivision or consolidation of shares of Stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number and price of Shares subject to this
Option Agreement shall not be affected by, and no adjustments shall be made by
reason of, any dissolution, liquidation, merger, consolidation or sale of assets
or capital stock, or any issue by the Company of shares of stock of any class or
securities convertible into shares of stock of any class.
9.6. Right of Recapitalization or Change. The grant of these Options shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.
10. Taxation upon Exercise of Options. Executive understands that, upon
exercise of these Options, Executive will recognize income, for Federal and
state income tax purposes, in an amount equal to the amount by which the fair
market value of the Shares, determined as of the Exercise Date, exceeds the
Exercise Price. The acceptance of the Shares by Executive shall constitute an
agreement by Executive to report such income in accordance with then applicable
law and to cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Executive's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Executive to make a cash payment to cover such liability as a
condition of the exercise of any of these Options.
11. Modification, Extension and Renewal of Options. The Board of Directors
may modify, extend or renew this Option Agreement or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option agreement in substitution therefore (to the extent not theretofore
exercised), subject at all times, to the Code and the corporate securities rules
of Florida and Missouri. Notwithstanding the foregoing provisions of this
paragraph 11, no modification, without the consent of the Executive, shall alter
to the Executive's detriment or impair any rights of Executive hereunder.
12. Investment Intent; Restrictions on Transfer.
(a) Investment Intention. Executive represents and agrees that if
Executive exercises any of these Options in whole or in part, Executive
will in each case acquire the Shares upon such exercise for the purpose of
investment and not with a view to, or for resale in connection with, any
distribution thereof; and that upon such exercise of any of these Options
in whole or in part, Executive (or any person or persons entitled to
exercise the Options under the provisions of paragraphs 6 and 7 hereof)
shall furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. If the Shares
represented by this Option Agreement are registered under the Securities
Act, either before or after the exercise of these Options in whole or in
part, the Executive shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the
Company with the foregoing written statement.
(b) Full Disclosure. Executive further represents that Executive has
had access to the financial statements or books and records of the Company,
has had the opportunity to ask questions of the Company concerning its
business, operations and financial condition, and to obtain additional
information reasonably necessary to verify the accuracy of such
information.
<PAGE>
(c) Legend. Unless and until the Shares represented by this Option
Agreement are registered under the Securities Act, all certificates
representing the Shares and any certificates subsequently issued in
substitution therefor and any certificate for any securities issued
pursuant to any stock split, share reclassification, stock dividend or
other similar capital event shall bear legends in substantially the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE
QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES
ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY
STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY
BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO
EXEMPTIONS THEREFROM.
and/or such other legend or legends as the Company and its counsel deem
necessary or appropriate. Appropriate stock transfer instructions with respect
to the Shares have been placed with the Company's transfer agent.
13. Stand-off Agreement. Executive agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Executive will not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) during any period that any of the foregoing
activities, with respect to the Shares, would violate the Securities Act of 1933
or any rules or regulations promulgated thereunder.
14. Notices. Any notice required to be given pursuant to this Option
Agreement shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Company, five (5) days after deposit in the
U.S. mail, postage prepaid, addressed to Executive at the address last provided
by Executive for his employee records.
15. Applicable Law. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of Missouri applicable to contracts made and performed in Missouri. In the event
the application of applicable corporate law of the state of Florida or any state
or federal securities law would render any section or part of this Option
Agreement inoperable or ineffective or void as a violation of law, the parties
agree to modify or amend this Option Agreement with the good faith intention to
bring this Option Agreement into full compliance with those laws.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the date first above written.
TravelNow.com Inc.
By:
Jeff Wasson,
Co-Chief Executive Officer
Executive
Whit Ehrler
By his or her signature, the spouse of Executive hereby agrees to be bound by
the provisions of the foregoing STOCK OPTION AGREEMENT
Spouse of Whit Ehrler
<PAGE>
Appendix A
NOTICE OF EXERCISE
TravelNow.com Inc.
318 Park Central East, Suite306
Springfield, Missouri 65804
Re: Stock Option
Notice is hereby given pursuant to Paragraph 4 of my Stock Option Agreement
that I elect to purchase the number of shares set forth below at the exercise
price set forth in my Option Agreement:
Stock Option Agreement dated:
Number of shares being purchased:
Exercise Price:
A check in the amount of the aggregate price of the shares being purchased
is attached.
I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my
Shares in violation of the Securities Act of 1933, as amended, or any applicable
federal or state securities laws.
I understand that the certificate representing the Option Shares will bear
a restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.
Further, I understand that, as a result of this exercise of rights, I will
recognize income in an amount equal to the amount by which the fair market value
of the Shares exceeds the exercise price. I agree to report such income in
accordance with then applicable law and to cooperate with Company in
establishing the withholding and corresponding deduction to the Company for its
income tax purposes.
Whit Ehrler
Exhibit 10.7
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Option Agreement") is made effective
September 22, 1999 by and between TravelNow.com Inc., a Florida corporation,
located at 318 Park Central Square, Suite 306, Springfield, Missouri 65806 (the
"Company"), and Craig Dayberry, whose address is 765 Kings Deer Point, Monument,
Colorado 80132("Executive"):
RECITALS
I. Executive as the Data Base Administrator (DBA) is an employee of the
Company that owns less than ten percent (10%) of the outstanding stock of the
Company and is not a Director of the Company.
II. The Board of Directors has authorized the granting to Executive the
right but not the obligation ("Option") to purchase shares of the Company's
Common Stock, no par value ("Stock"), upon the terms and conditions hereinafter
stated and pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").
III. The parties to this Agreement acknowledge that on or about July 27,
1999, the Company merged into a Florida corporation, Sentry Accounting, Inc.
("Sentry"), a fully reporting public company under the Securities Exchange Act
of 1934 ("Exchange Act") requiring the filing of various reports on Securities
Exchange Commission forms. Sentry is the surviving entity with fifty million
(50,000,000) shares of common stock, no par value, and twenty-five million
shares of preferred stock, no par value, authorized by its Articles of
Incorporation. Sentry changed its name to TravelNow.com Inc. and ten million
three hundred twenty-four thousand three hundred four (10,324,304) shares of
common stock, no par value, are issued and outstanding. Two million five hundred
seventy-two thousand five hundred two (2,572,502) shares are registered and
freely tradeable and seven million seven hundred fifty-one thousand eight
hundred two (7,751,802) are restricted.
IV. The parties to this Option Agreement acknowledge the need to remain at
all times in full compliance with the requirements of the Exchange Act and the
Internal Revenue Code ("Code").
V. The Employee is being granted five (5) separate options to purchase
thirty thousand (30,000) shares of the Company's restricted Common Stock, no par
value ("Shares"), each having a distinct option price ("Exercise Price") and
exercise date ("Exercise Date").
AGREEMENT
1. Shares/Price. Company hereby grants to Executive the right to purchase,
upon and subject to the terms and conditions stated in this Option Agreement,
the number of shares of Stock referred to in subparagraphs 3(a) through 3(e)
below for cash at the price per Share set forth in subparagraphs 3(a) through
3(e) titled Option One, Option Two, Option Three, Option Four and Option Five.
2. Term of Options; Continuation of Service. The termination date of this
Option Agreement ("Expiration Date")shall be the earlier of the following: (1)
the date of termination upon the occurrence of an event under paragraph 6 or 7,
or (2) the Fifth Anniversary date of this Option Agreement provided that the
termination date for any installment exercisable on the Fifth Anniversary Date
of this Option Agreement shall be the ninetieth day after the Fifth Anniversary
date of this Option Agreement. Nothing contained herein shall confer upon
Executive the right to the continuation of Executive's employment by the Company
or to interfere with the right of the Company to terminate such employment or to
increase or decrease the compensation of Executive from the rate in existence at
the date hereof.
3. Option Information. Options One through Five referred to in
subparagraphs 3.(a) through 3.(e)may sometimes collectively be referred to as
("Options").
<PAGE>
(a) Option One
(1) Date of Grant: September 22, 1999
(2) Number of Shares: Six Thousand (6,000)
(3) Exercise Price: Five Dollars ($5.00)
(b) Option Two
(1) Date of Grant: September 22, 1999
(2) Number of Shares: Six Thousand (6,000)
(3) Exercise Price: Twenty Dollars ($20.00) per share
(c) Option Three
(1) Date of Grant: September 22, 1999
(2) Number of Shares: Six Thousand (6,000)
(3) Exercise Price: Thirty-Five Dollars ($35.00) per share
(d) Option Four
(1) Date of Grant: September 22, 1999
(2) Number of Shares: Six Thousand (6,000)
(3) Exercise Price: Forty-Five Dollars ($50.00) per share
(e) Option Five
(1) Date of Grant: September 22, 1999
(2) Number of Shares: Six Thousand (6,000)
(3) Exercise Price: Sixty Dollars ($65.00) per share
4. Exercise of Options One through Five.
4.1. Subject to the provisions of paragraphs 6 and 7 of this Option
Agreement, Options One through Five may be exercised as set forth in
subparagraphs 4(a) through 4(c).
(a) Options One, Four and Five may each be exercised by Executive
during the term of Executive's employment by the Company in three (3) equal
installments. The first installment may be exercised on the First
Anniversary Date of this Option Agreement, the second and third
installments may be exercised on the Second and Third Anniversary Dates of
this Option Agreement.
(b) Option Two may be exercised by Executive during the term of
Executive's employment by the Company in three (3) equal installments. The
first installment may be exercised on the Second Anniversary Date of this
Option Agreement, the second and third installments may be exercised on the
Third and Fourth Anniversary Dates of this Option Agreement.
(c) Option Three may be exercised by Executive during the term of
Executive's employment by the Company in three (3) equal installments. The
first installment may be exercised on the Third Anniversary Date of this
Option Agreement, the second and third installments may be exercised on the
Fourth and Fifth Anniversary Dates of this Option Agreement.
4.2. Cumulative Installments. The installments shall be cumulative,
i.e.,Options One, Two, Three, Four and Five may be exercised, as to any or all
shares covered by an installment with respect to that Option, at any time or
times after an installment becomes exercisable and until expiration or
termination as provided in paragraph 2 of this Option Agreement.
<PAGE>
5. Mechanics of Exercise of Option. Each Option shall be exercised by
delivery to the Company of (a) written notice of exercise ("Notice of Exercise")
stating the number of Shares being purchased (in whole shares only) and such
other information set forth on the form of Notice of Exercise attached hereto as
Appendix A, (b) a check or cash in the amount of the Exercise Price of the
Shares covered by the Notice (or such other consideration as has been approved
by the Board of Directors) and (c) a written investment representation as
provided for in paragraph 12 hereof. This Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
shall be exercisable only by Executive during his lifetime, except as provided
in paragraph 7 hereof.
6. Termination of Employment; Termination of Option.
6.1. Cessation of Employment. If Executive ceases to be employed by the
Company for any reason, whether voluntarily or involuntarily, other than by his
death, Executive (or if the Executive dies after such termination, but prior to
such exercise date, Executive's personal representative or the person entitled
to succeed to each Option) shall have the right at any time within three (3)
months following such termination of employment or the remaining term of this
Option Agreement, whichever is the lesser, to exercise in whole or in part this
Option Agreement to the extent, but only to the extent that these Options are
exercisable as of the date of termination of employment and have not previously
been exercised; provided, however: (a) if Executive is permanently disabled
(within the meaning of Section 22(e)(3) of the Code) at the time of termination
or if the Executive is terminated without cause, the foregoing three (3) month
period shall be extended to six (6) months; or (b) if Executive is terminated
under any applicable state or federal law which law covers any willful breach of
duty, or habitual neglect of duty or commits any action or fails to take any
action which inhibits Executive from fully performing Executive's
responsibilities to the Company in good faith, including but not limited to
actions that lead to (i) a felony criminal conviction; (ii) any other criminal
conviction involving Executive's lack of honesty or moral turpitude; (iii) acts
of dishonesty, gross carelessness or gross misconduct; or, (iv) drug or alcohol
abuse, these Options shall automatically terminate as to all Shares covered by
this Option Agreement not exercised prior to termination.
6.2. Termination of Option Agreement. Unless earlier terminated, all rights
under this Option Agreement shall terminate in any event on the Expiration Date
of this Option Agreement as provided in paragraph 2 hereof.
7. Death of Executive. If the Executive shall die while in the employ of
the Company, Executive's personal representative or the person entitled to
Executive's rights hereunder may at any time within six (6) months after the
date of Executive's death, or during the remaining term of this Option
Agreement, whichever is the lesser, exercise any of these Options and purchase
Shares to the extent, but only to the extent, that Executive could have
exercised any of these Options as of the date of Executive's death.
8. No Rights as Shareholder. Executive shall have no rights as a
shareholder with respect to the Shares covered by any installment of these
Options until the effective date of issuance of the Shares following exercise of
any of these Options, and no adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock certificate or
certificates are issued except as provided in paragraph 9 hereof.
9. Recapitalization.
9.1. Adjustments due to Recapitalization. Subject to any required action by
the shareholders of the Company, the number of Shares covered by each Option,
and its Exercise Price, shall be proportionately adjusted for any increase or
decrease in the number of issued shares resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Company; provided, however, that the conversion of any
convertible securities of the Company shall not be deemed having been "effected
without receipt of consideration by the Company."
9.2. Termination or Extension of Option Agreement under Reorganization. In
the event of a proposed (1) dissolution or liquidation of the Company, (2) a
merger or consolidation in which the Company is not the surviving entity, or (3)
a sale of all or substantially all of the assets or capital stock of the Company
(collectively, (1), (2) and (3) shall be referred to as a "Reorganization"),
this Option Agreement shall terminate immediately prior to the Effective Date
<PAGE>
of the Reorganization set by the Board of Directors, which date shall be no
later than the consummation of such Reorganization (referred to as the "Event
Date"). In such event, Executive shall have the right for a period commencing
thirty (30) days prior to the Event Date or during the remaining term of the
Option, whichever is the lesser, to exercise any unexpired Option or Options
without regard to the installment provisions of paragraph 4; provided, however,
that such exercise shall be subject to the consummation of such Reorganization.
9.3. Reasonable Conversion of Option under Recapitalization. Subject to any
required action by the shareholders of the Company, if the Company shall be the
surviving entity in any merger or consolidation, this Option Agreement
thereafter shall pertain to and apply to the securities to which a holder of
Shares equal to the Shares subject to this Option Agreement would have been
entitled by reason of such merger or consolidation, and the installment
provisions of paragraph 4 shall continue to apply.
9.4. Par Value Status under Recapitalization. In the event of a change in
the shares of the Company as presently constituted, which is limited to a change
of all of its authorized Stock without par value into the same number of shares
of Stock with a par value, the shares resulting from any such change shall be
deemed to be the Shares within the meaning of this Option Agreement.
9.5. Class of Stock under Recapitalization. To the extent that the
foregoing adjustments relate to shares or securities of the Company, such
adjustments shall be made by the Board of Directors, whose determination in that
respect shall be final, binding and conclusive. Except as herein before
expressly provided in this paragraph 9, Executive shall have no rights by reason
of any subdivision or consolidation of shares of Stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number and price of Shares subject to this
Option Agreement shall not be affected by, and no adjustments shall be made by
reason of, any dissolution, liquidation, merger, consolidation or sale of assets
or capital stock, or any issue by the Company of shares of stock of any class or
securities convertible into shares of stock of any class.
9.6. Right of Recapitalization or Change. The grant of these Options shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.
10. Taxation upon Exercise of Options. Executive understands that, upon
exercise of these Options, Executive will recognize income, for Federal and
state income tax purposes, in an amount equal to the amount by which the fair
market value of the Shares, determined as of the Exercise Date, exceeds the
Exercise Price. The acceptance of the Shares by Executive shall constitute an
agreement by Executive to report such income in accordance with then applicable
law and to cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Executive's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Executive to make a cash payment to cover such liability as a
condition of the exercise of any of these Options.
11. Modification, Extension and Renewal of Options. The Board of Directors
may modify, extend or renew this Option Agreement or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option agreement in substitution therefore (to the extent not theretofore
exercised), subject at all times, to the Code and the corporate securities rules
of Florida and Missouri. Notwithstanding the foregoing provisions of this
paragraph 11, no modification, without the consent of the Executive, shall alter
to the Executive's detriment or impair any rights of Executive hereunder.
12. Investment Intent; Restrictions on Transfer.
(a) Investment Intention. Executive represents and agrees that if
Executive exercises any of these Options in whole or in part, Executive
will in each case acquire the Shares upon such exercise for the purpose of
investment and not with a view to, or for resale in connection with, any
distribution thereof; and that upon such exercise of any of these Options
in whole or in part, Executive (or any person or persons entitled to
exercise the Options under the provisions of paragraphs 6 and 7 hereof)
shall furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. If the Shares
<PAGE>
represented by this Option Agreement are registered under the Securities
Act, either before or after the exercise of these Options in whole or in
part, the Executive shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the
Company with the foregoing written statement.
(b) Full Disclosure. Executive further represents that Executive has
had access to the financial statements or books and records of the Company,
has had the opportunity to ask questions of the Company concerning its
business, operations and financial condition, and to obtain additional
information reasonably necessary to verify the accuracy of such
information.
(c) Legend. Unless and until the Shares represented by this Option
Agreement are registered under the Securities Act, all certificates
representing the Shares and any certificates subsequently issued in
substitution therefor and any certificate for any securities issued
pursuant to any stock split, share reclassification, stock dividend or
other similar capital event shall bear legends in substantially the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE
QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES
ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY
STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY
BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO
EXEMPTIONS THEREFROM.
and/or such other legend or legends as the Company and its counsel deem
necessary or appropriate. Appropriate stock transfer instructions with respect
to the Shares have been placed with the Company's transfer agent.
13. Stand-off Agreement. Executive agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Executive will not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) during any period that any of the foregoing
activities, with respect to the Shares, would violate the Securities Act of 1933
or any rules or regulations promulgated thereunder.
14. Notices. Any notice required to be given pursuant to this Option
Agreement shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Company, five (5) days after deposit in the
U.S. mail, postage prepaid, addressed to Executive at the address last provided
by Executive for his employee records.
15. Applicable Law. In the event either party brings an action against the
other based on a controversy or claim arising out of or relating to this
contract, or breach thereof, or for the purpose of resolving any dispute
relating to the subject matter of this Agreement the parties agree that (1)if
the action is initiated by the Company, venue of the proceeding will be in
Denver, Colorado and the state or federal court in which the action is brought
will have exclusive jurisdiction over the parties and this Agreement will be
governed by and construed in accordance with the laws of the State of Missouri
applicable to contracts made and performed in Missouri without regard to
conflict of law principles; (2)if the action is initiated by Executive, venue of
the proceeding will be in Greene County, Missouri and the state or federal court
in which the action is brought will have exclusive jurisdiction over the parties
and this Agreement will be governed by and construed in accordance with the laws
of the State of Colorado applicable to contracts made and performed in Colorado
without regard to conflict of law principles. In the event the application of
applicable corporate law of the state of Florida or any state or federal
securities law would render any section or part of this Option Agreement
inoperable or ineffective or void as a violation of law, the parties agree to
modify or amend this Option Agreement with the good faith intention to bring
this Option Agreement into full compliance with those laws.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
effective as of the date first above written.
TravelNow.com Inc.
By:
Jeff Wasson,
Co-Chief Executive Officer
Executive
Craig Dayberry
By his or her signature, the spouse of Executive hereby agrees to be bound by
the provisions of the foregoing STOCK OPTION AGREEMENT
Spouse of Craig Dayberry
Exhibit 10.8
EMPLOYMENT AGREEMENT
This Employment Agreement by and between TravelNow Global Reservation
Network, Inc., a Missouri corporation (the Company), and __________________
(Executive) shall be effective on March 1, 1998.
RECITALS
A. The Company desires to be assured of the association and services of
Executive for the Company.
B. Executive is willing and desires to be employed by the Company, and the
Company is willing to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties hereto do hereby agree as follows:
1. Employment. The Company hereby employs Executive as Executive Vice President
with the duties and obligations set forth in this agreement and subject at all
times to the supervision and direction of the Company's Board of Directors.
2. Term. The term of this Agreement is at the discretion of the Board of
Directors unless terminated pursuant to ss.6.
3. Scope of Duties.
3.1 Assignment of Duties. Executive to be responsible for sales, marketing
and business development. This will include duties to increase reservation
revenues through strategic partnerships; sales of advertising; and development
of a worldwide franchise/joint venture network, using the format developed for
TravelNow Japan.
3.2 Executive's Devotion of Time. Executive hereby agrees to devote his
full time, abilities and energy to the faithful performance of the duties
assigned to Executive by the Board of Directors and to the promotion and
forwarding of the business affairs of the Company, and not to divert any
business opportunities from the Company to himself or to any other person or
business entity.
3.3 Conflicting Activities.
(1) Executive shall not, during the term of this Agreement, be engaged in
any other business activity without the prior consent of the Board of Directors
of the Company; provided, however, that this restriction shall not be construed
as preventing Executive from investing his personal assets in passive
investments in business entities which are not in competition with the Company
or its affiliates.
(2) Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or anticipated
future business of the Company, in a manner consistent with the best interests
of the Company and with his duties under this Agreement. Should Executive
discover a business opportunity that does not relate to the current or
anticipated future business of the Company, he shall first offer such
opportunity to the Company. Should the Board of Directors of the Company not
exercise its right to pursue this business opportunity within a reasonable
period of time, not to exceed sixty (60) days, then Executive may develop the
business opportunity for himself, provided, however, that such development may
in no way conflict or interfere with the duties owed by Executive to the Company
under this Agreement. Further, Executive may develop such business opportunities
only on his own time, and may not use any service, personnel, equipment,
supplies, facility, or trade secrets of the Company in their development.
<PAGE>
4. Compensation.
4.1 Executive has asked for a base salary of $7,000.00 per month. The
Company does not have any money to pay any amount of base salary to Executive at
the time of the effective date or date of execution of this agreement. Executive
is aware of this fact. Executive agrees that the timing for the payment of a
base salary or the amount of the base salary to be paid at any given time is at
the exclusive and sole discretion of the Board of Directors.
4.2 Executive and dependent to be covered under the Company's Health
Insurance Program, effective September 1, 1998.
4.3 Executive to participate in annual or other bonus programs as approved
by the Board.
4.4 Executive has relocated to the Company headquarters at his own expense
and agrees that he is not entitled to any reimbursement for those expenses in
whole or in part.
4.5 Stock Purchase Option. Executive shall have the right during the term
of Executive's employment by the Company to purchase from the Company shares of
the Company's authorized but unissued common stock $.01 par value (herein
"Company Shares") for the consideration, in the amount and on the dates set
forth in the table attached hereto as Exhibit A-Schedules 1 through 3. If at any
time executive is dissatisfied for any reason with the purchase of any of the
Company shares Executive has the right to sell any or all of the shares back to
the Company and the Company has the immediate obligation to forthwith pay to
Executive the price Executive paid the Company for those shares, namely, ten
cents per share for each share tendered by Executive.
(1) Exercise of Stock Purchase Option. Executive must exercise the options
to purchase the Company Shares by giving written notice of exercise as provided
in this Agreement within ninety days from the date of exercise as provided in
Exhibit A-Schedules 1 through 3. Failure to give written notice within ninety
days of the exercise of the option then that option shall lapse. By way of
illustration the following example is given. If the Option Exercise Date is
April 30, 1998, Executive must cause the delivery of the written notice
exercising that option to the Company not later than the close of business on
July 29, 1998. The April 30, 1998 option will be void after the close of
business on July 29, 1998.
(2) The Company will issue the Company Shares subject to options that have
been exercised during each Fiscal Year within sixty (60) days of the close of
each Fiscal Year during the term of this Agreement.
(3) The right of Executive to purchase Company Shares pursuant to this
option shall terminate upon the termination of Executive's employment by the
Company.
(4) In the event that Executive brings any action against the Company
whether by use of federal or state judicial process, by administrative process,
arbitration or mediation Executive must prior to the time of bringing any such
action sell back to the Company all Company Shares purchased by Executive
pursuant to this option at a purchase price of $.10 per share.
5. Confidentiality of Trade Secrets and Other Materials.
5.1 Trade Secrets. Other than in the performance of his duties hereunder,
Executive agrees not to disclose, either during the term of his employment by
the Company or at any time thereafter, to any person, firm or corporation any
information concerning the business affairs, the trade secrets or the customer
lists or similar information of the Company. Any technique, method, process or
technology used by the Company shall be considered a trade secret for the
purposes of this Agreement.
5.2 Ownership of Trade Secrets; Assignment of Rights. Executive hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by him or by the
Company are the property of the Company and shall not be used by him in any way
<PAGE>
adverse to the Company's interests. Executive shall not deliver, reproduce or in
any way allow such documents or things to be delivered or used by any third
party without specific direction or consent of the Board of Directors of the
Company. Executive hereby assigns to the Company any rights which he may have in
any such trade secret or proprietary information.
5.3 Covenant Not To Compete. In the Event this Agreement is terminated in
accord with the Termination Clause, exclusive of item number one in the
Termination Clause, or if the contract is not renewed by Executive, Executive
shall not work for another organization, start an organization provide
consulting services to an organization or in any way directly or indirectly
carry on any activity or enterprise that would in any way constitute competition
with the Company for a period of one year from the date of termination of
employment as herein provided. In the event of a breach of this non-compete
covenant, Company shall be entitled to injunctive relief, it being agreed by the
parties that is no adequate remedy at law available to the Company.
Notwithstanding anything contained herein to the contrary if the Company fires
Executive before Executive has been paid a salary or if Executive quits before
he has been paid a salary then this covenant not to compete will be treated as
void and inapplicable.
6. Termination.
6.1 Bases for Termination.
(1) Executive's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(2) Executive's employment may be terminated by the Company with cause,
effective upon delivery of written notice to Executive given at any time
(without any necessity for prior notice) if any of the following shall occur:
(a) any action by Executive which would constitute willful breach of
duty, habitual neglect of duty and continued incapacity;
(b) any material breach of Executive's obligations set forth in this
Agreement; or
(c) any material acts or events which inhibit Executive from fully
performing his other responsibilities to the Company in good faith, such as any
criminal conviction involving Executive's lack of honesty or Executive's moral
turpitude, gross carelessness or gross misconduct.
(3) Executive's employment may be terminated by the Company without cause
(for any reason or no reason at all) at any time by giving Executive 30 days
prior written notice of termination, which termination shall be effective on the
30th day following such notice.
(4) Executive may terminate his employment hereunder by giving the Company
30 days prior written notice, which termination shall be effective on the 30th
day following such notice.
(5) In the event the Company files a petition seeking protection under the
Bankruptcy Laws of the United States the Executive may terminate his employment.
6.2 Payment Upon Termination. Upon termination of this agreement by
Executive or by the Company for any reason the Company shall pay to Executive
within 60 any unpaid commissions as provided in this agreement.
6.3 Dismissal from Premises. At the Company option Executive shall
immediately leave the Company's premises on the date notice of termination is
given by the Company to Executive.
7. Injunctive Relief. The Company and Executive hereby acknowledge and agree
that any default under this Agreement by Executive will cause damage to the
Company in an amount difficult to ascertain. Accordingly, in addition to any
other relief to which the Company may be entitled, the Company shall be entitled
to such injunctive relief as may be ordered by any court of competent
jurisdiction including, but not limited to, an injunction restraining any
violation of ss.5 above and without proof of actual damages.
<PAGE>
8. Miscellaneous.
8.1 Transfer and Assignment. This Agreement is personal as to Executive and
shall not be assigned or transferred by Executive without the prior written
consent of the Board of Directors. This Agreement shall be binding upon and
inure to the benefit of all of the parties hereto and their respective permitted
heirs, personal representatives, successors and assigns.
8.2 Severability. Nothing contained herein shall be construed to require
the commission of any act contrary to law. Should there be any conflict between
any provisions hereof and any present or future statute, law, ordinance,
regulation, or other pronouncement having the force of law, the latter shall
prevail but the provision of this Agreement affected thereby shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law, and the remaining provisions of this Agreement shall remain in full
force and effect.
8.3 Governing Law. This Agreement is made under and shall be construed
pursuant to the laws of the State of Missouri.
8.4 Counterparts. This Agreement may be executed in several counterparts
and all documents so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of the parties did not sign the
original or the same counterparts.
8.5 Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, arrangements, and
understandings with respect thereto. No representation, promise, inducement,
statement or intention has been made by any party hereto that is not embodied
herein, and no party shall be bound by or liable for any alleged representation,
promise, inducement, or statement not set forth herein.
8.6 Modification. This Agreement may be modified, amended, superseded, or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof waived, only by a written instrument executed by the party or
parties to be bound by any such modification, amendment, supersession,
cancellation, or waiver.
8.7 Attomeys' Fees and Costs. In the event of any dispute arising out of
the subject matter of this Agreement, the prevailing party shall recover, in
addition to any other damages assessed, its attorneys' fees and court costs
incurred in litigating or otherwise settling or resolving such dispute whether
or not an action is brought or prosecuted to judgment. In construing this
Agreement, none of the parties hereto shall have any term or provision construed
against such party solely by reason of such party having drafted the same.
8.8 Waiver. The waiver by either of the parties, express or implied, of any
right under this Agreement or any failure to perform under this Agreement by the
other party, shall not constitute or be deemed as a waiver of any other right
under this Agreement or of any other failure to perform under this Agreement by
the other party, whether of a similar or dissimilar nature.
8.9 Cumulative Remedies. Each and all of the several rights and remedies
provided in this Agreement, or by law or in equity, shall be cumulative, and no
one of them shall be exclusive of any other right or remedy, and the exercise of
any one of such rights or remedies shall not be deemed a waiver of, or an
election to exercise, any other such right or remedy.
8.10 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
8.11 Notices. Any notice under this Agreement must be in writing, sent by
express 24-hour guaranteed courier, or hand-delivered, or may be served by
depositing the same in the United States mail, addressed to the party to be
notified, postage-prepaid and registered or certified with a return receipt
requested. The addresses of the parties for the receipt of notice shall be as
follows:
<PAGE>
If to the Company: 318 Park Central East, Suite 306, Springfield, Missouri
65806;
If to Executive: 318 Park Central East, Suite 306, Springfield, Missouri
65806
Each notice given by registered or certified mail shall be deemed delivered
and effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its address for notice by
giving notice thereof in the manner provided above.
8.12 Survival. Any provision of this Agreement which imposes an obligation
after termination or expiration of this Agreement shall survive the termination
or expiration of this Agreement and be binding on Executive and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be executed as of the date first set forth above.
TravelNow Global Reservation Network, Inc.
Jeff Wasson, President
Chris Noble, Vice President
Executive
__________________
STATE OF MISSOURI )
)SS
COUNTY OF GREENE )
On this ____________ day of ____________ in the year 19__, before me
_____________ Notary Public in and for said state, personally appeared Jeff
Wasson, President, and Chris Noble Vice President, TravelNow Global Reservation
Network, Inc., known to me to be the persons who executed the within Agreement
on behalf of said corporation and acknowledged to me that they executed the same
for the purposes therein stated.
Notary Public
My Commission expires:
STATE OF MISSOURI )
)SS
COUNTY OF GREENE )
On this ____________ day of _____________, in the year19__, before me Notary
Public in and for said state, personally appeared _________________ known to me
to be the person who executed the within Agreement as Executive and acknowledged
to me that he/she executed the same for the purposes therein stated.
Notary Public
My Commission expires:
SABRE SUBSCRIBER AGREEMENT - (UNITED STATES)
This Sabre* Subscriber Agreement (the "Agreement") is entered into by and
between Sabre Inc. ("Sabre") and the undersigned ("Customer"), as of the date
executed by Sabre below ("Effective Date") regarding the provision of products
and services set forth herein to Customer's locations within the United States
and its territories.
1. LEASE TERM
1.1 Lease. For the term specified in Article below, Sabre shall lease to
Customer the System, as defined herein.
1.2 Term. The lease term of the System identified on Schedule A shall commence
on the date of installation and shall continue for ____ months ("Initial Term").
Any additional System installed subsequent to the date of execution of this
Agreement by Sabre shall be subject to the same terms and conditions as this
Agreement and shall have a term of ____ months commencing on the date of
installation ("Additional Term").
2. DEFINITIONS.
The following terms shall have the following meanings in this Agreement:
2.1 Agreement means this Sabre Subscriber Agreement, and all Amendments,
Schedules and Supplements made a part hereof.
2.2 Charges has the meaning given in Article 3.2.
2.3 Communication Protocol means the rules or standards on how data transmission
takes place across computer networks.
2.4 Confidential Information means this Agreement, any and all applicable rights
to patents, copyrights, trademarks and trade secrets, proprietary and
confidential information of Sabre or Customer, their affiliates, subsidiaries,
successors or assigns concerning their past, present or future research,
development, business activities or affairs, finances, properties, methods of
operation, processes and systems, agreements (including without limitation
private fare or special discount agreements) related to the business of Sabre or
Customer.
2.5 Information Provider means any party, other than Customer, which provides
information for inclusion in the Sabre System, including, without limitation,
Reed Elsevier Inc., the publisher of the Official Airline Guide.
2.6 Instructions means any and all manuals, operating procedures, manufacturer's
recommendations, rules, and instructions delivered or made available to Customer
by Sabre either in hard-copy or via the Sabre System, and which must be complied
with by Customer. Such Instructions may be unilaterally revised or amended by
Sabre at any time.
2.7 Internet means the global computer network commonly referred to as the
"Internet".
2.8 Internet Connection means any connection between the Internet and the Sabre
System or System for the purpose of allowing clients of Customer to make direct
reservations for the products and services offered in the Sabre System.
2.9 ISP means any third party computer network which connects Customer or its
employees to the Sabre System or the System via the Internet. ISPs and ISP
supplied equipment such as datalines or browser software are not included in the
definitions of the Sabre System or the System.
2.10 Non-Sabre Traffic means data other than that passing to and from the Sabre
System which is transmitted and received by Customer using the System.
2.11 Non-Standard System means any hardware, software, communication access
devices or firmware not acquired from Sabre, including any such Non-Standard
System acquired from an ISP.
2.12 PNR means a passenger name record created in the Sabre System.
2.13 Participant means any air carrier (including scheduled, charter, domestic
and international airlines) car rental company, surface transportation carrier,
hotel or lodging provider, railroad, steamship company, cruise or tour operator
or other vendor of travel related products, information or services which has an
agreement with Sabre for the display of information regarding its products or
services in the Sabre System.
- --------
* Sabre is a registered trademark of a subsidiary of Sabre Inc.
<PAGE>
2.14 Prohibited Segment means a Travel Service Segment for which no
corresponding space has been reserved within the transporting carrier's internal
reservation system.
2.15 Sabre Booking means an airline, hotel, tour, rental car or cruise Segment
that obligates a Participant to pay a booking fee to Sabre and that is created
in or processed through the Sabre System by Customer during any one calendar
month or that is secured to Customer's location, less cancellations made prior
to the Segment Activity Date. Sabre Bookings are credited in the latter of (i)
the calendar month in which the Segment Activity Date occurs or (ii) the
calendar month in which the Segment is actually processed by the Sabre System
for billing to the Participant. Sabre Bookings may include additional product or
service Segments in the future at Sabre's sole discretion.
2.16 Sabre Component means all memory, disk storage space, ports and any other
element of the Standard Equipment.
2.17 Sabre Licensee means a person or entity licensed to market the Sabre System
in a designated area of the world.
2.18 Sabre Subscriber means a person or entity, other than an airline, which
utilizes the Sabre System to make reservations. The term "Sabre Subscriber"
shall include any person or entity making reservations through any version of
the Sabre System or through a Sabre Licensee.
2.19 Sabre System means Sabre's global distribution system (commonly referred to
as a computerized reservation system) which collects, stores, processes,
displays and distributes information through computer terminals concerning air
and ground transportation, lodging and other travel related products and
services offered by travel suppliers and which enables Sabre Subscribers to (i)
reserve or otherwise confirm the use of, or make inquiries or obtain information
in relation to, such products and services and/or (ii) issue tickets for the
acquisition or use of such products and services.
2.20 Schedule A means the document reflecting the Charges and any applicable
discounts for the System as amended by any additional documents.
2.21 Segment means (a) for airline bookings, each separate flight segment
reservation identified by a separate flight number in a PNR, multiplied by the
number of passengers booked in such PNR for such flight segment; (b) for hotel
bookings, each separate reservation that is processed through the Sabre System
with an action status code of HK, KK or KL regardless of the number of rooms,
suites or other accommodations or the number of persons or the duration of the
stay; (c) for car rental bookings, each separate reservation that is processed
through the Sabre System with an action status code of HK, KK or KL regardless
of the number of vehicles or persons or the duration of the rental; and (d) for
cruise and tour bookings, each separate reservation that is created in or
processed through the Sabre System and confirmed by the Participant, regardless
of the number of cabins or travelers or the duration of the cruise or tour. The
term Segment does not include Prohibited Segments.
2.22 Segment Activity Date means the first date listed in a PNR for the relevant
Segment.
2.23 Site means Customer's location at which the System is to be installed as
identified on Schedule A.
2.24 Standard Equipment means the items of hardware and communication access
devices, including, without limitation, communication data lines and networks,
leased to Customer by Sabre in accordance with this Agreement and identified on
Schedule A.
2.25 Supplement means a document reflecting any changes to the System, and/or
Charges or discounts related thereto, all as agreed to by the parties. A
Supplement will be provided by Sabre upon request of Customer.
2.26 System means the Standard Equipment, Sabre Component, System Software
and/or Internet Connection.
2.27 System Software means that software delivered by Sabre to Customer.
2.28 Transaction means a grouping of characters transmitted to the Sabre System
whether such transmission is made in the Sabre System manually or automated,
including transmissions made through an Internet Connection. Each transmission
to the Sabre System from Customer constitutes one Transaction. No input message
may exceed three hundred (300) characters in length.
2.29 Transaction Limit has the meaning given in Article 10.3.
2.30 Transaction Ratio has the meaning given in Article 3.3.
<PAGE>
2.31 Travel Service Segment means a Sabre Booking entered in the Sabre System
with an action status code of GK, GL, BK, BL, HN, YK, HK*, or HL*.
3. CHARGES AND PAYMENTS
3.1 Prepayment. Upon execution of this Agreement by Customer, Customer shall pay
to Sabre the non-refundable prepayment as shown on Schedule A. If the System is
installed, the prepayment shall be credited against the Customer's first
Charges.
3.2 Charges. All amounts payable to Sabre ("Charges") shall be due and payable
in United States dollars within fifteen (15) days of the date of Sabre's
invoice, without setoff or counterclaim.
3.3 Additional Charges. Customer agrees to pay to Sabre additional Charges at
Sabre's then prevailing rate for services and materials including without
limitation the following: (a) the installation or removal of Standard Equipment;
(b) Standard Equipment relocation within the Site; (c) each Site disconnect or
relocation to different premises; (d) modifications, upgrades, enhancements or
additions of Standard Equipment and/or System Software; (e) any applicable fees
for non-compliance with any payment terms; (f) installation of peripheral
devices requested by Customer, (g) processing Transactions which exceed the
level of one hundred thirty (130) Transactions per Sabre Booking ("Transaction
Ratio"), (h) materials for use with the Standard Equipment, including, but not
limited to, ticket stock for use with thermal ticket printers, and (i)
connecting the System to other Sabre approved networks or systems. The
Transaction Ratio is subject to change by Sabre upon thirty (30) days advance
notice to Customer.
3.4 Variables. If Customer elects to use certain variables including, without
limitation, Ticketing and Invoice/Itinerary functions or Microfiche, Customer
shall pay all Charges for such variables based on Sabre's then prevailing rate.
3.5 Increases. Sabre shall have the right to increase the Charges, other than
the Fixed Monthly Charges identified on Schedule A, for the remaining term of
this Agreement upon thirty (30) days advance written notice to Customer. If the
increase exceeds ten percent (10%) of the Charges in any consecutive twelve
month period, Customer may terminate this Agreement upon written notice to Sabre
within fifteen days of receipt of Sabre's notice of the increase.
Notwithstanding the foregoing, the Charges for data lines or other communication
access devices shall be subject to increase, at any time and without limitation,
to cover any increase in the cost imposed upon Sabre by the telecommunications
vendor.
3.6 Modifications. Sabre's completion of any modification to the System or
Customer's payment of any revised Charges related thereto, whichever occurs
first, constitutes acceptance and ratification of the modifications to the
System and the revised Charges and/or discounts related thereto.
3.7 Interest. Charges not paid when due shall accrue interest at the rate of
eighteen percent (18%) per annum or the highest rate permitted by the governing
law indicated in Article , whichever is less.
3.8 Taxes. Customer shall pay any taxes, or assessments including any interest
or penalty thereon levied as a result of this Agreement, excluding taxes
measured by the net income of Sabre. Customer shall indemnify and hold harmless
Sabre from all costs, fines and expenses (including reasonable legal costs)
incurred by Sabre resulting from Customer's failure to pay taxes as provided in
this Article.
4. INSTALLATION AND DELIVERY
4.1 Delivery. Sabre shall arrange for delivery of the System F.O.B. the Site, on
the estimated installation date, as identified on Schedule A.
4.2 Installation. Subject to Article , Sabre shall install, or cause to be
installed, the System at the Site. Customer shall allow installation of the
System at the Site. Customer's failure to do so or to give adequate assurance
that it will do so on the estimated installation date, will constitute an Event
of Default pursuant to Article 14.1.2.
4.3 Customer's Obligations Prior to Installation. Customer, at its expense,
shall be responsible for preparing, on or before the estimated installation
date, the Site for the System in accordance with the Instructions. If
installation of the System is prevented or delayed because of Customer's failure
to prepare the Site, Sabre shall use reasonable efforts to install the System
upon Customer's compliance with this Article and upon payment of all reasonable
expenses incurred by Sabre resulting from Customer's failure to prepare the
Site.
<PAGE>
4.4 Relocation and Possession. Customer shall at all times keep the System in
its sole possession and control at the Site. Customer shall not move any part of
the System from the Site without first obtaining the written consent of Sabre.
Such consent will not be unreasonably withheld.
4.5 Communication Access. Except when Customer utilizes an ISP to access the
Sabre System, Sabre or its designated third party shall install the necessary
communication access device to connect the System to the Sabre System and other
approved systems or networks. All such devices are either owned by Sabre or such
third-party, are subject to this Agreement, and shall be returned to Sabre or
the third-party as Sabre directs upon termination of the Agreement.
4.6 Non-Standard System.
4.6.1 Subject to Customer's compliance with all other terms and conditions of
this Agreement, Sabre agrees to allow Customer to connect or use Non-Standard
System with the System without Sabre's prior written consent, except to the
extent that such Non-Standard System consists of communications data lines,
emulator boards, gateways, routers, ticket printers or other devices connecting
directly to the System or Sabre System ("Reserved Equipment"). Sabre consent for
Reserved Equipment shall be conditioned upon Sabre certification and approval
prior to its use with the System. Such consent may be withheld in order to
preserve the integrity of the Sabre System and the System.
4.6.2 Customer shall represent and warrant to Sabre that the Non-Standard
System and its connection to the System conforms in all respects to Sabre's
Non-Standard System standards and specifications, a copy of which Customer
may request from Sabre, and will not be altered or modified without prior
notice to Sabre.
4.6.3 Customer shall remove all Non-Standard System placed on or within the
Standard Equipment prior to Sabre's removing such Standard Equipment from
Customer's Site. Sabre disclaims, and Customer hereby waives and
indemnifies, any responsibility or liability on the part of Sabre, under
any theory whatsoever, for any Non-Standard System that Customer has failed
to remove from the Standard Equipment prior to Sabre's removing such
Standard Equipment from Customer's Site.
4.6.4 Customer shall not use Non-Standard System in conjunction with the
System for any function not specifically outlined in this Agreement and any
use or attempted use for any other function shall constitute an Event of
Default under Article 14.1.2.
4.6.5 Customer shall also ensure that Sabre has access to Customer's Site
on request for conducting on-site inspections, testing or to oversee
installation of the Non-Standard System. Customer is responsible for
ensuring that any Standard Equipment at Customer's Site is connected to the
System for the purposes of performing testing and diagnostics on such
Standard Equipment by Sabre's designated agent. If Sabre reasonably
determines that the Non-Standard System is causing, or contributing to, a
problem with the System, the Sabre System or another Sabre Subscriber's
access to or operation of the Sabre System, then Sabre has the right to
immediately restrict access to the Sabre System upon notice to Customer as
provided for in this Agreement and Sabre shall have no liability to
Customer for such restriction of access.
4.6.6 Customer agrees that its continued right to maintain the connection
between the Non-Standard System and the System and/or the Sabre System and
to use the Non-Standard System in connection with the Standard Equipment
shall be dependent upon Customer's full cooperation with requests by Sabre
to repair, alter, modify, or where necessary, de-install the Non-Standard
System if Sabre reasonably determines that the Non-Standard System, or a
component thereof, is impairing the System, the Sabre System or another
Sabre Subscriber's access to or operation of the Sabre System.
4.6.7 Customer shall pay Sabre's then prevailing rate for all employee
resources expended by Sabre for, but not limited to, Sabre's monitoring of
the installation of the Non-Standard System and/or expended in connection
with on-site inspection and/or testing of the Non-Standard System after
installation, service calls and any travel and incidental expenses incurred
by Sabre's personnel or vendors for the conduct of such monitoring,
inspecting, testing or service calls; provided, however, that after the
initial installation of the Non-Standard System, Sabre will make such
on-site inspections or test only where it reasonably believes that the
Non-Standard System is impairing the System, the Sabre System or another
Sabre Subscriber's access to or operation of the Sabre System.
4.6.8 Customer agrees that Sabre has first and complete access to the Sabre
Component. If, as a result of Customer's use of Non-Standard System, an
upgrade of the Sabre Component is required, Customer shall comply with the
applicable provisions of this Agreement.
<PAGE>
4.6.9 Sabre reserves the right to modify the Sabre System or the System,
even if such modification requires changes in Customer's Non-Standard
System. Sabre will make reasonable efforts to notify Customer in advance of
such changes. Any expenses incurred in modifying Customer's Non-Standard
System to conform to the Sabre System or System modifications shall be the
sole responsibility of Customer.
4.7 Acceptance of System. Upon installation of the System and establishment of a
successful connection with the Sabre System and any other Sabre approved systems
or networks, Customer shall be deemed to have accepted the System. Any use of
the System, additional System and/or Non-Standard System further constitutes
acceptance of this Agreement by Customer.
5. REPAIRS AND MAINTENANCE
5.1 Repairs and Maintenance. Upon prompt notification from Customer, Sabre or
its designated agent shall promptly repair and maintain or replace the Standard
Equipment provided that the Standard Equipment has been subject to reasonable
operation. Customer shall not make any modifications nor attempt to perform
repairs or maintenance of any kind to the System.
5.2 Limitation. Sabre is not responsible for repairs and maintenance of any
Non-Standard System or other hardware, software or communication access devices
at Customer's Site or at the locations of other Sabre approved systems or
networks beyond the point at which they are connected to the System and/or the
Sabre System.
5.3 Notification. Customer shall promptly inform Sabre of any breakdown of the
Standard Equipment by contacting Sabre Customer Services. Customer shall
maintain a record of all occasions upon which repair or maintenance service is
performed and make such records available to Sabre upon request.
5.4 Charges. Repair or maintenance services on Standard Equipment during normal
business hours (9:00 a.m. to 6:00 p.m. local time, Monday through Friday,
excluding legal holidays) are included in the Charges, provided that the
Customer has not been negligent and the Standard Equipment has been subject to
reasonable operation; otherwise, Customer will be charged a service fee in
accordance with Sabre's or its independent contractor's then prevailing rates.
5.5 Non-Standard System. All maintenance of the Non-Standard System shall be the
sole responsibility of the Customer. Sabre will accept calls to Sabre Customer
Services regarding a malfunction of the Non-Standard System if Sabre determines
that the malfunction is not attributable to the Non-Standard System. Customer
shall pay Sabre's then prevailing maintenance charges for any maintenance calls
for the Sabre System or the System if Sabre reasonably determines that the
problems were caused by or attributable to the Non-Standard System.
6. TITLE AND OWNERSHIP OF SYSTEM.
The System leased hereunder shall remain the property of Sabre. Customer shall
not in any other manner dispose of the System or any part thereof or suffer any
lien or legal process to be incurred or levied on the System.
7. INSURANCE
7.1 General. Customer shall take all necessary precautions to protect the System
installed at Customer's Site.
7.2 At its own cost, Customer shall procure and maintain insurance, from an
insurer and on terms and conditions acceptable to Sabre, insuring the System
against all risk of loss or damage, including, without limitation, the risk of
fire, theft and any other such risks as are customarily insured in a standard
all risk policy. Such insurance shall also provide the following:
7.2.1 Full replacement value coverage for the Standard Equipment, which
value is set forth on Schedule A.
7.2.2 An endorsement naming Sabre as a co-insured and as a loss payee to
the extent of its interest in the Standard Equipment; and
7.2.3 An endorsement requiring the insurer to give Sabre at least thirty
(30) days prior written notice of any intended cancellation, non-renewal,
material change in coverage or, within thirty (30) days of the event,
written notice of any default in the payment of a premium.
7.3 Risk of loss for and damage to the System shall pass to the Customer upon
delivery of the System to the Site.
<PAGE>
7.4 Sabre may request at any time proof of such insurance and/or other form of
surety from Customer. The failure of Customer to produce such proof or surety
within thirty (30) days of the request by Sabre will be considered an Event of
Default as defined in Article herein.
8. TITLE AND OWNERSHIP OF CONFIDENTIAL INFORMATION
8.1 Each party's Confidential Information shall remain that party's exclusive
property.
8.2 Each party shall maintain the confidentiality of the other party's
Confidential Information at all times during and after the term of this
Agreement. Neither party shall use, sell, sublicense, transfer, publish,
disclose, display, or otherwise make available to others, except as authorized
in this Agreement, the Confidential Information of the other party or any other
material relating to the Confidential Information of the other party nor shall
either party permit its officers, employees, agents, contractors or
subcontractors to divulge the other party's Confidential Information without
that party's prior written consent.
8.3 Customer shall use the data, other than Non-Sabre Traffic, transmitted under
this Agreement ("Data") solely for the benefit of itself and its customers in
connection with rendering the following services: (i) air carrier, hotel, car
and rail reservations, including schedule quotations; (ii) customer accounting
and record keeping activities; or (iii) the sale of or reservations for other
miscellaneous products or services offered in the Sabre System. Customer shall
not publish, disclose or otherwise make available to any third party any
compilation of Data obtained from the Sabre System. However, Customer may use
specific Data for the benefit of its customers in connection with any
reservation or schedule quotation production of a hard copy travel itinerary,
invoice, statement or ticket.
8.4 Nothing in this Agreement shall be interpreted to limit in any way Sabre's
right to use, market, sell or publish any booking related data subject only to
any applicable laws or regulations.
9. SYSTEM SOFTWARE LICENSE
9.1 Ownership of System Software. Customer acknowledges that Sabre or the
original manufacturer of the System Software, as applicable, owns or has
licensed from the owner, copyrights in the respective System Software and that
ownership and title are retained by the manufacturer or its licensor. All
applicable rights to patents, copyrights, trademarks, and trade secrets inherent
in the System Software and pertinent thereto are and shall remain Sabre's or the
original manufacturer's sole and exclusive property. Any copy of such System
Software must incorporate any copyright, trade secret, or trademark notices or
legends appearing in the original version delivered to Customer.
9.2 Grant of License. Subject to the provisions of this Agreement and for the
term specified in Article , either Sabre or the original manufacturer grants to
Customer a non-transferable, non-exclusive limited license to use the System
Software subject to the following restrictions: (a) Customer shall use the
System Software solely in connection with its use of the Sabre System, (b) the
System Software shall be used and installed solely at the Site and solely used
on the Standard Equipment or NonStandard System authorized under Article , (c)
the System Software shall be used solely for internal purposes and only in the
ordinary course of business, (d) Customer shall not compile, reverse compile,
decompile, disassemble, reverse assemble or reverse engineer the System Software
or any portion thereof, (e) the System Software shall not be copied or reprinted
in whole or in part except (i) a reasonable number of copies of each program may
be made in machine readable form for reasonable archival or backup purposes or
(ii) when Sabre has granted permission to do so, (f) Customer shall not lease,
sell, license, sublicense or otherwise transfer the System Software to any other
party, and (g) the terms of this Agreement shall govern the System Software
license unless modified by a license which may be associated with a particular
software product, wherein the license associated with that particular software
product shall govern.
9.3 Modification Rights. Customer shall not modify the System Software or merge
such software into other programs or create derivative works based on such
software. Additionally, Customer shall not delete or cause to be deleted the
System Software from the Standard Equipment. Notwithstanding anything to the
contrary contained herein, noncompliance with this provision shall constitute an
Event of Default under this Agreement and this Agreement shall immediately
terminate and Customer shall be obligated to pay Sabre damages as specified in
Article hereof.
<PAGE>
9.4 Upgrades and Modifications. All tangible objects containing or relating to
the System Software are the sole and exclusive property of Sabre or the
manufacturer. In the event Sabre modifies the System Software, it may deliver
such modified System Software to Customer at its then current charge, if any,
and Customer shall promptly return to Sabre any and all tangible objects
relating to all previous versions of the System Software as provided in Article
. Customer shall be solely responsible for protecting all software not obtained
from Sabre hereunder and the data related thereto in the event of a software
upgrade. Customer, in order to receive an upgraded or updated program, shall
comply with any and all terms, conditions and Instructions requested by Sabre.
9.5 Operating Program.
9.5.1 Customer acknowledges that the System Software may incorporate, in
part, copyrighted materials pertinent to the Operating Program as
identified on Schedule A ("Operating Program"). Customer agrees that such
copyrighted portions shall be subject to the Operating Program copyright
and license.
9.5.2 If Customer requires additional Operating Programs, Customer shall
notify Sabre and Sabre will provide Customer with additional copies to
support additional video agent sets pursuant to this Agreement.
9.5.3 Customer will look only to Sabre and not to the manufacturer for any
support, maintenance, assistance and upgrades and the like with respect to
the Operating Program and the manufacturer shall have no liability to
Customer in relation to the Operating Program.
9.5.4 No action, regardless of form, arising out of the license of the
Operating Program may be brought more than two years after the cause of
action has arisen.
9.5.5 Customer shall physically retain a copy of the Conditions of Use for
Sabre Users (Attachment I) with each applicable video agent set or
dedicated fileserver/processor eligible to use such Operating Program.
10. OPERATION OF THE SABRE SYSTEM AND THE SYSTEM
10.1 Operation of System.
10.1.1 The Sabre System and the System shall be operated by Customer solely
for the purposes and functions expressly permitted by this Agreement and in
strict accordance with the Instructions. Customer shall not in any way
utilize the System for the direct or indirect purpose of bypassing or
circumventing the Sabre System in communicating in any way with
Participants. Any violation of this provision will be deemed an Event of
Default under Article 14.1.2.
10.1.2 Customer may use the System to transmit and receive Non-Sabre
Traffic only from those systems or networks approved in writing by Sabre.
Customer acknowledges that in cases of communications capacity limits being
reached, data transmission through the System with the Sabre System will be
given priority over any Non-Sabre Traffic.
10.1.3 Customer shall access the Sabre System only through the System, an
ISP or another system or device authorized in writing by Sabre.
10.1.4 Customer shall take all precautions necessary to prevent
unauthorized operation or misuse of the Sabre System or the System,
including without limitation, speculative booking, shell bookings,
reservation of space in anticipation of demand, or improper record or
access. In the event of misuse of the Sabre System or the System, Sabre
reserves the right, in addition to all rights under the Agreement, to
immediately terminate the Agreement.
10.1.5 Customer shall not enter any Prohibited Segments into the Sabre
System. Prohibited Segments so entered shall not be calculated in
determining productivity levels under the Agreement. All Travel Service
Segments shall be removed from the Sabre System should corresponding space
be canceled direct via telephone with the transporting carrier.
10.2 Non-Exclusivity. This Agreement is not exclusive and nothing in the
Agreement is intended to preclude or prohibit Customer from using any other
computerized reservation system. The parties agree that Customer's expected use
of the System is the Fixed Monthly Discount Booking Level stated in Schedule A.
<PAGE>
10.3 Transaction Volume. Notwithstanding the provisions of Article (g), Sabre
shall have the right, upon thirty (30) days notice to Customer to limit Customer
to generating no more than one hundred thirty (130) Transactions per Sabre
Booking ("Transaction Limit"). The Transaction Limit may be changed by Sabre
upon thirty (30) days advance notice to Customer.
10.4 Training. Sabre will make available introductory Sabre System training
during the installation process. For purposes of this Article, the installation
process is defined as anytime between contract signing by both Customer and
Sabre through two months after installation is complete.
10.4.1 Upon written request from Customer, at such time that installation
is complete, additional training may be offered subject to availability and
at Sabre's then prevailing rate per person, per class. The additional
training charge will be assessed on Customer's monthly invoice.
10.4.2 The training described in Article shall be performed at a location
designated by Sabre.
10.4.3 Except as otherwise provided herein, Customer is responsible for all
training of all its employees in the proper use of the Sabre System.
10.4.4 In addition to the training described in Article , Sabre may offer
to Customer supplemental training programs on a local level at Sabre's then
prevailing rate and method of delivery. Such training may consist of, but
not be limited to, workshops, seminars, self-paced instruction and
individual consultations.
10.4.5 Customer and its trainees agree to comply with all training
procedures and rules established by Sabre, and Sabre reserves the right to
remove any Customer trainee from the training program if such trainee fails
to comply with such procedures and rules.
10.4.6 Sabre may, at its discretion, monitor or test Customer's employee's
training levels. If Sabre determines the training level of any one or more
of Customer's employees to be insufficient, then Customer will institute
such additional training at its own expense (including, if necessary,
additional training by Sabre at Sabre's then prevailing charges) as may be
necessary to bring Customer's employees to the level of training required
by Sabre.
11. WARRANTY, AND LIMITATION OF WARRANTY, LIABILITY AND REMEDY
11.1 Sabre Warranty. Sabre agrees to use reasonable efforts to maintain the
availability of the Sabre System, but shall have no liability for interruptions
in the operation of the Sabre System except as specifically provided herein.
Subject to the terms hereof, in the event that the Sabre System is not operable
ninety-five percent (95%) of the total normal business hours each month,
excluding periods for maintenance of Standard Equipment or other scheduled down
time ("Normal Time"), Sabre will reduce the monthly Charges (on a pro-rata basis
according to the percentage of Normal Time during which the Sabre System was not
operable at least ninety-five percent (95%) of the Normal Time. For purposes of
this article, normal business hours shall be 9:00 a.m. to 6:00 p.m., local time,
Monday through Saturday. The Sabre System shall be deemed inoperable if Customer
is unable, after calling Sabre Customer Service to make any Sabre Bookings as a
result of a failure attributable to the Sabre System. To request a reduction
under this Article, Customer shall submit a written record to Sabre and request
an adjustment in the monthly charges. Customer's written records must be
submitted in a timely manner and include, at a minimum, the date and time of the
outage, the time the outage was reported to Sabre Customer Service, the time the
Sabre System was restored (within normal business hours as defined above) and
the type of outage.
11.2 Limited Warranty of the System. In the event of a material malfunction or
defect in an unaltered component of the System that substantially affects
performance of the System that is reported by Customer to Sabre and that can be
reproduced by Sabre, Sabre will use reasonable efforts to correct such
malfunction or defect without additional charge to Customer. THE FOREGOING SHALL
BE CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR ANY MALFUNCTION OR DEFECT IN THE
SYSTEM. IF SUCH MALFUNCTION OR DEFECT MATERIALLY IMPAIRS CUSTOMER'S USE OF THE
SYSTEM AND CANNOT BE CURED AS PROVIDED IN THIS SECTION, THEN CUSTOMER'S
ALTERNATE SOLE AND EXCLUSIVE REMEDY SHALL BE TO TERMINATE THIS AGREEMENT WITHOUT
FURTHER LIABILITY TO SABRE FOR DAMAGES HEREUNDER.
11.3 Exclusion Of Other Warranties. EXCEPT AS SPECIFICALLY PROVIDED IN THIS
ARTICLE, THE USE OF THE SABRE SYSTEM, THE DATA DERIVED FROM THE SABRE SYSTEM,
THE SYSTEM AND/OR ANY COMPONENTS THEREOF ARE PROVIDED TO CUSTOMER BY SABRE, ANY
INFORMATION PROVIDER OR THE OWNER OF ANY ELEMENT OF THE SYSTEM (AS THE CASE MAY
BE) "AS IS AND WITH ALL FAULTS". ALL OTHER WARRANTIES ARE HEREBY DISCLAIMED
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF ACCURACY, COMPLETENESS AND
NON-INFRINGEMENT OF THE DATA DERIVED FROM THE SABRE SYSTEM, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED
WARRANTIES ARISING OUT OF COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE.
<PAGE>
11.4 Limitation of Liability.
11.4.1 NEITHER SABRE NOR ANY INFORMATION PROVIDER NOR ANY OWNER OF ANY
ELEMENT OF THE SYSTEM OR THE SABRE SYSTEM SHALL BE LIABLE TO CUSTOMER OR
ANY THIRD PARTY FOR ANY INJURY, LOSS, CLAIM OR DAMAGE CAUSED IN WHOLE OR IN
PART BY THE NEGLIGENCE OF SABRE OR ANY INFORMATION PROVIDER OR BY ANY OWNER
OF ANY ELEMENT OF THE SYSTEM OR BY EVENTS BEYOND THE CONTROL OF SABRE OR OF
ANY OF THOSE OTHER PERSONS.
11.4.2 IF A PASSENGER USES A CONFIRMED TICKET FOR AIR TRANSPORTATION ISSUED
PURSUANT TO A RESERVATION MADE BY CUSTOMER BY MEANS OF THE SABRE SYSTEM AND
IS REFUSED CARRIAGE BECAUSE OF AN OVERSALE OF SEATS OR THE LACK OF RECORD
OF SUCH RESERVATION, THE SOLE REMEDY OF CUSTOMER SHALL BE AS SET FORTH IN
THE TARIFF OF THE REFUSING CARRIER OR APPLICABLE TERMS AND CONDITIONS OF
THE CARRIER'S CONTRACT OF CARRIAGE.
11.4.3 TO THE EXTENT THAT SABRE HAS ANY LIABILITY UNDER THIS AGREEMENT OR
UNDER ANY THEORY OF LIABILITY, SABRE'S CUMULATIVE LIABILITY FOR DAMAGES TO
CUSTOMER HEREUNDER SHALL BE LIMITED TO THE LESSER OF (1) CUSTOMER'S DIRECT
DAMAGES, (2) THE TOTAL AMOUNT OF CHARGES ACTUALLY PAID BY CUSTOMER TO SABRE
PURSUANT TO THIS AGREEMENT OVER THE TERM OF THIS AGREEMENT, OR (3) ONE
MILLION DOLLARS ($1,000,000).
11.4.4 NEITHER SABRE NOR ANY INFORMATION PROVIDER NOR ANY OWNER OF ANY
ELEMENT OF THE SYSTEM SHALL BE LIABLE TO CUSTOMER UNDER ANY THEORY OF
LIABILITY OR ANY FORM OF ACTION, INCLUDING NEGLIGENCE FOR ANY INCIDENTAL,
SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES UNDER ANY
CIRCUMSTANCES, INCLUDING BUT NOT LIMITED TO LOST PROFITS, REVENUE OR
SAVINGS, OR THE LOSS OF USE OF ANY DATA, EVEN IF THAT PERSON THAT WOULD
HAVE BEEN LIABLE IN THE ABSENCE OF THIS SECTION HAD BEEN ADVISED OF, KNEW,
OR SHOULD HAVE KNOWN, OF THE POSSIBILITY THEREOF.
11.5 NON-SABRE TRAFFIC. CUSTOMER ACKNOWLEDGES THAT IT IS SOLELY LIABLE FOR THE
CONTENT, ACCURACY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OR OTHER THIRD PARTY
RIGHTS, OF THE NON-SABRE TRAFFIC. CUSTOMER WARRANTS THAT THE TRANSMISSION AND
RECEIPT OF NON-SABRE TRAFFIC BY CUSTOMER IS NOT IN CONTRAVENTION OF ANY LAWS,
RULES OR REGULATIONS. FURTHER, CUSTOMER HEREBY WARRANTS THAT IT HAS ENTERED INTO
SUCH SEPARATE AGREEMENTS AS IT DEEMS NECESSARY OR APPROPRIATE WITH THE SYSTEMS
OR NETWORK PROVIDERS FOR THE TRANSMISSION AND RECEIPT BY CUSTOMER OF THE
NON-SABRE TRAFFIC AND, IN PARTICULAR, CUSTOMER WARRANTS THAT IT SHALL BE SOLELY
LIABLE TO THESE PROVIDERS FOR ANY MALFUNCTION OR OTHER ADVERSE IMPACT
EXPERIENCED BY SAID PROVIDERS AS A RESULT OF THE TRANSMISSION AND RECEIPT BY
CUSTOMER OF THE NON-SABRE TRAFFIC.
12. INDEMNIFICATION
12.1 Customer and Sabre ("Indemnitor") hereby agree to indemnify and hold each
other, their affiliates, subsidiaries, successors and assigns and their
officers, directors, agents and employees ("Indemnitees") harmless from and
against third-party liabilities, including, but not limited to, attorneys' fees,
and other expenses incident thereto, ("Claims") which may be threatened against,
or recoverable from the Indemnitees by reason of any injuries to or death of
persons or loss of, damage to, or destruction of property to the extent arising
out of or in connection with any act, or omission of the Indemnitor.
12.2 Customer will indemnify Sabre for any Claims, including debit memos issued
by Participants, arising from Customer's misuse of the Sabre System including,
without limitation, making fraudulent bookings and/or failing to honor
Participant ticketing and fare rules.
13. ASSIGNMENT
13.1 Assignment Or Sublease By Customer. Customer shall not sublease, transfer
or assign this Agreement or any portion thereof, or any right or obligation
hereunder, unless customer has obtained the prior written consent of Sabre,
which consent shall not be unreasonably withheld. Any attempted assignment in
violation of this Article shall be void.
13.2 Assignment by Sabre. Sabre shall have the right to sell, transfer, assign
or delegate its interests, rights and/or obligations, without the prior consent
of Customer, and, provided that such transferee or assignee assumes all of
Sabre's obligations, Sabre shall be released of all obligations after the
effective date of such sale, transfer, delegation or assignment.
14. TERMINATION AND DEFAULT
14.1 Default By Customer. The occurrence of any one or more of the following
events shall constitute a non-exclusive event of default (the "Event of
Default") pursuant to the terms of this Agreement.
14.1.1 Customer fails to pay any amount when due;
<PAGE>
14.1.2 Any representation by Customer is discovered to be materially
misleading or inaccurate, or Customer fails to perform any material
covenant, agreement, obligation, term or condition contained herein;
14.1.3 Customer terminates or cancels this Agreement or any portion
thereof, except as expressly permitted in this Agreement;
14.1.4 Customer ceases to do business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its inability to
pay debts as they become due, acquiesces in the appointment of a trustee,
receiver or liquidator for it or any substantial part of its assets or
properties, or executes an agreement to sell all or substantially all of
its assets without obtaining the consent for assignment of this Agreement
under Article .
14.1.5 Customer fails to secure and maintain Airlines Reporting Corporation
("ARC") accreditation for ticketing of reservations;
14.1.6 Events of Default described in , and shall not be cause for
termination if Customer cures such failure within fifteen (15) days after
date of written notice from Sabre. If Customer cures its failure as
provided in this provision, said failure shall not be considered to be an
Event of Default for the purposes of Article .
14.2 Sabre's Rights Upon Termination. Upon the occurrence of an Event of Default
and subject to Article , Sabre shall have the right to any one or more of the
following remedies; (i) terminate this Agreement and Customer's access to the
Sabre System, the System and any other approved systems or networks; (ii) seek
all legal and equitable remedies to which it is entitled, and (iii) retake
immediate possession of the System. If Customer's Event of Default results in
termination, Customer agrees to pay to Sabre damages suffered by Sabre as a
result of such Event of Default.
14.3 Termination By Customer. In the event that Sabre breaches any material term
of this Agreement, which breach continues for a period of fifteen (15) days
after Sabre receives from Customer written notice which sets forth the specific
breach and Customer's intent to terminate the Agreement if such breach is not
cured, then Customer may immediately terminate the Agreement upon separate
written notice to Sabre. Customer may not otherwise cancel, terminate, modify,
repudiate, excuse or substitute this Agreement without Sabre's prior written
consent, which Sabre may withhold in its absolute discretion.
15. MISCELLANEOUS
15.1 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS AND THE UNITED STATES OF AMERICA. CUSTOMER HEREBY SUBMITS AND CONSENTS
TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS AND THE COURTS OF THE STATE OF TEXAS IN ANY DISPUTE
ARISING OUT OF THIS AGREEMENT AND AGREES THAT SERVICE OF PROCESS SHALL BE
SUFFICIENT IF MADE ON THE SECRETARY OF STATE OF THE STATE OF TEXAS WITH A COPY
TO BE SENT, REGISTERED MAIL TO THE CUSTOMER AT THE ADDRESS SET FORTH IN SCHEDULE
A OR SUCH OTHER ADDRESS AS CUSTOMER MAY LATER SPECIFY BY WRITTEN NOTICE TO
SABRE.
15.2 Binding Effect. Except as otherwise provided, this Agreement shall inure to
the benefit of and bind the successors and assigns of the parties hereto.
15.3 Deletion of Equipment. During the term of the Agreement, Customer may
delete up to ten percent (10%) of the installed productive video agent sets,
video agent set terminal addresses and printers, contingent upon the following:
(a) Customer provides documentation of a substantial decrease in the number of
Sabre Bookings, which decrease is the result of the loss of its commercial
accounts and/or customer base; (b) Customer notifies Sabre, in writing, of the
description and location of the equipment to be deleted (the "Deleted
Equipment"); (c) Customer pays to Sabre the then current de-installation charges
for the Deleted Equipment plus any outstanding Charges for such Deleted
Equipment up through the Stop Billing Date which Sabre will specify to Customer;
and (d) Customer will forfeit all right and equity, if any, in the Deleted
Equipment removed from Customer's location.
15.3.1 If Customer complies with the requirements identified in above,
Sabre shall de-install the Deleted Equipment and disconnect it from the
System.
15.3.2 Sabre shall defer all Charges related to the Deleted Equipment
("Deferred Charges") from the Stop Billing Date to the termination date of
this Agreement on the following conditions: (a) the Additional Term and all
other terms and conditions of this Agreement that would have applied to the
Deleted Equipment, shall apply to any Standard Equipment added to the
System after the Stop Billing Date, up to an amount equal in number and
type to the Deleted Equipment or such lesser amount agreed to by Sabre
("Re-installed Equipment"); and (b) Customer shall pay Sabre all applicable
Charges for the Re-installed Equipment, including installation, lease,
maintenance and use Charges, at Sabre's then current rates.
<PAGE>
15.3.3 The Deferred Charges shall be deemed waived by Sabre at the end of
the Initial Term of the Agreement or any renewal thereof if Customer has
not breached this Agreement. Interest shall accrue on the Deferred Charges
at the maximum rate allowed by applicable law from the date of the deferral
until payment. In addition to all other rights under Article , Sabre shall
be entitled to immediate payment of the Deferred Charges plus interest upon
default by Customer.
15.4 Entire Agreement. This Agreement and the Instructions constitute the entire
agreement of the parties as to the matters set forth herein and shall supersede
any previous understandings, agreements, representations, statements,
negotiations and undertakings, whether written or oral, between the parties
relating to the matters set forth herein. Any amendment to this Agreement must
be in writing and signed by the authorized representatives of both parties.
15.5 Force Majeure. Sabre and Customer shall be relieved of their obligations
hereunder in the event and to the extent and only so long as that performance is
delayed or prevented by any cause reasonably beyond their control, including,
but not limited to, acts of God, public enemies, war, civil disorder, fire,
flood, explosion, labor disputes or strikes, or any acts or orders of any
governmental authority, inability to obtain supplies and materials (including
without limitation computer hardware) or any delay or deficiency caused by the
electrical or telephone line suppliers or other third parties.
15.6 Notices. Unless otherwise stated, notices given or required under this
Agreement must be in writing and shall be deemed delivered upon deposit through
the United States Mail, to Sabre at P. O. Box 619615, MD 3558, Dallas/Fort
Worth, Texas, 75261-9615 (to be sent to the attention of Sabre, Financial
Services) or to the Customer at the address set forth in Schedule A.
15.7 Return of System. Upon the termination of this Agreement for any reason,
Customer, at its sole cost and expense, shall return the System and all
Confidential Information as requested by Sabre, in good repair, condition and
working order, less normal and ordinary wear and tear, by delivering it to a
common carrier selected and designated by Sabre, F.O.B. the destination
designated by Sabre in writing.
15.8 Sabre System Modification. Sabre retains the right to modify the Sabre
System, at its discretion at any time during the term of this Agreement.
However, such modifications will not materially impair Customer's ability to
access and use the Sabre System in the manner expressly permitted in this
Agreement.
15.9 Severability. Any provision of this Agreement which may be determined by a
court or other competent governmental authority to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability, without invalidating
the remaining provisions thereof, unless said prohibition or unenforceability
materially alters the rights or obligations of either party.
15.10 Subsequent Acts of Government. In the event that there is any change in
any statute, rule, regulation or order governing the operation of computerized
reservations systems, or air transportation generally or the Sabre System, which
in any way materially impairs the benefits of this Agreement to Sabre, then the
parties hereto will commence consultation in order to determine what, if any,
changes to this Agreement are necessary or appropriate, including, but not
limited to, early termination of this Agreement. If the parties hereto are
unable to agree upon changes in the Agreement in response to such new statute,
rule, order or regulation within thirty (30) days after commencement of such
consultation, this Agreement may be canceled by Sabre upon giving Customer
ninety (90) days prior written notice of such cancellation. If Sabre elects to
terminate the Agreement pursuant to this Article, except for Customer's
obligation to pay any and all Charges incurred through the date of termination,
each party shall be relieved of any future obligations under this Agreement as
of the effective date of cancellation. Each party shall bear its own costs and
expenses incurred as a result of said termination. Customer does not have the
right to terminate the Agreement under this provision.
15.11 Surviving Sections. If the term of the Agreement expires or is terminated
for any reason before Customer has paid to Sabre all of the sums due, the
Agreement shall survive such expiration or termination to the extent necessary
to protect Sabre's rights until all sums owed to Sabre have been paid.
Notwithstanding anything to the contrary referenced herein, Articles , , and
shall survive the termination of this Agreement.
15.12 Waiver. A failure or delay of either party to require strict performance
to enforce a provision of this Agreement or a previous waiver or forbearance by
either party shall in no way be construed as a waiver or continuing waiver of
any provision of this Agreement.
<PAGE>
15.13 Acknowledgment. Customer hereby acknowledges that Sabre has offered
Customer a Sabre Subscriber Agreement with a three (3) year term with reasonable
terms and conditions.
16. INTERNET CONNECTIONS
16.1 Limited License. Customer may establish an Internet Connection using
Sabre's products or a third party application. Customer is hereby given a
limited license to utilize data transmitted from the Sabre System for purposes
of developing, operating and maintaining a reservation booking site solely for
the use of its customers and according to the other limitations contained in
this Agreement, including, without limitation, Article . All uses of the Sabre
System through an Internet Connection will be considered uses by Customer under
this Agreement. Customer may not utilize any data transmitted from the Sabre
System for purposes of developing, operating or maintaining a reservation
booking site or any other redisplay of Sabre System data for any third party
including any un-affiliated travel agencies.
16.2 Termination. The limited license granted in Article may be terminated by
Sabre for any reason upon five (5) days written notice to Customer. Upon such
termination Customer must immediately remove the Internet Connection and cease
utilizing data transmitted under the Agreement for purposes of developing,
operating or maintaining a reservation booking site.
16.3 Branding. Customer agrees to adhere to the branding standards and
requirements as communicated by Sabre which may be modified from time to time
upon thirty (30) days advance notice to Customer.
16.4 Charges. Customer will pay a Charge for each PNR created through an
Internet Connection at Sabre's then current rate.
17. SABRE RESERVES THE RIGHT TO CHANGE SABRE GUARANTEE PROGRAM RULES,
REGULATIONS, AND SPECIAL OFFERS WITHOUT NOTICE, AND TO END SABRE GUARANTEE
PROGRAMS WITHOUT NOTICE
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth below.
ALL SIGNATURES MUST BE IN BLACK INK
CUSTOMER
By:
---------------------------------------
(Signature)
Name: Jeff Wasson
---------------------------------------
(Print Name)
Title:
---------------------------------------
Date:
---------------------------------------
Agency Name: ---------------------------------------
Pseudo City Code: ---------------------------------------
SABRE INC.
By:
---------------------------------------
(Signature)
Name: Joe Herzog
---------------------------------------
(Print Name)
Title:
---------------------------------------
Date:
---------------------------------------
<PAGE>
ATTACHMENT I
Conditions of Use for Sabre Users
1. QUALIFYING USE. The manufacturer has made this package available to you
through The Sabre Group, whether directly or indirectly, on the
understanding that it is being supplied to you primarily for use with the
Sabre System, and not with a view to resale or other re-marketing.
1. COPYRIGHT AND OTHER RIGHTS
The manufacturer's programs contain material in which the manufacturer and in
many cases the manufacturer's suppliers, retain proprietary rights. The
manufacturer wants these programs to be fully usable by you for the purpose for
which they are supplied, that is, in connection with a computer. No infringement
of the rights of the manufacturer or of the manufacturer's suppliers will occur
provided that the following conditions are observed with respect to each
program:
a. The program is used only on:
(i) a single machine; or
(i) on any workstation connected to a single fileserver which is primarily
used in connection with the Sabre System.
a. The program is copied into machine-readable or printed form for backup or
modification purposes only in support of use on a single machine, or on a
workstation connected to the Sabre System;
a. However, certain diskettes marked "Copy Protected" may include mechanisms
to limit or inhibit copying of the program;
a. The program is modified or merged into another program only for use on a
single machine or on a workstation connected to the Sabre System. Any
portion so merged continues to be subject to these conditions;
a. The copyright notice is reproduced and included in any copy or
modifications made of the program and in any program merged into other
programs; and
a. If the program package is transferred to another party, all copies and
modifications made of the program must be transferred or destroyed. You do
not retain any right with respect to the transferred package. The other
party agrees to observe all of these Conditions of Use.
Any other act involving reproduction or use of, or other dealing in the program
is prohibited.
You are reminded that it may be necessary to obtain local and United States
licenses to export or re-export this package.
No statements contained in this package shall affect the statutory rights of any
person.
Exhibit 10.10
ULTRADIRECT(SM) INTERFACE AGREEMENT
-----------------------------------
This Agreement is entered into by and between THE HOTEL INDUSTRY SWITCH
COMPANY, a Delaware corporation, (hereinafter "THISCO") and TRAVEL NOW GLOBAL
RESERVATIONS NETWORK, INC., (hereinafter "Participant"), this 17th day of
September, 1997.
1.0 DEFINITIONS
---------------
1.1 For purposes of this Agreement, the following definitions shall apply:
(i) UltraDirect(SM). A service of THISCO to provide accessors of
Participant's System with Dodging Select and Lodging Connect capabilities.
(ii) Interface. The Interface is the hardware, software and attendant
technical support required to produce computer to computer communications
between Participant's System and THISCO's UltraDirect.
(iii) Participant's System. A computerized information system owned and
operated by Participant or licensed to third parties providing information
and other services to its accessors (which for all purposes, shall include
accessors via licensees of Participant's System).
(iv) Lodging Select(SM). A service of THISCO providing a connection with
hotel or other lodging entity reservations systems which enables accessors
to obtain information, including, without limitation, availability and
rates, on hotel and other lodging properties in response to selected search
criteria.
(v) Lodging Connect(SM). A service of THISCO providing a connection with
hotel or other lodging entity reservation systems which enables accessors
to make, modify and cancel reservations.
(vi) Net Reservations. Net Reservations are reservations by accessors of
Participant's System processed through UltraDirect within a particular time
period, less the number of canceled reservations by accessors of
Participant's System processed through UltraDirect during the same time
period.
(vii) Information Request. An Information Request is a request for
information by an accessor of Participant's System which utilizes Lodging
Select.
<PAGE>
2.0 THE ULTRADIRECT(SM) SYSTEM
------------------------------
2.1 Duties of THISCO. THISCO shall produce, pursuant to a mutually agreed
schedule, and maintain on a continual basis a dependable and operative interface
between Participant's System and UltraDirect providing the capabilities of
Lodging Sect and Lodging Connect. THISCO will provide all reasonable and
necessary technical support, hardware and software, and modifications to
UltraDirect so as to enable accessors of Participant's System to utilize
UltraDirect.
2.2 Duties of Participant. Participant shall use all reasonable and
necessary efforts to cooperate fully with THISCO personnel with respect to the
creation of the interface and the connection of UltraDirect to Participant's
System. Participant shall provide technical support as reasonably necessary, and
agrees to undertake such reasonable and necessary programming and modification
of its system as required to produce a dependable and operable interface with
UltraDirect. UltraDirect shall be used solely by Participant and accessors of
Participant's System for the purposes described herein.
2.3 Enhancement or Modification of UltraDirect. THISCO may undertake to
modify the operation or enhance the capability and data base available through
UltraDirect. In such even, THISCO will provide notice to Participant of such
enhancement at least ninety (90) days prior to such modification or enhancement
and Participant will, within the ninety (90) day period, make such adjustments
and modification to its system, as may be reasonable and necessary to maintain
the interface with UltraDirect.
2.4 Enhancement or Modification of the Participant System. In the event
Participant modifies the operation or enhances the capability of Participant's
System, and such modification or enhancement of Participant's System is likely
to or will disrupt the interface, Participant shall, at its own expense, make
such adjustments and modifications to Participant's System as is reasonable and
necessary to maintain the interface with UltraDirect.
2.5 Exclusive Reservation Interface. To the extent that Participant
provides LodgingSelect to any licensee or accessor of Participant's Systems,
Participant agrees to process all hotel and other lodging reservation
transactions by such licensee or accessor through LodgingConnect.
2.6 Automated Information Search. Participant agrees that it will not
create, utilize, participate in or knowingly permit the occurrence of non-manual
repetitive Search Requests.
<PAGE>
3.0 FEES
--------
3.1 Connection Fee. Upon full execution of this Agreement, Participant
shall pay THISCO an initial payment of Two Thousand Five Hundred Dollars. Upon
completion of the connection, Participant shall pay THISCO __________________.
3.2 Monthly Maintenance Fee. Participant shall pay to THISCO a monthly
maintenance fee each month during the term of the Agreement of ______________
______________ provided that the monthly maintenance fee will be reduced to
_________________________________ for each month during which Net Reservations
exceed ________________ and further provided that the monthly maintenance fee
will be reduced to _____ for each month during which Net Reservations exceed ___
_____________.
3.3 Communication and Other Costs. Participant shall be solely responsible
for the cost of dedicated leased data lines, dial up lines and all other
communication related costs incurred in connection with the interface. Each
party shall bear its own costs for modems purchased or leased as necessary for
communications between Participant's System and UltraDirect.
3.4 Payment of Fees and Costs. THISCO will invoice Participant monthly for
all fees and costs to be paid by Participant pursuant to this Agreement.
Participant shall pay each invoice upon receipt and, in any event, within 30
days of receipt of each invoice. In the event an invoice is not paid within 30
days of its receipt, Participant agrees to pay y interest on all amounts over 30
days old at an annual rate of 15% or 1 1/4% per month. All fees and costs due
THISCO shall be paid in U.S. dollars.
4.0 TERM
--------
4.1 Term of Agreement. The initial term of this Agreement, unless earlier
terminated pursuant to the provisions of this Agreement, shall begin upon
execution of this Agreement and shall continue thereafter for a period of sixty
(60) months provided, however, the term of this Agreement shall be automatically
extended for additional one (1) year terms unless either party shall, at least
sixty (60) days prior to the expiration of the initial or any extended term,
give notice of termination of the Agreement at the end of the term.
5.0 TERMINATION
---------------
5.1 Termination by Participant. Upon the occurrence of an Event of Default
(as hereinafter defined) by THISCO and the failure of THISCO to cure such
default after written notice and opportunity to cure as provided by Section 6.3
hereof, Participant may terminate this Agreement at any time within thirty (30)
days after the expiration of the cure period provided in Section 6.3.
5.2 Termination by THISCO. Upon the occurrence of an Event of Default (as
hereinafter defined) by Participant and the failure of Participant to cure such
default after written notice and opportunity to cure as provided by Section 6.3
hereof, THISCO may terminate this Agreement at any time within thirty (30) days
after the expiration of the cure period provided in Section 6.3.
<PAGE>
6.0 DEFAULT
-----------
6.1 Events of Default. Subject to Section 6.2 hereof, any one of the
following listed occurrences shall be considered an Event of Default:
(i) The failure to pay any amount due hereunder within the time required;
(ii) The refusal or failure to diligently and in good faith perform each
and every material provision of this Agreement;
(iii) The application by Participant or THISCO for or the consenting to the
appointment of a receiver, a trustee or liquidator of all or of a
substantial portion of its assets; the making by Participant or THISCO of a
general assignment for the benefit of creditors; Participant or THISCO
being adjudicated a bankrupt or becoming insolvent; Participant or THISCO
filing a voluntary petition in bankruptcy or filing a petition or answer
seeking reorganization or an arrangement with creditors or seeking to take
advantage of any law (whether federal or state) relating to relief of
debtors, or admitting (by answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy,
reorganization, arrangement, insolvency or other proceedings (whether
federal or state) relating to relief of debtors; Participant or THISCO
admitting in writing that it is unable to pay its debts as they mature or
that it is generally not paying its debts as they mature; Participant or
THISCO suffering or permitting to continue for ninety (90) consecutive days
any judgment, decree or order, entered by a court of competent
jurisdiction, which approves a petition seeking reorganization of such
party or which appoints a receiver, trustee or liquidator of such party or
of all or a substantial part of any of its assets; attachment, execution or
other judicial seizure of all or substantially all of the assets of
Participant or THISCO, where such seizure is not discharged within ninety
(90) days; or the filing of any involuntary petition in bankruptcy against
Participant or THISCO which is not dismissed within ninety (90) days of its
filing.
6.2 Force Majeure. It shall not constitute a default if an Event of Default
is caused by or results from acts of God, fire, war, civil unrest, accident,
power fluctuations or outages, telecommunication fluctuations, outages or
delays, utility failures, mechanical defects, or other events beyond the control
of the defaulting party. However, if an Event of Default results from any such
occurrence and continues for more than 30 consecutive days, either party may
terminate this Agreement by providing notice as required herein.
6.3 Notice of Default. Upon the occurrence of an Event of Default, the
non-defaulting party shall give written notice to the defaulting party
specifying the alleged default. The defaulting party shall then be entitled to
10 days after receipt of such notice within which to cure any monetary default
and 30 days within to cure any non-monetary default.
<PAGE>
7.0 CONFIDENTIALITY
-------------------
7.1 Confidential Information. During the term of this Agreement, it is
acknowledged by Participant and THISCO that each may receive or have access to
confidential and proprietary information of the other party including, but not
limited to, software, codes, specifications, data base and trade secrets
("Confidential Information"). Each party acknowledges that it shall not acquire
any ownership or other rights in or to Confidential Information of the other,
and shall use the Confidential Information only for the purposes of the
performance of this Agreement, and shall keep confidential and not disclose the
Confidential Information to any other person, firm or corporation without the
prior written consent of the other party. Any Confidential Information
transmitted in writing or by other tangible media shall remain the property of
the owner and shall be returned to the owner at its request, together with all
copies made thereof, at the conclusion of this Agreement. The parties agree that
the provisions of this Section 7 shall survive the expiration or termination of
this Agreement.
7.2 Use of Marks. Participant acknowledges that "UltraDirect",
"LodgingSelect" and "LodgingConnect" are each service marks of THISCO and
Participant agrees to not use any of THISCO's marks in any way including, but
not limited to, in any advertising or promotional materials, without the prior
written approval of THISCO.
8.0 INDEMNIFICATION
-------------------
8.1 Indemnification in the Event of Certain Losses. Participant agrees to
indemnify and hold harmless THISCO and THISCO's affiliates, directors, officers,
employees and other stockholders, from and against any losses, claims,
liabilities, damages or expenses (including reasonable attorney's fees)
occurring on account of Participant's fault and through no fault of THISCO
("THISCO's Losses"). THISCO agrees to indemnify and hold harmless Participant,
and Participant's affiliates, directors, officers, employees and stockholders,
from and against any losses, claims, liabilities, damages or expenses (including
reasonable attorney's fees) occurring on account of THISCO's fault and through
no fault of Participant ("Participant's Losses"). Promptly after receipt by an
indemnified party of notice of the commencement of any action or the
presentation or other assertion of any claim which could result in any
indemnification claim pursuant to this Section 8.l, such indemnified party shall
give prompt notice thereof to the indemnifying party and the indemnifying party
shall be entitled to participant therein or, to the extent that it shall wish,
assume the defense thereof with its own counsel. If the indemnifying party
elects to assume the defense of any such action or claim, the indemnifying party
shall not be liable to the indemnified party for any fees of other counsel or
other expenses, in each case subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation and preparation, unless representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The parties agree to cooperate to the fullest extent possible in
connection with any claim for which indemnification is or may be sought under
this Agreement.
<PAGE>
9.0 DISCLAIMER OF WARRANTIES
----------------------------
9.1 DISCLAIMER AND WAIVER. THISCO SHALL NOT BE RESPONSIBLE OR LIABLE FOR
(i) ANY INACCURACIES OR FALSIFICATIONS IN THE DATA OR THE INFORMATION PROCESSED
VIA ULTRADIRECT (ii) NOR SHALL IT HAVE ANY LIABILITY FOR ANY ACT OR FAILURE TO
ACT WITH RESPECT TO THE SERVICES TO BE PROVIDED AS SET FORTH HEREIN, EXCEPT FOR
BREACH OF THIS AGREEMENT, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (iii) ANY
CLAIM, DAMAGE OR LIABILITY OF ANY NATURE ARISING OUT OF AN ACCESSOR'S USE OF
PARTICIPANT'S SYSTEM (INCLUDING ULTRADIRECT). ALL WARRANTIES EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE,
MERCHANTABILITY, GOOD AND WORKMANLIKE PRODUCT OR SERVICE OR OTHERWISE, ARE
DISCLAIMED AND WAIVED.
9.2 No Consequential Damages. Neither party shall be liable to the other
for any consequential damages proximately caused or resulting from any breach of
this Agreement or arising out of the performance of this Agreement, and each
party hereby expressly waives such damages.
9.3 Repair of UltraDirect. Notwithstanding any other provision of this
Agreement, the only obligation of THISCO in the event of a material failure in
the operation or performance of UltraDirect shall be to repair the system within
seven (7) days of receipt of written notice from Participant requesting such
repair. Failure to cure such material failure within seven (7) days shall give
rise to an immediate right of termination by Participant.
10. MISCELLANEOUS
-----------------
10.01 Any controversy or claim arising out of or relating to this contract,
or the breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. There shall be a panel of three arbitrators. Each
party shall select one arbitrator and the two arbitrators selected shall select
a third neutral arbitrator. All reasonable and necessary costs and fees
(including attorney's fees) incurred in connection with the arbitration shall be
borne by the losing party or assessed in the award as otherwise deemed
appropriate by the arbitrators. If the demand for arbitration is initiated by
Participant, venue of the arbitration proceedings shall be determined by THISCO.
If the demand for arbitration is initialed by THISCO, venue of the arbitration
proceedings shall be determined by Participant.
10.02 Non-Exclusive Agreement. Except as otherwise provided herein, each
party acknowledges that this is not an exclusive agreement with respect to the
interface between UltraDirect and Participant's System and that each party may
contract with other parties providing same or similar services.
10.03 Status of Parties. This Agreement shall not constitute a partnership,
joint venture or similar arrangement. The parties hereto are separate and
distinct entities independently contracting with each other at arms length.
THISCO shall not be deemed by this Agreement to be granting a license to
Participant, with respect to UltraDirect or any software or service mark related
thereto, or otherwise, this being a contract for the use and rendering of
services only.
10.04 Assignment. This Agreement is not assignable by THISCO or Participant
without the prior written consent, of the non- assigning party, (and such
consent shall not be unreasonably withheld) provided that THISCO may assign
Agreement to an affiliate or in the event of an acquisition, merger or sales of
substantially all assets.
10.05 Notices. All notices, requests, consents, payments and other
communications contemplated hereby shall be in writing and (a) personally
delivered, (b) deposited in the United States mail, first-class, registered or
certified mail, return receipt requested, with postage prepaid, (c) sent by
overnight courier service (for next business day delivery), shipping prepaid, or
(d) by facsimile transmission, as follows:
<PAGE>
If to If to
THISCO: Participant:
3811 Turtle Creek Blvd. 318 Park Central East
Suite 1100 Suite 306
Dallas, TX 75219 Springfield, MO 65806
Attention: John F. Davis, III Attention: Chris Nobel
(Facsimile (214) 528-5675) Facsimile (417) 864-8811
or such persons or addresses as any party may request by notice duly given
hereunder. Except as otherwise specified herein, notices shall be deemed given
and received at the time of personal delivery o, if sent by U.S. mail, three (3)
business days after mailing, or, if sent by overnight courier, one (1) business
day after such sending.
10.06 Controlling Law. This Agreement shall be interpreted pursuant to the
laws of the State of Texas. The venue for any suit brought with respect to or
arising out of this Agreement shall be in the City of Dallas, Texas in the state
or federal courts situated in Dallas County, Texas. The parties hereto hereby
waive all objections, and they hereby consent to such jurisdiction and venue.
10.07 Entire Agreement. This Agreement constitutes the entire agreement
between THISCO and Participant with respect to the implementation and operation
of UltraDirect and supersedes and replaces any and all other agreements and
representations, verbal or written, with respect to the subject matter of this
Agreement. There are no representations, warranties or agreements made or relied
upon be either party with respect to the subject matter of this Agreement which
are not contained in this Agreement.
10.08 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the legal representatives, successors and duly
authorized assigns of each party whether resulting form merger, acquisition,
reorganization or assignment pursuant to the terms hereof.
10.09 Confidentially of the Agreement. The parties agree that the terms and
provisions of this Agreement shall be kept confidential and shall be disclosed
only to those persons and entities as required by law or as permitted by the
other party hereto. The parties may, however, disclose the existence of this
Agreement to any person or entity.
THE HOTEL INDUSTRY SWITCH TRAVEL NOW GLOBAL RESERVATIONS
COMPANY NETWORK, INC.
By: /s/ Signature on file By: /s/ Chris Noble
- ------------------------- -------------------
Its: Its: Chris Noble
Vice President
Date: 9/30/97 Date: 9/17/97
Exhibit 10.11
MCI WorldCom Flex T1 Internet Agreement
Customer Information
Company Name
Travel Now Network
Billing Address - Line 1 Phone Fax
318 Park Central East 4178643600
Billing Address - Line 2 City State Zip + 4
Suite 306 Springfield MO 65806
<TABLE>
<CAPTION>
T1 Services (1,2)
Discounted Equipment (10) and
Flex T1 Service (3) Other T1 Services(7) CPE Maintenance
- --------------------------------------- ----------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sustained
Use (Kbps) Monthly (4,5) Start-UP (6)
0-128 ______ ______ Item Monthly Start-Up Item Price
128-256 ______ ______ Price-Protected T1(8) ______ (9) ______ X Cisco 2524 Router ______
256-384 ______ ______ Double T(SM) ______ ______ X Cisco Internal TI CSU/DSU ______
384-512 ______ ______ X Diverse T(SM) ______ ______ CPE Maintenance Program
(See Attachment)
Over 512
</TABLE>
Term and Payment
Term Term Discount (11) P.O. Number - If P.O. required, return it with
- ---- ------------------ Agreement
24 mos price protected option
Notes
The service prices above do not include telco installation fees,
domain-name-registration fees, (12) monthly line charges, or equipment costs.
1 Connectivity is provided to Customer's organization only. Resale to or use
by another organization is prohibited.
2 Networks assigned from a UUNET net block are non-portable. Network space
allocated by UUNET must be returned to UUNET if Customer discontinues
service. UUNET may suspend service or terminate this Agreement, effective
upon notice, for a violation of these requirements.
3 Flex T1 customers always have available to them the full T1 bandwidth over
an unshared, non-fractional 1.5 Mbps digital leased line.
4 Monthly Fee includes UUNET domain-name service for one domain per Customer
and any sub-domains, additional domains for internal Customer use are $50
each.
5 Monthly billing is based on the level of sustained use during the month. To
determine this level, traffic samples are taken every five minutes; the
level under which 95% of these samples fall is the level of sustained use.
6 To ensure proper installation, UUNET will order all telco lines; a $500
surcharge applies for Customer-ordered lines. Installation may be scheduled
Monday through Friday, excluding holidays, between the hours of 8 AM and 7
PM ET; Customers requiring installation outside of these hours must pay a
surcharge of $500. Customer's installation period extends for 30 days after
UUNET has passed packets with Customer's router. UUNET's installation
engineers are not responsible for providing consulting on or configuring
security equipment (UUNET offers security products and consulting services.
Ask a Sales Representative for details.).
7 Minimum 1-Year Term Commitment required.
8 Available only to customers getting new internet connections and only
during the first six months of T1 service, provided monthly sustained use
does not exceed 384 Kbps during that period.
<PAGE>
9 Applies to the first year of service. After the first year, UUNET will
sample Customer's use statistics, using the same traffic-sample method
described above. If Customer's sustained use qualifies for a tiered Monthly
Fee that is:
(a) lower than the Price-Protected Monthly Fee, Customer may elect to
continue service at the lower tiered Monthly Fee or sign up for
another year at the Price-Protected Monthly Fee, or
(b) higher than the Price-Protected Monthly Fee, UUNET will begin charging
the appropriate tiered Monthly Fee.
10 Available only with service. UUNET is acting only as a reseller with
respect to the hardware and software offered under this Agreement
("Equipment"), which Equipment was manufactured by a third party
("Manufacturer"). UUNET will provide first-level support for Equipment, but
will not repair or replace Equipment unless Customer has purchased CPE
Maintenance from UUNET. Customer's use of Equipment is subject to the terms
and conditions of the Manufacturer's end-user agreement. Should Customer
purchase Equipment from UUNET, UUNET will ship to Customer the current
UUNET-tested version.
11 Discount applicable only to Monthly Fee. At the conclusion of the Term
Commitment, this Agreement shall continue in effect on a month-to-month
basis at UUNET's then-current list price for the service.
12 Domain-name registration requires a separate fee that will be billed
directly to Customer by Network Solutions. UUNET will not, under any
circumstances, send payment to Network Solutions on behalf of Customer. All
domain-name applications that use UUNET name servers must be authorized by
UUNET, or the application may be denied or delayed. Customer may not use in
applications for its customers' domains UUNET name servers.
Terms and Conditions
1. UUNET Technologies, Inc. ("UUNET") exercises no control over, and accepts
no responsibility for, the content of the information passing through
UUNET's host computers, network hubs and points of presence (the "UUNET
Network"), EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6 BELOW, UUNET (a)
MAKES NO WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED FOR THE
SERVICES AND EQUIPMENT IT IS PROVIDING and (b) DISCLAIMS ANY WARRANTY OF
TITLE, MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A PARTICULAR
PURPOSE. Use of any information obtained via the UUNET Network is at
Customer's own risk. UUNET specifically denies any responsibility for the
accuracy or quality of information obtained through its services. UUNET
shall not be liable for any delay or failure in performance due to Force
Majeure, which shall include acts of God; earthquake; labor disputes;
changes in law, regulation, or government policy; riots; war; fire;
epidemics; acts or omissions of vendors or suppliers; equipment failure;
transportation difficulties; or other occurrences that are beyond UUNET's
reasonable control.
2. All use of the UUNET Network and the service must comply with the
then-current version of the UUNET Acceptable Use Policy ("Policy"), which
is part of this Agreement and is available at the following URL:
www.uu.net/usepolicy. UUNET reserves the right to amend the Policy from
time to time, effective upon either posting of the revised Policy at the
URL or providing other notice to Customer. UUNET reserves the right to
suspend the service or terminate this Agreement, effective upon notice, for
a violation of the Policy. Customer agrees to indemnify and hold harmless
UUNET and its affiliates from any losses, damages, costs, or expenses
resulting from any third-party claim or allegation ("Claim") arising out of
or relating to use of the service, including any Claim that, if true, would
constitute a violation of the Policy.
3. NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES THAT RESULT FROM CUSTOMER'S OR
CUSTOMER'S USERS' USE OF THE UUNET NETWORK AND THE SERVICE, INCLUDING,
WITHOUT LIMITATION: ANY SUCH DAMAGES FOR LOSS OF DATA RESULTING FROM
DELAYS, NON-DELIVERIES, MISDELIVERIES, OR SERVICE INTERRUPTIONS.
Notwithstanding anything to the contrary stated in this Agreement,
Customer's sole remedies for any claims relating to this service or the
UUNET Network are set forth in Section 7 below.
4. Connectivity is provided to Customer's organization only. Resale to or use
by another organization is prohibited. Networks assigned from a UUNET
net-block are non-portable. Network space allocated by UUNET must be
returned to UUNET in the event Customer discontinues service. UUNET may
suspend the service or terminate this Agreement effective upon notice for a
violation of the terms of this Section.
<PAGE>
5. Payment is due 30 days after date of invoice. Accounts are in default if
payment is not received within 30 days after date of invoice. Payment made
by a check that is later returned to UUNET for insufficient funds shall
place Customer immediately in default and subject Customer to a UUNET
returned-check charge of $25. Accounts unpaid 60 days after date of invoice
may have service interrupted or terminated. Such interruption or
termination does not relieve Customer of the obligation to pay the Monthly
Fee. Only a written request to terminate Customer's service relieves
Customer of the obligation to pay the Monthly Fee. Accounts in default are
subject to an interest charge on the outstanding balance of the lesser of
1.5% per month or the maximum rate permitted by law. Customer agrees to pay
UUNET its reasonable expenses, including attorney and collection-agency
fees, incurred in enforcing its rights under these Terms and Conditions.
Prices are exclusive of any taxes that may be levied or assessed upon the
equipment or service provided thereunder. Any such taxes shall be paid by
Customer. If Customer is exempt from otherwise applicable taxes, Customer
must submit its tax identification number and exemption certificate at the
same time it submits this Agreement.
6. Billing for UUNET service will commence when a UUNET hub and a functioning
telephone circuit are prepared to route IP packets to Customer's site. The
Startup Charge is invoiced upon acceptance of this Agreement by UUNET.
Charges for Equipment shall be invoiced upon shipment. Service is invoiced
monthly in advance, and my be canceled only by 60 days' advance written
notice. In the event of early cancellation of a term Commitment, Customer
will be required to pay 75% of UUNET's standard Monthly Fee for each month
remaining in the Term Commitment. UUNET reserves the right to change the
rates by notifying Customer 60 days in advance of the effective date.
7. The Service Level Agreement ("SLA") for this service is set forth at
www.wcom.com/products+services/and applies only to customers agreeing to a
Term Commitment of at least one year. UUNET reserves the right to amend the
SLA from time to time, effective upon either posting of the revised SLA to
this URL or providing other notice to Customer. In the event of any
amendment resulting in a material reduction of the SLA's service levels or
credits, Customer may terminate this Agreement without penalty by providing
UUNET written notice of termination during the 30 days following notice of
such amendment. The SLA sets forth Customer's sole remedies for any claim
relating to this service or the UUNET Network, including any failure to
meet any guarantee set forth in the SLA. UUNET's records and data shall be
the basis for all SLA calculations and determination. Notwithstanding
anything to the contrary, the maximum amount of credit in any calendar
month under the SLA shall not exceed the Monthly Fee and/or Startup Charge
that, absent the credit, would have been charges for UUNET service that
month (collectively the "UUNET Fees"), provided that the maximum amount at
credit for failure to meet the Availability Guarantee shall not exceed the
sum of (a) the UUNET Fees plus (b) the telephone-company line charge that,
absent the credit, would have charged for said month.
8. Neither party may use the other party's name, trademark, trade names, or
other proprietary identifying symbols without the prior written approval of
the other party. Neither party may assign or transfer any of its rights or
obligations under this Agreement without the prior express, written consent
of the other party, provided that either party may assign or transfer this
Agreement to any affiliate of such party upon advance written notice to the
other party. No failure or delay on the part of either party to exercise
any right or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy granted hereby or by law.
9. These Terms and Conditions supersede all previous representations,
understandings, or agreements and shall prevail notwithstanding any
variance with terms and conditions of any order submitted. Acceptance of
this Agreement by UUNET may be subject, in UUNET's absolute discretion, to
satisfactory completion of a credit check. Activation of service shall
indicate UUNET's acceptance of this Agreement. Use of the UUNET Network
constitutes acceptance of these Terms and Conditions.
UUNET may be contacted on the Web at http://www.uu.net and at the following
mailing address: UUNET Technologies, Inc., 3060 Williams Drive, Fairfax, VA
22031
Signature
Customer Representative Title Signature Date
Chris Noble CEO /s/Chris Noble 4/6/99
<PAGE>
MCI WorldCom Flex T1 Internet Agreement
Attachment A
MCI WorldCom Commercial Customer Profile
Sales Information
Sales Rep/ARM Name: Candy Letterman, Sales Rep ID: 4991865, X West __ East, __
National/Data, __ Agents, Address - East & National/Data: 6929 N. Lakewood Ave.,
Tulsa, OK 74117 (918-590-6000), Address - West & Agents: 100 N.E. Loop 410, San
Antonio, TN 78216 (210-255-2454)
Applicant Information
Complete Company Name (If incorporated, name shown on corporate charter):Travel
Now Network, Taxpayer ID (Required), Date Business Started
Main Business Phone Number: 4178643600, Type of Business (Required): Internet
Travel Reservations, State of Incorporation, Date of Incorporation
Street Address - Line 1: 318 Park Central East Street Address - Line 2: Suite
306, City:Springfield, State: MO, Zip + 4 65806
Billing Address - Line 1
Billing Address - Line 2, City, State, Zip + 4
Parent or Subsidiary Information
Check One: __ Parent, __ Subsidiary, Name of Business State of Incorporation
Percentage Owned
Principal, Partner, and Major-Shareholder Information, List the complete names
of all principals, partners, and major shareholders.
Check One: __Sole Proprietorship, __Partnership, __LLC, __LLP, __Private
Corporation, __Public Corporation, Stock Symbol:
Name of Owner, Social Security Number, Name of Partner 1, Social Security
Number, Name of Partner 2 Social Security Number, Name of Officer 1, Title, Name
of Officer 2, Title.
References
Name of Bank, Phone, Fax, Lending Officer, Account Number, Previous or Existing
Local-Service Provider: Brooks Fiber Comm/Southwestern Bell, Previous or
Existing Long-Distance Provider: Dial US.
General Trade References, List businesses with which the Applicant has traded
within the last 12 months.
Company: Brooks Fiber Communications, Name of Contact: Candy Letterman , Phone:
4175202215, Fax: 4175202299.
Usage, Credit, and Signatures
Estimated Monthly Usage: _____, Requested Credit Limit. Authorization of Credit
Investigation: Applicant authorize MCI WorldCom to investigate his credit and
understands that MCI WorldCom may also utilize other sources of credit deemed
necessary. Such information will be held in strict confidence. Applicant agrees
to indemnify and hold MCI WorldCom and any other persons harmless from all
liability, damage, or expenses arising from or relating to any and all credit
investigations by MCI WorldCom. Applicant has read and agrees to the Terms and
Conditions attached to this Application.
Name of Authorized Officer, Owner, or Partner: Jamie Coppedge, Title of
Authorized Officer, Owner, Or Partner: Administrator, Application-Tracking ID:
46880, Signature of Authorized Officer, Owner, or Partner: /s/Chris Noble, Date:
4/6/99.
Continuing Guarantee of Service. Complete only when Guaranty is required by MCI
WorldCom.
I personally guarantee payment of account to MCI WorldCom, Inc. executed
effective the date below.
Name, Social Security Number, Home Address, City, State, Zip + 4, Signature,
Date.
<PAGE>
MCI WorldCom Flex T1 Internet Agreement
Attachment A (Continued)
MCI WorldCom Commercial Customer Profile
Terms and Conditions
1. SERVICE AND PAYMENT TERMS. Customer and Guarantor agree to pay to MCI
WorldCom all applicable Service charges and any and all federal, state, or
local taxes that may apply to MCI WorldCom services provided. Customer's
account becomes delinquent if payment is not received by MCI WorldCom on or
before thirty (30) days from the billing date found on the invoice. If MCI
WorldCom does not receive notice, in writing, of a dispute about the
charges within thirty (30) days after an invoice is rendered, such invoice
shall be deemed correct and binding. Customer agrees to make payment to MCI
WorldCom at the address of the MCI WorldCom operating center designated on
the first page of this Application; the place designated on the invoice; or
at such place as MCI WorldCom directs. Customer agrees to and will be
assessed a returned-check charge of up to $25.00 for any Customer check
that a financial institution refused to honor.
2. TERMINATION RIGHTS. MCI WorldCom, by oral or written notice to Customer,
may immediately discontinue (unless the state in which Customer resides
prohibits or requires some other notification period) all Service(s)
provided by MCI WorldCom to Customer or cancel a Service Agreement for any
of the following reasons: (i) A breach by Customer of any of the provisions
in the Service Agreement or this Credit Application; (ii) The failure of
Customer to provide a satisfactory security deposit; (iii) Any violation by
Customer of any law, rule, or regulation (including applicable Tariffs);
(iv) MCI WorldCom's inability to furnish Service to Customer because of any
law, rule, court order, or other government regulation or interference; (v)
Any unauthorized or non-permitted use of MCI WorldCom Service; and (vi) Any
event, transaction, or occurrence outside the control of MCI WorldCom.
3. INTEREST CHARGE. Customer agrees to pay to MCI WorldCom the lesser of an
annual rate of interest of 18% (or a monthly rate of 1.5%) or the maximum
rate allowed by law on all accounts that are delinquent. If the
transactions contemplated by this Application would be usurious or violate
any law, MCI WorldCom and Customer (or Guarantor, as defined below) agree
(*i) that the total amount contracted for, charged, or received by MCI
WorldCom that constitutes interest shall not exceed the maximum amount of
interest allowed by law and (ii) that any excess interest that is above
that allowed by law shall be credited or paid to Customer.
4. REPRESENTATION AND WARRANTIES. Customer, Guarantor, and the person(s)
signing this Application represent and warrant to MCI WorldCom that: (i)
The person executing on behalf of Customer has the authority and power to
execute this application; (ii) Customer conducts a bona fide business and
is in compliance with all laws; (iii) MCI WorldCom services will be used
solely for commercial purposes; and (iv) Customer will abide by the
permitted uses as set forth in the Service Agreement.
5. JURISDICTION AND VENUE. Customer and Guarantor agree that they, by
executing this Application or Guaranty, are doing business in a state
identified on the first page of this Application as a MCI WorldCom
operating center, and all claims or causes of action that in any way arise
out of or relate to the Application or Guaranty Agreement or the provision
of service may be brought in a court of competent jurisdiction in such
state. Customer and Guarantor hereby SPECIFICALLY AND VOLUNTARILY WAIVE the
right to seek to transfer venue from the court in which MCI WorldCom
against Customer or Guarantor has filed any action.
<PAGE>
6. GUARANTY AGREEMENT (If applicable). For value received, and in
consideration of the credit heretofore and hereafter extended by MCI
WorldCom, the undersigned, to Customer and all of its successors and
assigns, whether one or more ("Guarantor"), jointly and severally guarantee
the full and punctual payment when due of all indebtedness (as hereinafter
defined) owing by Debtor to MCI WorldCom. "Debtor" includes Customer and
all other entities owned or controlled by Customer and/or Guarantor,
whether such entities are now or hereafter existing. Guarantor agrees that
such guarantee is a continuing guarantee of payment of all indebtedness
owing by Debtor to MCI WorldCom now outstanding or owing or which hereafter
may exist or be incurred. It shall be conclusively presumed that all
extension of credit and financial accommodations made by MCI WorldCom to
Debtor made concurrently herewith or hereafter are made in reliance upon
this Guaranty Agreement.
This guarantee shall continue until such time as Guarantor gives written
notice of termination by actual delivery thereof to the Credit Manager of
MCI WorldCom at the operating center identified on the first page hereof,
and such notice of termination is acknowledged in writing by an officer of
MCI WorldCom. Such termination of this guarantee shall not be effective as
to any indebtedness then owing to MCI WorldCom by Debtor, and this
guarantee shall continue as to any such indebtedness until the same is
fully paid, discharged, and satisfied.
Guarantor absolutely and unconditionally guarantees payment of the
indebtedness to MCI WorldCom. Guarantor's liability hereunder shall not be
impaired, reduced, or affected by MCI WorldCom's failure, refusal, or
neglect to collect the indebtedness from Debtor, or to enforce or preserve
any other security or guarantee, or the failure to perform any other act
prior to seeking payment from Guarantor.
Guarantor hereby expressly waives and consents in advance to any change or
alteration of any agreement between Debtor and MCI WorldCom, including,
without limitation, the rearrangement, renewal, and/or extension of
Debtor's indebtedness. Guarantor's liability hereunder shall not be
impaired, reduced, or affected by the taking of any other guarantee or
security for the indebtedness, or by the release, subordination, or loss of
any such other guarantee or security, whether done voluntarily by MCI
WorldCom or by the death, insolvency, bankruptcy, disability of Debtor, or
any Guarantor.
As used herein "indebtedness" means and includes every claim, demand,
right, and/or cause of action of every kind or character and all extensions
and renewals thereof, whether arising by reason of sales of goods;
merchandise or services on open account; promissory notes; interest;
express or implied contracts; tort; any other matter; or whether
constituting a joint or several; direct or indirect; or primary or
secondary liability of Debtor to MCI WorldCom.
7. AUTHORITY TO APPROVE. This Application for Commercial Credit is a
solicitation by Customer to MCI WorldCom for an offer to sell to Customer
telephone, Internet, and/or related services. Until such offer is made by
MCI WorldCom and accepted by Customer, there is no contract obligating MCI
WorldCom to provide any goods or services to Customer. MCI WorldCom will
make no offer until Customer's credit worthiness has been investigated and
approved by MCI WorldCom. NO SALESPERSON HAS AUTHORITY TO ENTER INTO THIS
AGREEMENT OR ANY SIDE AGREEMENT.
Exhibit 10.12
TSA# 006
CITY UTILITIES
TELECOMMUNICATIONS SERVICE AGREEMENT
This Telecommunications Service Agreement ("TSA"), Service Description
("SD") and Service Level Agreement ("SLA"), (collectively referred to as the
"Agreement") between CITY UTILITIES OF SPRINGFIELD, MISSOURI, a municipal
utility with its office located at 301 East Central, Springfield, Missouri 65802
("City Utilities") and TRAVELNOW.COM INC. with its principal offices located at
318 Park Central East, Suite 306, Springfield, Missouri 65806 ("TravelNow"),
shall be effective as of the Start Date set forth in the SD.
PROVISIONS
1. PROVISION OF SERVICES. City Utilities shall provide telecommunication
services to TravelNow in accordance with the Agreement. City Utilities shall
install, maintain and operate facilities capable of providing the capacity, as
described in the SD and SLA, to transmit telecommunications signals between
points specified in the SD.
2. SERVICE DESCRIPTIONS. TravelNow by submission of this Agreement to City
Utilities does request the telecommunications services herein set forth. If City
Utilities agrees to provide the requested services, City Utilities shall sign
the SD and the SLA. City Utilities is under no obligation whatsoever to accept
any SD or SLA submitted by TravelNow; and City Utilities may, in its discretion,
reject any such SD or SLA.
3. EFFECTIVE DATE. This Agreement shall be effective between the parties as
of the Start Date set forth in the SD.
4. SERVICE PERIOD. City Utilities shall provide the telecommunications
services beginning on the Start Date and ending on the Expiration Date as stated
in the applicable SD.
5. TRAVELNOW RESPONSIBILITIES. TravelNow has sole responsibility for
installation, testing, and operation of TravelNow provided equipment other than
that specifically provided by City Utilities as set out in this Agreement or as
otherwise provided in the SD and/or the SLA. In no event will the untimely
installation or non- operation of TravelNow premises equipment relieve TravelNow
of its obligation to pay charges for services as of the Start Date.
6. TRAVELNOW INTERCONNECTIONS. City Utilities and TravelNow will agree on
the technical requirements for the requested services so that City Utilities can
provide the necessary facilities. City Utilities shall provide the interface
equipment and facilities, including cable splicing, if necessary. TravelNow
shall provide City Utilities with access to TravelNow's premises so that City
Utilities can make interconnections and maintain its facilities. Access will be
given at mutually agreeable times.
7. PAYMENT. Payment for all monthly charges shall be paid in arrears as
described in the attached SD. Payment for non-recurring service charges, if any,
shall be due on execution of the SD.
8. TAXES. Charges are exclusive of sales, use, privilege, excise, value
added and similar taxes, if any, arising as a result of any telecommunication
services provided to TravelNow by City Utilities which are lawfully assessed
directly against TravelNow by any taxing authority.
9. DEFAULT. If TravelNow fails to make any payment when due, City Utilities
may give TravelNow thirty (30) days notice of termination of this Agreement. If
TravelNow fails to cure such default within the thirty (30) day period, then
this Agreement shall terminate without further notice.
10. FORCE MAJEURE. If performance of this Agreement by either party or any
obligation hereunder (other than the payment of money) is prevented, restricted
or interfered with by causes beyond its reasonable control including, but not
<PAGE>
limited to, acts of God, fire, explosion, vandalism, cable cut, storm or other
similar occurrence, any law, order, regulation, direction, action or request of
the United States government or state or local governments, or of any federal,
state or local department, agency, commission, court, bureau, corporation or
other government instrumentality, or of any civil or military authority, or by
national emergencies, insurrections, riots, wars, strikes, lockouts or work
stoppages or other labor difficulties, supplier failures or shortages, then such
party shall be excused from such performance on a day-to-day basis to the extent
of such prevention, restriction or interference. The party claiming force
majeure shall notify the other party and shall use reasonable efforts under the
circumstances to avoid or remove such force majeure. If the force majeure lasts
for more than thirty (30) days, either party may terminate this Agreement on
written notice.
11. NATURE OF AGREEMENT. This Agreement is in the nature of a license for
the capacity of service periods indicated in the SD. City Utilities shall at all
times retain ownership of its facilities subject only to TravelNow's rights to
utilize the capacity provided for in this Agreement. This Agreement does not
constitute an assignment or transfer by City Utilities to TravelNow of any
severable or identifiable component of the fiber optic cables or associated
equipment over which capacity will be provided. City Utilities reserves the
right, in its sole discretion, to apportion or reapportion the use of circuits
on its fiber optic network between and among its customers, including TravelNow,
subject only to its obligations to provide the services specified.
12. SERVICE WARRANTY. Service warranty shall be addressed individually
within the SLA.
<PAGE>
13. NOTICES. Notices shall be in writing and mailed or delivered to the
following persons at the addresses listed below:
CITY UTILITIES: TravelNow:
Todd Murren Chris Kuhn, CIO
Director-Telecommunications TravelNow.com Inc.
301 E. Central 318 Park Central East, Suite 306
Springfield, MO 65802 Springfield, MO 65806
14. USE OF FACILITIES. City Utilities will provide the services over its
facilities and electronics to TravelNow upon the condition that such facilities
shall not be used for any unlawful purpose.
15. ASSIGNMENT. City Utilities reserves the right to assign all of its
rights, duties and obligations under this Agreement to an affiliate of City
Utilities at any time during the term of this Agreement, including any
extensions, without liability to TravelNow and without causing cancellation of
the Agreement. City Utilities shall notify TravelNow in writing of any such
assignment forty-five (45) days prior to the date of the assignment.
16. ENTIRE AGREEMENT. The contract consists of this Agreement and any
applicable SD and SLA. The Agreement can only be modified in writing signed by
the parties. In the event any provision of this Agreement conflicts with any
applicable law, regulation, tariff filed by City Utilities or order of any
regulatory body with jurisdiction, then such law, regulation, tariff or order
shall prevail.
17. GENERAL PROVISIONS.
A. The failure of either party to insist on or enforce, in any
instance, strict performance by the other of any of the terms of this
Agreement or to exercise any rights herein conferred shall not be construed
as a waiver or relinquishment of its right to assert or rely upon any such
terms or right on any future occasion.
B. City Utilities shall perform this Agreement as an independent
contractor and neither party shall be the agent, partner, or joint venturer
of the other.
C. TravelNow shall not assign this Agreement without the prior written
consent of City Utilities, which will not be unreasonably withheld. This
Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the parties.
D. This Agreement shall be governed by the laws of the state of
Missouri and the venue for any action arising out of this Agreement shall
be Greene County, Missouri.
E. If any provision of this Agreement is invalid or unenforceable,
then the remainder of this Agreement shall not be affected by such
invalidation or unenforceability.
F. Provisions contained in this Agreement that by their sense and
context are intended to survive the performance of this Agreement shall so
survive the completion of performance and termination of this Agreement
including, without limitation, provisions for indemnification and the
making of any and all payments due under the terms of this Agreement.
G. This contract is not exclusive and the parties may contract with
others for similar services.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day of
September, 1999.
CITY UTILITIES OF SPRINGFIELD, TRAVELNOW.COM INC.
MISSOURI
By:________________________ By:_________________________________
General Manager Jeff Wasson, President
Date: _____________________ Date: _______________________
<PAGE>
TSA # 006
SERVICE DESCRIPTION
City Utilities agrees to provide and TravelNow agrees to pay for the
services described below subject to the terms and conditions contained in City
Utilities Telecommunications Service Agreement with TravelNow, identified by TSA
#006 as more fully described and modified by this Service Description and the
Service Level Agreement. This Service Description shall not be effective until
signed by City Utilities.
<TABLE>
<CAPTION>
Facilities Type/Ckt. Originating Point Terminating Point Start Date Expiration Date
- --------------------- -------------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
NetLink - 10 Mbps McDaniel Bldg. City Utilities October 1, 1999 Sept. 30, 2001
Burstable (TravelNow.com Inc.) General Office
- --------------------- -------------------- ----------------- --------------- ---------------
</TABLE>
Monthly Recurring Service Charges: - See Other Remarks section for detailed
explanation of monthly variable charges. Payment due ten (10) days after mailing
by City Utilities to TravelNow.
Installation Charge: - Waived. Two year contract.
Originating Point: Terminating Point:
------------------ ------------------
City: Springfield City: Springfield
- -------------- --------------------- -------------- ---------------
Address: 318 Park Central East Address: 301 E. Central
- -------------- --------------------- -------------- ---------------
Bldg.: McDaniel, Suite 306 Bldg.: General Office
- -------------- --------------------- -------------- ---------------
Contact Name: Chris Kuhn Contact Name: Todd Murren
- -------------- --------------------- -------------- ---------------
Contact Phone: 417.864.3600 Contact Phone: 417.831.8795
- -------------- --------------------- -------------- ---------------
Other Remarks:
TravelNow shall pay $_____ per Mbps per ASR per month, rounded to the
nearest dollar. The minimum Monthly Recurring Service Charge shall be ____
__________________________ This minimum charge assures a transfer rate of two
(2) megabits per second Average Sustained Rate (ASR) per month. The maximum
Monthly Recurring Service Charge is _________________________________ for ten
(10) megabit per second ASR usage. ASR is determined by the following method:
City Utilities continuously collects 5 minute averaged samples of
TravelNow's traffic during the calendar month. Utilizing the industry
standard "95th Percentile" model, the top 5 percent of these samples are
overlooked, i.e. not used in the calculation. The remaining highest sample
establishes the Average Sustained Rate (ASR).
<PAGE>
If during the term of this Agreement additional NetLink 10 Mbps burstable
services are requested by TravelNow at the present location, above the current
NetLink 10 Mbps Burstable service specified in this SD, City Utilities will
provide the additional Net Link 10 Mbps Burstable services at the current
contract minimum monthly _________________________ and burstable rate of _____
_____________________________ per megabit per second per ASR per month within
twenty-four (24) business hours.
TravelNow acknowledges City Utilities' window for maintenance relative to
these services as being any Sunday between the hours of 3 a.m. and 6 a.m.
Notification by City Utilities will be given 3 business days prior to any
scheduled maintenance work.
IN WITNESS WHEREOF, the parties have executed this Service Description on
the day of September, 1999.
CITY UTILITIES OF SPRINGFIELD, TRAVELNOW.COM INC.
MISSOURI
By:_____________________________ By:_______________________________
Director - Telecommunications Jeff Wasson, President
Date: _____________________ Date: _______________________
<PAGE>
TSA # 006
CITY UTILITIES OF SPRINGFIELD / TRAVELNOW
SERVICE LEVEL AGREEMENT
City Utilities warrants that it shall provide telecommunication services
and connectivity to TravelNow in accordance with the following provisions for
service and support:
City Utilities does not guarantee uninterrupted service but shall use its
best efforts to restore service whenever there is interruption. City Utilities
shall give notice to TravelNow within one (1) hour of any loss of connectivity
or service between TravelNow and the Internet. This notification shall include;
(a) actions City Utilities is taking to remedy the problem and (b) a possible
time frame when service and/or connectivity will be restored. In the unlikely
event that service is disrupted, the Monthly Recurring Service Charge shall be
reduced proportionally based on the time that the service is interrupted
beginning at the time TravelNow notifies City Utilities that the service is
interrupted and ending at the time the service is restored. The following are
examples of how the Monthly Recurring Service Charge would be reduced:
Example 1 - Thirty day month (720 hours), service disruption lasts 1 hour.
The ASR for that month is 2.5 Mbps and that month's charge would have been
______ (2.5 Mbps X _______). Due the 1 hour interruption, that month's
charge is ______ (2.5 Mbps X (719 hours/720 hours) X ______.)
Example 2 - Thirty day month (720 hours), service disruption lasts 1 hour.
The ASR for that month is 1.5 Mbps and that month's charge would have been
______ (2 Mbps X ______). Due the 1 hour interruption, that month's charge
is ______ (2 Mbps X (719 hours/720 hours) X ______.)
If City Utilities fails to restore connectivity and /or service within
twenty-four (24) hours following a complete service outage, TravelNow may
terminate this Agreement with written notice up to 5 days after the occurrence.
This remedy shall not apply to the extent the interruption in service is caused
by City Utilities' backbone Internet provider and or TravelNow, its agents or
employees.
Under no circumstances shall City Utilities be liable for any indirect,
consequential, or special damages or for any lost profits of any kind or nature
whatsoever. The foregoing warranty and remedies are exclusive and in lieu of any
other warranties or remedies, whether express, implied or statutory.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Service Level Agreement
on the day of September, 1999.
CITY UTILITIES OF SPRINGFIELD, TRAVELNOW.COM INC.
MISSOURI
By:_________________________________ By:_________________________________
Director - Telecommunications Jeff Wasson, President
Date: _____________________ Date: _______________________
THE McDANIEL BUILDING
LEASE AGREEMENT
This lease Agreement (hereinafter called the "Agreement"),entered into this
13th day of August, 1998, by and between Warren Davis Properties II, L.L.C., a
Missouri Limited Liability Company (hereinafter "Lessor") and Travelnow,
Inc.(hereinafter "Lessee").
1. Leased Premises: In consideration of the mutual covenant and agreements
herein contained, Lessor hereby demises, leases and rents to Lessee and lessee
hereby takes and accepts from Lessor 3,135 square feet in the McDaniel Building
known as Suite # 306 (hereinafter called the "leased Premises"), located at 318
Park Central East, Springfield, Greene County, Missouri, together with any area
used for special stairs or electrical, mechanical or telephone closets which are
for the exclusive use of Lessee, for the term specified herein upon all the
terms and conditions as set forth in this Agreement.
2. Leased Term: This Agreement shall be effective and the lease shall
commence at 12:00 am on the 1st day of September, 1998, and continue for a
period of 2 Years, and shall expire at 11:59 pm on the 31st day of August, 2000
3. Rental and Options to Renew: Lessee shall pay to Lessor the total sum of
$ 25,806.00 per year during the term of this Lease, payable to Lessor at 316
Park Central East, Suite #101, Springfield, Missouri 65806, or at such other
place as may be designated in writing by Lessor, payable in equal monthly
installments of $ 2,155.00 in advance, and without demand or offset, on the
first day of each calendar month during the Lease term. The first such rental
installments shall be paid on the effective date hereof, and if Lessee's
occupancy under this Agreement commences on a date other than the first day of a
calendar month, then the prorata portion of the rental applicable to the partial
first month of Lessee's occupancy shall be paid on or before the first day of
occupancy, and shall be in addition to the total rental set forth above.
Options to Renew: (Check if Applicable) (XX)
Lessor hereby grants to Lessee the option to renew this Lease Agreement for
one successive renewal term of one year. This Lease Agreement shall
automatically renew for such option terms unless Lessee shall deliver written
notice to Lessor declining renew terms at least sixty (60) days prior to the
commencement date of each renewal term. During each renewal term, Lessee shall
pay rental in the amount of $ 2,230.00 per month in advance, in accordance with
the terms and conditions set forth above. During each renewal term, all other
terms and conditions of this Lease Agreement shall remain in full force and
effect.
4.Security Deposit: Lessee shall deposit with Lessor the sum of $ -0- on
the date of execution of this Agreement, as a Security Deposit. Lessor and
Lessee mutually agree that the Security Deposit shall be deposited in Lessor's
Property Management Account, to be held and disbursed pursuant to the terms of
this Agreement.
5.Services By Lessor:
A. Office Space Leases - (Check if applicable) (XX)
Lessor shall furnish Lessee the following services in the McDaniel Building
between the hours of 7:00am and 7:00pm, Monday through Friday, excluding
holidays, and from 8:00am until 12:00pm on Saturday: hot, cold and refrigerated
water at those points provided for general use of all tenants; electrical
service for ordinary office machines and uses, excluding any business machine or
other equipment of high electrical consumption characteristics (any special
electrical service other than 110 volt shall be at Lessee's own expense); heated
and refrigerated air conditioning in season, at such time as Lessor normally
furnishes these services to all tenants in the McDaniel Building, and at such
temperatures and amounts as are considered by lessor to be standard (excluding
any special heating or air conditioning service needed by Lessee for computers
or other equipment or uses); elevator service in common with other tenants in
the building; janitorial cleaning services as may in the judgment of Lessor, be
reasonably required. Lessor shall furnish security services as may in Lessor's
sole judgment, be reasonably required. Lessor shall not be liable in damages to
Lessee, or otherwise, for failure, stoppage or interruption of any such service,
not shall the same be construed as an eviction of Lessee or allow any offset or
abatement of rental or relieve Lessee from any covenant or agreement set forth
herein. In the event of any failure, stoppage or interruption of such services,
Lessor shall use reasonable diligence to resume such services promptly.
<PAGE>
6. Maintenance and Repair by Lessor: Lessor, without extra charge except as
provided herein, shall provide for the cleaning and maintenance of the public
portions of the McDaniel Building, including painting and landscaping
surrounding the McDaniel Building, in keeping with the usual standard for first
class office buildings in Springfield, Missouri. Unless otherwise expressly
provided herein, Lessor shall not be required to make any improvements or
repairs of any character on the Leased Premises during the term hereof, except
such repairs as may be required to the exterior of walls, corridors, floors,
windows, roof and other structural elements and equipment of the McDaniel
Building.
7. Repair and Maintenance by Lessee : Lessee shall, at its own cost and
expense, maintain and keep the Leased Premises in good repair and condition.
Lessee agrees not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises. Lessee shall at its own cost and expense repair
or replace any damage or injury done to the Leased Premises, to the McDaniel
Building or any part thereof, caused by acts or omissions of Lessee, its agents,
employees, licensees or visitors. Upon termination of this Agreement for any
reason, Lessee agrees to deliver up the Leased Premises to Lessor in as good a
condition as on the date the Leased premises were first occupied by Lessee,
ordinary wear and tear excepted. Should Lessee fail to make such repairs or
replacements promptly, Lessor may, as its option enter the Leased Premises
without such entering causing or constituting an interference with the
possession of the Leased Premises by Lessee, and make such repairs or
replacements, and Lessee shall pay the cost thereof to Lessor on demand. Lessee
shall maintain the Leased Premises in full compliance with all laws, codes and
regulation applicable to Leased Premises.
8. Parking and Service Areas: Lessee shall be entitled to the use of 2
parking spaces during the lease term, in such locations as are designated by
Lessor. Lessor shall have the right, as it deems necessary, to designate and
mark certain parking spaces within the parking areas controlled by Lessor, as
visitor parking. Lessor shall have control and enforcement of the parking of
Lessee's employees' automobiles and all other vehicles in the parking areas and
upon all drives and service areas appurtenant to the McDaniel Building. Lessor
may, from time to time, adopt and change rules and regulations relating to such
parking areas. Lessor shall not be liable for any losses sustained by Lessee or
its employees from theft of, or for any damage to, any vehicle or other
equipment (including contents of vehicles) while located on the parking areas or
upon the drives and service areas appurtenant to the McDaniel Building.
9. Furniture, fixtures and Personal Property of Lessee: Lessee may remove
its trade fixtures, office supplies and moveable office furniture and personal
property not attached to the McDaniel Building; provided that such removal is
completed prior to the termination of this Agreement, that Lessee is not in
default of any obligation or covenant of this Agreement at the time of such
removal, and that Lessee promptly repairs all damage caused by any such removal
at Lessee's sole cost. All other property on the Leased Premises and any
alterations or additions to the Leased Premises, including but not limited to,
wall-to-wall carpeting, paneling or other wall covering, and any other article
attached or affixed to the walls, floors or ceilings of the Leased Premises,
shall be deemed to be fixtures and shall become the property of the Lessor upon
termination of this Agreement. Lessee shall leave all such fixtures upon the
Leased Premises and shall surrender same with the Leased premises as a part
thereof at the termination of this Agreement for any reason, provided, however,
that Lessor may at its option, direct Lessee in writing to remove any and all
alterations, additions, fixtures, equipment or property placed or installed by
Lessee in the Leased Premises, and Lessee shall remove all such items within ten
(10) days of receipt of such direction from Lessor, and shall repair any damage
caused by such removal at Lessee's sole cost.
10. Building Rules and Regulations: Lessee acknowledges and agrees that
Lessor has promulgated Building Rules and Regulations applicable to all tenants
and lessees of the McDaniel Building, a copy of which are attached hereto as
Addendum "B". Lessee specifically acknowledges and agrees that such Rules and
Regulations have been furnished to Lessee prior to Lessee's execution of this
Agreement, that Lessee has read and understands said Rules and Regulations, and
that such Rules and Regulations shall be and are hereby made a part of this
Agreement as if set forth in the body of this Agreement. Such Rules and
Regulations shall be binding upon Lessee and Lessee agrees to comply with all
provisions thereof. Lessee further agrees that such Rules and Regulations may be
amended from time to time by Lessor in Lessor's sole discretion, and Lessee
further agrees that any such amendments shall become a part of this Agreement
upon their adoption by Lessor and delivery of a copy thereof the Lessee, and
Lessee shall hereafter be bound thereby.
11. Notices: Whenever in this Agreement it shall be required or permitted
that notice or demand be given or served by any party hereto to or upon another,
such notice or demand shall be given or served (and shall not be deemed to have
been given or served unless) in writing and delivered personally or forwarded by
Certified or Registered Mail, postage prepaid, addressed to the appropriate
party at the address shown at the signature line. Such addresses may be changed
from time to time by any party by serving notice as above provided.
<PAGE>
12. Obligations of Successors: It is mutually agreed that all the
provisions hereof are to be construed as covenants and agreements as though the
words imparting such covenants were used in each separate paragraph hereof, and
that, except as restricted by the provisions of Section 18 of the Rules and
Regulations as set forth in Addendum "B" entitled "Assignment and Sublease" all
the provisions hereof shall bind and enure to the benefit of the parties hereto,
their respective heirs, legal representatives, successors and assigns.
13. Entire Agreement: This instrument and any attached Addendum A, B, C and
D, collectively constitute the entire agreement between the Lessor and Lessee,
and no other promises or representations shall be binding unless made in writing
and signed by Lessor and Lessee. The addendums attached to this Agreement are
made a part hereof by this reference.
14. Paragraph Captions: Paragraph captions herein are for Lessor's and
Lessee's convenience only and neither limit nor amplify the provisions of this
Agreement.
15.Force Majeure: In the event that Lessor shall be delayed, hindered or
prevented from the performance of any acts required hereunder by reason of acts
of God, riots, fire, strike or the unavailability of materials, then performance
of such acts shall be excused for the period of the delay, and the period for
the performance of any such acts shall be extended for a period equivalent to
the period of such delay.
IN WITNESS WHEREOF, Lessor and Lessee, acting by and through their duly
authorized representatives have hereby caused this Agreement to be executed in
multiple counterparts, each of which shall have the force and effect of an
original, as of the day and year first above written.
LESSOR LESSEE
Warren Davis Properties, L.L.C. Travelnow, Inc.
By: /s/ Ron Shepherd By: /s/ Jeff Wasson
Ron Shepherd, Prop. Mngr Jeff Wasson, President
316 Park Central E#101
Springfield MO 65806 By: /s/ Chris Noble
Chris Noble, Vice President
316 Park Central E 3306
Springfield MO 65806
<PAGE>
ADDENDUM "B"
RULES AND REGULATIONS
1. Lessee shall not paint, display, inscribe, maintain or affix any sign,
picture, advertisement, notice, lettering or direction on any part of the
outside or inside of the Building, or on any part of the inside of the Leased
Premises which can be seen from the outside of the Leased Premises, except on
hallway doors of the Leased Premises, and then only such name or names or matter
and in such color, size, style, character and material as may be first approved
by Lessor in writing. Lessor reserves the right to remove at Lessee's expense
all matter other than the above provided for without notice to Lessee.
2. In advertising or other publicity, without Lessor's prior written
consent, Lessee shall not use the name of the Building except as the address of
its business and shall not use pictures of the Building in advertising or
publicity.
3. Lessee shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in and about the Building.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly form the Building corridor.
4. Lessee shall not waste electricity, water or air conditioning and agrees
to cooperate fully with Lessor to assure the most effective operation of the
Building's heating and air conditioning, and shall refrain from attempting to
adjust any controls. Lessee shall keep corridor doors closed. Lessor shall not
permit any objects to be placed on or dropped into any grills or devices in the
Leased Premises utilized for heating or air conditioning.
5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.
6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.
7. The Lessor may require that all persons who enter or leave the building
at any time, if determined by Lessor form time to time to be necessary for the
protection of the Building, must identify themselves to watchmen, by
registration .or otherwise.
8. The bringing into the Building, taking therefrom, or removal therein of
furniture, fixtures or supplies, when of large weight or bulk, shall be done at
such times as the custodian of the Building shall arrange therefor. All damage
to the Building caused by taking in, putting out or moving the same during the
time it is in or on the Leased Premises shall be repaired at the expense of the
Lessee owning or using same.
9. Lessee will permit access to the Leased Premises to Lessor at all
reasonable times for inspection and cleaning and for such repairs, alterations,
additions, installations and removals, including among others, pipes, wires and
other apparatus, as Lessor may deem proper or useful for serving the Leased
Premises or other part of the building.
10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.
11. Lessee shall comply with all federal, state and municipal laws,
ordinances and regulations and shall not directly or indirectly make any use of
the Leased Premises which may be prohibited by any laws, ordinances or
regulations thereof or which shall be dangerous to person or property.
12. Lessee shall be responsible for the observance of all Rules and
Regulations by Lessee's employees, agents, clients, customers, invitees and
guests.
13. Lessee shall not at any time permit its employees to park in any
Parking Area designated as "Visitor Parking".
14. Lessee will not (i) install or operate any internal combustion engine,
boiler, machinery, refrigerator, heating or air conditioning apparatus in or
about the Leased Premises, (ii) carry on any mechanical business in or about the
Leased Premises without written permission of Lessor, (iii) exhibit, sell, or
offer for sale, use, rent or exchange in the Leased Premises or Building any
article, thing or service except those ordinarily embraced within the permitted
use of the Leased Premises specified in the Lease Agreement, (iv) use the Leased
Premises for housing, lodging or sleeping purposes, (v) permit preparation of or
warming of food in the Leased Premises or permit food to be brought into the
<PAGE>
Leased Premises for consumption therein (warming of coffee and individual
lunches of employees excepted) except by express permission of Lessor, (vi)
place any radio or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises,
(vii) operate or permit to be operated any musical or sound producing instrument
or device inside or outside the Leased Premises which may be heard outside the
Leased Premises, (viii) operate any electrical device from which may emanate
electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, (ix) bring or
permit to be in the Building any bicycle or other vehicle or dog (except in the
company of a blind person) or other animal or bird, (x) make or permit any
objectionable noise or odor to emanate from the Leased Premises, (xi) disturb,
solicit or canvass any occupant of the Building, (xii) or do anything in or
about the Leased Premises tending to create or maintain a nuisance or do any act
tending to injure the reputation of the Building.
15. Payment of Increased Building Costs: The Base Rental provided for
herein includes a stipulated allowance in the amount of $ 4.50 per square foot
of useable area for repairing, maintaining and operating the Building, Parking
Area and other land area surrounding the Building (the Building, the Parking
Area and other land area herein collectively termed the "Premises") during the
first calendar year of the Lease Term. The term "Basic Costs" as used herein
shall mean all expenses, costs and disbursements of every kind and nature which
Lessor shall pay or become obligated to pay because of, or in connection with
the ownership, operation, repairs and maintenance of the Premises, computed on
an accrual basis and in accordance with generally accepted accounting principals
and consistently applied, including but not limited to the following:
i. wages and salaries to be allowable to the Premises of all employees
directly engaged in the operation and maintenance of the Premises,
including taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Premises;
iii. all costs of supplies and materials used in. the operation,
repair and maintenance of the property;
iv. costs of all utilities for the Premises (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Premises
including security services, window cleaning, elevator maintenance,
janitorial service, pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Premises and any personal property used in connection with the operation,
repair or maintenance of the Premises;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or
hereafter imposing any taxes or fees on the Premises;
viii. the cost of repairs and general maintenance of the Premises;
iv. a reasonable amortization charge (exclusive of any finance
charges) on account of any capital expenditure incurred in reduction of the
Basic Costs or incurred to comply with any requirements of any in force
governmental regulations by authorities having jurisdiction over the
Premises or necessary for the health or satisfaction of the tenants of the
Building.
At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of the Basic
Costs for such calendar year and if Lessor, in its reasonable judgment,
determines that the aggregate of the Basic Costs for such calendar year
(calculated on a per square foot basis using the useable area of the Building as
set forth in Section 1 of this Agreement) will exceed $4.50, Lessor shall give
written notice to Lessee of the estimated Basic Costs, expressed in terms of
dollars per square foot, the amount by which the Basic Costs will exceed $4.50
per square foot and the monthly amount of additional rental payable by Lessee
with respect to the increase in Basic Costs. Commencing with the first monthly
payment in the calendar year, the Lessee shall pay to Lessor in addition to the
Base Rental, an amount equal to 1/12th of Lessor's estimated increase in the
Basic Costs (expressed in terms of dollars per square foot calculated as
aforesaid) multiplied by the useable area of the Leased Premises as set forth in
Section 1 of this Agreement. Within a reasonable time after each calendar year,
Lessor shall perform such computations that are necessary to determine the
actual amount of the Basic Costs and the prorata portion payable by Lessee under
this paragraph for such calendar year whereupon, if the Lessee shall have
overpaid, Lessor shall within thirty (30) days after such determination refund
to Lessee the amount of such excess. But if the Lessee shall have underpaid, the
Lessor shall invoice Lessee for the amount of the underpayment, such
underpayment shall be due and payable following the receipt by Lessee of
invoice.
<PAGE>
16. Use and Violation of Insurance Coverage. The Leased Premises are to be
used by Lessee solely for office purposes and no other purpose; Lessee shall not
use, occupy, or permit the use or occupancy of the Leased Premises for any
purpose which is, directly or indirectly, in violation of any law, ordinance or
governmental regulation, code or order; or permit the maintenance of any public
or private nuisance; or do or permit any act or thing which may disturb the
quiet enjoyment of any other tenant of the Building; or keep any substance or
carry on or permit any operation which might emit offensive odors or conditions
into other portions of the Building; or permit anything to be done or fail to do
anything which would increase the fire and extended coverage insurance rate on
the Building or contents, and if there is any increase in insurance rates by
reason of acts of Lessee, Lessee shall pay such increase promptly upon demand
therefor by Lessor. Lessee shall not obstruct the sidewalks, entries, passages,
vestibules, halls, elevators or stairways of the Building and shall not use the
same for any purpose other than ingress and egress to and from the Leased
Premises.
17. Alterations: Lessee agrees that it will not make 'or allow to be made
any alterations, physical additions or improvements in or to the Leased Premises
without first obtaining the written consent of the Lessor. In any instance where
Lessor grants such consent, Lessor may grant such consent upon the condition
that Lessee's contractors, laborers and materialmen must work in harmony with
and not interfere with any other work being conducted on behalf of Lessor or any
other tenant of the Building.
18. Assignment and Sublease. Lessee shall not sell, convey, transfer or
assign this Agreement or any part thereof, or any rights created hereby, or
mortgage or pledge the same, or sublet the Leased Premises, or any part thereof,
or allow it to be assigned by operation of law or otherwise, without the written
consent of Lessor, which consent shall not be unreasonably withheld. Any
assignment or sublease shall not release Lessee from any obligation or liability
hereunder.
19. Subordination to Mortgage. The Lease Agreement is and shall always be
subject and subordinate to the lien of any mortgages, deeds of trust or other
security instrument which are now or shall at any future time be place upon the
Building, the Leased Premises or Lessor's rights hereunder and to any and all
renewals, extensions, rearrangements, modifications or consolidations thereof;
provided that, in the event of a foreclosure under any such security instrument,
the holder thereof shall forthwith notify Lessee of such holder's election to
either (1) ratify and adopt the Lease Agreement, or (2) terminate the Lease
Agreement effective six (6) months following such notice. Such subordination
shall be self-operative and no further instrument of subordination need be
required by any security holder. In confirmation of such subordination, Lessee
agrees to execute promptly any instrument deemed necessary by Lessor to further
effect the subordination of the Lease Agreement to any such security interest.
20. Fire and Other Casualty. If the Leased Premises, or any portion
thereof, are partially or totally destroyed or damaged by fire or other casualty
covered by the fire and extended coverage insurance carried by Lessor on the
Building, Lessor shall repair and restore the damaged portion of the Leased
Premises (excluding any tenant fit up work in excess of the building standard
and any additions, equipment, furniture and alterations made by tenant) as soon
as it is reasonably practicable to substantially the same condition in which the
Leased Premises were before such damage to the extent permitted by the available
insurance proceeds. Provided, however, that if the Leased Premises are
completely destroyed or badly damaged that repairs cannot be completed within
six (6) months thereafter, the Lease Agreement may be terminated by either party
hereto by serving written notice upon the other. If the Building is totally or
partially destroyed by fire or other casualty and cannot be restored within six
(6) months thereafter, Lessor may, at its option, terminate the Lease Agreement
by serving written notice on the Lessee.
In the event the Leased Premises, or any portion thereof, is destroyed or
damaged by fire or other casualty covered by the fire and extended coverage
insurance carried by Lessor that such damaged portion can not reasonably be used
by Lessee for the purpose herein provided and the Lease Agreement is not
terminated as above provided, there shall be an abatement of rent to the extent
that the damaged portion of the Leased Premises is unfit for use by Lessee in
the ordinary course of its business until said damaged portion of the Leased
Premises is made useable.
In the event the Leased Premises, or any portion thereof, shall be
destroyed or damaged by fire or other casualty resulting from the fault or
negligence of Lessee, or the agents, employees, licensees or invitees of Lessee,
such damage shall be repaired by and at the expense of Lessee (to the extent
that such destruction or damage is not covered by the fire and extended coverage
insurance carried by Lessor) under the direction and supervision of Lessor, and
rent shall continue without abatement.
<PAGE>
21. Insurance. Lessor shall throughout the term hereof maintain fire and
extended coverage insurance on the Building, including the interior improvements
which constitute the Standard Building Improvements in an amount not less than
eighty percent (80%) of the full insurable value of the Building and shall
maintain comprehensive general liability insurance in such amounts as it may
desire. Lessee shall provide, at its own expense at all times during the lease
term naming Lessor as additional insured, public liability insurance of FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) single limit bodily injury and
FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) single limit property damage, and
fire and extended coverage insurance for the value of its property, fixtures,
supplies, furniture and interior improvements in the Leased Premises in excess
of the Standard Building Improvements, and shall pay all taxes assessed against
furniture, equipment, fixtures or other property in or on the Leased Premises.
Every insurance policy obtained by both parties pursuant to the Lease Agreement
shall expressly waive any and all rights of subrogation against the other party,
its agents and employees. Lessee shall deliver to Lessor certificates of such
insurance, which shall declare that the respective insurer may not cancel the
same in whole or in part without giving Lessor written notice of its intention
to do so at least ten (10) days in advance.
22. Liability and Indemnity. Lessee agrees to indemnify and save Lessor
harmless from all claims for injury to persons (including death) or for damage
to property arising from or out of Lessee's use and occupancy of the Leased
Premises or from an act or omission of invitees, or of any other third party
(including costs and expenses of defending against such claims).
Lessee agrees to use and occupy the Leased Premises and other facilities of
the Building, the Parking Area and all drives and other areas appurtenant
thereto, at its own risk and hereby releases Lessor, its agents and employees,
from all claims for any damage or injury to persons (including death) or
property to the full extent permitted by law.
Lessee agrees that Lessor shall not be responsible or liable to Lessee, its
agents, employees, customers or invitees, for damage or injury to persons
(including death) or property occasioned by the acts or omission of any other
tenant or such tenant's agents, employees, customers or invitees within the
Leased Premises, the Building, the Parking Areas and all drives and other areas
appurtenant thereto.
23. Default by Lessee. Lessee covenants and agrees that if Lessee shall
make default in the payment of any rental or other charges required to be made
by its to Lessor hereunder, or in the faithful performance of any other covenant
to be performed by it hereunder, and such default shall continue for a period of
ten (10) days after written notice from Lessor to Lessee to remedy same, then
Lessor may declare the Lease Agreement terminated as of the expiration of such
ten (10) day period and without additional notice to Lessee the Lessor or any of
its agents may reenter the Leased Premises and remove all persons and property
therefrom, with or without legal process and without prejudice to any of
Lessor's other legal rights hereunder, or, Lessor may take possession of the
Leased Premises and re-let the same for the remainder of the Lease Term for the
account of Lessee, it being understood that under either of said options, Lessee
shall remain liable for all rental and other sums payable under the provisions
hereof. In the event of any reentry by Lessor, Lessee hereby expressly waives
all claims for damages by reason hereof, as well as all claims for damages by
reason of any eviction proceedings or proceedings by way of sequestration or any
other legal proceedings which Lessor may employ or recover any sums due
hereunder or possession of the Leased Premises.
24. Lien for Rent. To secure the payment of rental and other charges
required to be made by Lessee, and the faithful performance of all other
covenants of the Lease Agreement required to be performed by Lessee, Lessee
hereby gives to Lessor security interest in and to all property which may be
placed in or upon the Leased Premises and the proceeds of any insurance which
may accrue to Lessee by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Lessee. This security interest is given
in addition to the Lessor's statutory lien(s) and shall be cumulative thereto.
This security interest may be foreclosed with or without Court proceedings, by
public or private sale, with or without notice, and Lessor shall have the right
to become purchaser upon being the highest bidder at such sale. Upon request of
Lessor, Lessee agrees to execute Uniform Commercial Code financing statements
relating to the aforesaid security interest.
25. Transfer by Lessor. Lessor may transfer or assign all or any part of
the Leased Premises or the Lease Agreement. Upon the transfer or conveyance of
the Building, without further agreement of the parties, Lessor shall be relieved
of and from any liability with respect to the obligations and covenants of
Lessor contained in the Lease Agreement arising out of any act or occurrence
after the date of such sale and the Purchaser at such sale or any subsequent
sale shall be deemed, without further agreement of the parties, to have assumed
and agreed to carry out the Lessor's covenants under the Lease Agreement.
<PAGE>
26. Attorney's Fees. In the event Lessor or Lessee defaults in the
performance of any of the terms, covenants, agreements or conditions contained
in the Lease Agreement and the other party hereto places the enforcement of the
Lease Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.
27. Non-Waiver. Neither acceptance of rent by Lessor nor failure by Lessor
to complain of any action, non-action, or default of Lessee, whether singular or
repetitive, shall constitute a waiver of any of Lessor's rights under the Lease
Agreement. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.
28. Access by Lessor. Not withstanding any provision of the Lease Agreement
to the contrary, Lessor, its agents and employees, shall have access to and the
right to enter upon the Leased Premises at any reasonable time to examine the
condition thereof, to clean, repair or make alterations required or deemed
necessary or desirable to be made by Lessor, to show the Leased Premises to
prospective purchasers or tenants, and for any other purpose deemed reasonable
by Lessor.
29. Bankruptcy by Lessee. In the event of any of the following: the filing
or execution or occurrence of a petition in bankruptcy or other insolvency
proceedings by or against Lessee; or petition or answer seeking relief under any
provision of the Bankruptcy Act; or any assignment for the benefit of creditors
or composition; or a petition or other proceeding by or against Lessee for the
appointment of a trustee, receiver or liquidator of Lessee or any of Lessee's
property; or a proceeding by any governmental authority for the dissolution or
liquidation of the Lease Agreement; the Lease Agreement may, at the option of
Lessor, be terminated immediately by the mailing of notice to Lessee.
30. Holding Over. Upon the termination of the Lease Agreement for any
reason, Lessor, shall have the right to reenter and resume possession of the
Leased Premises. If Lessee should remain in possession of the Leased Premises
after termination of the Lease Agreement without the execution by Lessor and
Lessee of a new Lease Agreement, then Lessee shall be deemed to be occupying the
Leased Premises as a tenant-at-sufferance subject to all the covenants of the
Lease Agreement and these Rules and Regulations except the amount of Base Rent,
and the Base Rent for any such holdover period shall be 200% of the Base Rent
being paid by Lessee immediately prior to the termination date, and Lessee shall
indemnify Lessor and hold Lessor harmless from any claims which may be asserted
by any third party who is unable to enter or occupy the Leased Premises because
of Lessee's holdover occupancy thereof.
31. Eminent Domain. If, during the term of the Lease Agreement, any part or
interest therein of the Leased Premises should be taken or otherwise acquired by
any authority exercising the powers of eminent domain, Lessor may, at its
option, terminate the Lease Agreement. If, during the term of the Lease
Agreement, a part of the building should be taken or otherwise acquired by an
authority exercising the powers of eminent domain, Lessor may, at its option,
terminate the Lease Agreement. If Lessor elects to continue the Lease Agreement,
the rental shall be reduced in proportion to the area of the Leased Premises so
taken or acquired (effective as of the date of such taking). Lessor shall be
entitled to any and all compensation and damages awarded, or agreed upon between
the condemning authority and Lessor, except for an award, if any, specified by
the condemning authority, or agreed to by the Lessee and the condemning
authority for the leasehold estate of Lessee.
32. Signs. Lessee shall not place any signs, letters, symbols, or other
identifying marks anywhere upon, about or within the Building and its Parking
Areas, or upon the exterior of the doors, walls or windows of the Leased
Premises, without the prior written approval of Lessor.
33. Severability. The Lease Agreement and these Rules and Regulations shall
be construed in accordance with the laws of the State of Missouri. If any clause
or provision hereof is illegal, invalid or unenforceable, under present or
future laws effective during the Lease Term hereof, then it is the intention of
the parties hereto that the remainder of the Lease Agreement and these Rules and
Regulations shall not be affected thereby.
<PAGE>
34. Security Deposit. Upon the occurrence of any default by Lessee, Lessor,
may from time to time, without prejudice or any other remedy, use the security
deposit paid to Lessor by Lessee therein provided to the extent necessary to
make good any arrearage of Base Rent of any other damage, injury or expense or
liability cause to Lessor by such event of default and the remaining balance of
such security deposit to be returned by Lessor to Lessee upon the termination of
the Lease Agreement. Such security deposit shall not be considered as an advance
payment of rent or a measure of Lessor's damages in case of default by Lessee.
35. Relocation of Lessee. Lessor reserves the option and right to require
Lessee to relinquish the Leased Premises and to relocate in another area of
comparable size in the Building designated by Lessor. Lessor shall be
responsible for all expenses with respect to any required location and all
repairs necessary to the designated area to conform with Lessee' requirements
under the Lease Agreement. If the Lessor elects to relocate the Lessee, the area
to which the Lessee is relocated shall be deemed the Leased Premises for all
purposes and the Lease Agreement shall continue in full force and effect for the
remainder of the Lease Term.
Lessee hereby acknowledges that it has received, reviewed and understands
the foregoing Rules and Regulations of the McDaniel Building and acknowledges
and agrees that such Rules and Regulations are a part of Lessee's Lease
Agreement and shall be fully binding on Lessee during the Lease Term.
Lessee: /s/ Signature on file /s/ Chris Noble
Date: 8/13/98 Date 8/18/98
<PAGE>
WARREN DAVIS PROPERTIES
316 Park Central East - Springfield MO 65806
Phone (417) - 862-9100 Fax (417) - 862-9665
Addendum B
This addendum to Lease Agreement dated August 13, 1998 by and between Warren
Davis Properties II, LLC hereinafter referred to as Lessor and TravelNow
Incorporated hereinafter referred to as Lessee, will include Suite #418 also
located in the McDaniel Building, 318 Park Central East, Springfield, Missouri
65806.
The Lease term shall commence on July 15, 1999 at 12:00am and end on August 31,
2000 at 11:59pm.
The Lease rate shall be $1140 per month due in advance on the 1st day of each
month. Payable to Warren Davis Properties II, LLC 316 Park Central East,
Springfield, Missouri 65806.
There is an option to renew this lease for one, one year term. The lease rate
for the option period on Suite #418 is $1185 per month.
All terms and conditions of these premises will be subject to the Lease
Agreement of which this is addended.
I hereby agree to the terms and conditions of this addendum.
Lessor Lessee
Warren Davis Properties II, LLC TravelNow, Inc.
By: /s/ Ron Shephard By: /s/ Jeff Wasson
Ron Shephard, Prop. Mngr. Jeff Wasson, President
316 Park Central East By: /s/ Chris Noble
Springfield, MO 65806 Chris Noble, Vice Pres.
318 Park Central East #306
Springfield, MO 65806
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